As of October 2025, the government still does not plan to bring back the Old Pension Scheme (OPS) even though there are constant requests from central government workers. At the same time, the 8th Pay Commission has already been approved and is estimated to affect the salary and pension changes as of January 1, 2026; however, the return to OPS remains uncertain.
What Is the Old Pension Scheme (OPS)?
OPS was a type of pension plan where the government did not need to pay anything into it, and the monthly pension paid to the retired employee was determined according to the last salary drawn. In the year 2004, it was phased out and replaced by the New Pension Scheme (NPS), a market-linked scheme where the retiree has to make contributions. Under the NPS, the employee along with the government would put money into a fund and the pension would depend on the returns coming from the market.
What the Government Has Said
In the Terms of Reference (ToR) for the 8th Pay Commission, the government very clearly stated that the “unfunded cost of non-contributory pension schemes” would be taken into account while making recommendations. This indicates that a comeback to OPS is not a possibility, as the government is worried about the long-term financial strain of unrecoverable pensions.
The Centre keeps its ground firm despite protests from workers’ lights after 2004 that NPS and UPS (Universal Pension Scheme) will remain, both of which are of the contributory type.
Comparison: OPS vs NPS
| Feature | Old Pension Scheme (OPS) | New Pension Scheme (NPS) |
|---|---|---|
| Type | Non-contributory | Contributory |
| Pension Amount | Fixed (50% of last salary) | Market-linked |
| Retirement Benefits | Guaranteed | Depends on fund returns |
| Government Liability | High | Shared with employee |
| Tax Benefits | Limited | Available under Sec 80CCD |
Employee Sentiment
Among the central government employees, railways, education, and defense are mainly the sectors from where the loudest voices for a return to OPS are coming. According to them, the NPS does not give the retirees financial security because of the market fluctuations that are inherent. The stance of the government shows that reforms might be inclined to further perfecting NPS rather than replacing it.
Final Thoughts
The expectation from the 8th Pay Commission is to make salary hikes and pension revisions; however, the Old Pension Scheme’s return is not in 2025 plans. The government is on the path of being fiscally sustainable and may just offer NPS better retirement security by enhancing its features. Employees should keep themselves up to date and plan their retirements by setting realistic expectations.