Government employee unions have been demanding for a long time to abolish the National Pension System (NPS) and implement the Old Pension Scheme (OPS). This debate has started again in the discussions regarding the 8th Pay Commission, and union organizations have also admitted that it may not be possible to completely abolish NPS and return to OPS. OPS in India is a government-funded retirement scheme that guarantees a fixed monthly pension for life. Under OPS, retiring employees get the benefit of guaranteed pension and dearness allowance (DA) linked to their last salary.
Why do employee unions want to return to OPS?
Demanding OPS, All India NPS Employees Federation (AINPSEF) in its memorandum said that it provides social security and economic stability after retirement. Additionally, this provides retirees with a fixed income after retirement and also protection from inflation. Under OPS, employees get 50 percent of the last basic salary and DA as pension after retirement. On the other hand, NPS is market linked and does not guarantee a fixed pension amount.
According to the memorandum of AINPSEF, the post-retirement income in NPS is uncertain as the pension payment depends on the total amount accumulated (corpus). Therefore, some employees receive very little pension, especially those who joined regular government service later. The memorandum claims that in some cases, the pension under NPS has ranged between Rs 200 and Rs 2,000 per month.
Why is it difficult to completely return to OPS?
In almost 20 years of NPS, contributions of more than Rs 16.5 lakh crore from employees and the government have been deposited in the system. As a result, a move to completely eliminate the NPS and revert to OPS would involve huge economic costs and complex administrative and market challenges.
NPS funds are invested through LIC, SBI, UTI and other government-linked financial institutions. Dr. Manjit Singh Patel, National President of All India NPS Employees Federation and National Mission for Old Pension Scheme India, told India Today that if this money is suddenly withdrawn, then first of all it will be difficult because it has been invested in different places. Secondly, the value of money can also be affected. Also, if NPS is abolished completely, this investment flow will stop. This may have a negative impact on liquidity (availability of cash) in the market and financial institutions.
Six months of 8th CPC completed
The process of the 8th CPC formed under the chairmanship of former Supreme Court Justice Ranjana Prakash Desai started in November 2025 and now it has completed six months. This commission includes former IAS officer Pankaj Jain as member-secretary and Professor Pulak Ghosh, professor of finance and member of the Prime Minister’s Economic Advisory Council, as member. The decisions of the 8th CPC will impact approximately 50 lakh central government employees (which includes defense employees) and approximately 65 lakh retired pensioners of the central government (which also includes defense retirees).
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