The issue of Old Pension Scheme (OPS) has been a topic of discussion for a long time, especially after its discontinuation by the National Pension System (NPS) in 2004 for the central government employees. The government in October 2025, however, announced new reforms that included Unified Pension Scheme (UPS) the merging of OPS and NPS features. The objective of this change is to give retirees more secure future while satisfying the demands of the employees for guaranteed pensions.
Reasons Why OPS Is in the Limelight Again
OPS, which is one hundred percent government funded, provides a fixed pension, which is usually 50% of the last salary drawn. On the other hand, the NPS is market-linked, hence the pensions will depend on the returns of the investments. Due to high inflation and protests among workers, some states have gone back to OPS while the central government has adopted a middle path through UPS.
Unified Pension Scheme (UPS)
The UPS that was announced in April 2025 and was reiterated in the October updates combines the advantages of both OPS and NPS. The employees will not only have a guaranteed minimum pension but also market-linked returns. The government will not face a total burden in terms of disbursements as this model is designed to reduce the fiscal pressure while assuring stability for the retired people financially.
State-Level Adoption
Rajasthan, Chhattisgarh, Punjab, and Himachal Pradesh are the states that have already reinstated OPS for their employees while other states are assessing the financial consequences before a decision is made. The October 2025 update indicates that more states are being pressured by the employee unions to follow the path of those that have already restored OPS.
OPS vs NPS vs UPS
| Feature | Old Pension Scheme (OPS) | National Pension System (NPS) | Unified Pension Scheme (UPS) 2025 |
|---|---|---|---|
| Pension Type | Fixed, 50% of last salary | Market-linked, based on returns | Hybrid: Guaranteed + Market-linked |
| Employee Contribution | None | 10% of basic + DA | 10% of basic + DA |
| Government Contribution | Fully funded by govt | 14% of basic + DA | 14% of basic + DA |
| Risk Factor | No risk | Market dependent | Balanced risk |
| Fiscal Burden | High on govt | Moderate | Moderate, more sustainable |
Effects on Employees
The implications of the October 2025 update for the employees are clearer retirement benefits. The employees covered by OPS still are provided with fixed pensions while the NPS subscribers have an option to move to UPS for a mixture of safe and profitable. Retired people can look forward to more stability and their younger counterparts can plan for the long term with confidence.
Conclusion
The Old Pension Scheme October 2025 update has once again brought to the forefront the government’s balancing act between the Indian workforce’s needs and the government’s fiscal responsibility. With the UPS model delivering a hybrid solution, employees are more likely to receive predictable pensions without placing an undue financial burden on the states. The tug of war between OPS and NPS may go on, but UPS is being recognized as a feasible and practical compromise for India’s working population.
