The Government of India has clarified its position on the restoration of the Old Pension Scheme (OPS), the financial sustainability of the National Pension System (NPS), and the Unified Pension Scheme (UPS). The clarification was given in the Lok Sabha on 10 August 2026 in response to Unstarred Question No. 3636 raised by Shri Aditya Yadav.
The Government stated that it had moved away from OPS because of its unsustainable fiscal liability on the Government exchequer. It also pointed out that restoration of OPS in States is a matter of State policy discretion and that the Comptroller and Auditor General (CAG) has highlighted the fiscal implications of reverting to OPS.
At the same time, the Government highlighted the introduction of the Unified Pension Scheme (UPS) from 1 April 2025 as an option under NPS aimed at improving pensionary benefits for eligible Central Government employees.
OPS Restoration: What Did the Government Say?
The issue of restoration of the Old Pension Scheme (OPS) has been a major subject of discussion among Government employees and employee organisations.
In the Lok Sabha reply dated 10 August 2026, the Ministry of Finance explained that the Government moved away from OPS because of the financial burden associated with it.
According to the Government’s response, the restoration of OPS in the States falls under State policy discretion. However, the Government also referred to CAG observations regarding the financial consequences of reverting to the old pension system.
This means that the Central Government’s present position remains that a return to the traditional OPS is not being pursued at the Central Government level.
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What Was Asked in Lok Sabha Question No. 3636?
The question raised several important issues concerning OPS and NPS.
The Government was asked about:
- The official position and fiscal calculations concerning demands for restoration of OPS.
- The structural limitations, market risks and annuity-related concerns associated with NPS.
- Whether any high-level committee had been constituted to modify NPS and guarantee a defined minimum pension.
- The total pension corpus accumulated under PFRDA from Central Government employees’ contributions.
The answer was given by Minister of State for Finance Shri Pankaj Chaudhary.
Government’s Position on Old Pension Scheme
The Government’s response makes its position on OPS particularly clear.
The Central Government stated that it had moved away from OPS because of its:
“unsustainable fiscal liability on the Government exchequer.”
Under the traditional pension arrangement, pension expenditure creates a long-term liability for the Government.
The Government therefore considers the defined-contribution framework under NPS and the subsequent introduction of UPS as mechanisms intended to provide pension benefits while maintaining a different fiscal structure.
What Did the Government Say About State Governments Restoring OPS?
An important distinction has been made between the Central Government and State Governments.
According to the Lok Sabha reply, restoration of OPS in States falls under State policy discretion.
Therefore, decisions taken by individual State Governments to restore or move towards OPS are separate from the Central Government’s pension policy for Central Government employees.
The Government also referred to recent CAG State Finance Audit Reports, which have highlighted the fiscal implications associated with reverting to OPS.
NPS Continues as a Defined-Contribution Pension Scheme
The Government described the National Pension System (NPS) as a defined-contribution pension scheme introduced for Central Government employees, except the Armed Forces, joining Government service on or after 1 January 2004.
Under NPS, contributions are made by both:
- The employee
- The Central Government/employer
The accumulated contributions are invested according to the applicable pension fund and investment framework.
The ultimate retirement benefit is linked to the accumulated pension corpus and the applicable payout mechanism.
Unified Pension Scheme (UPS): Government’s Alternative
One of the most significant points in the Government’s answer is the reference to the Unified Pension Scheme (UPS).
The Government stated that, based on the deliberations of a committee constituted under the chairpersonship of the then Finance Secretary, and after discussions with stakeholders, UPS was introduced with effect from 1 April 2025 as an option under NPS.
The objective was to improve pensionary benefits for eligible Central Government employees.
UPS provides an inflation-linked defined benefit framework with an assured payout, subject to the conditions prescribed under the scheme.
The Government’s reply specifically mentions a minimum assured payout of ₹10,000 per month after retirement, subject to the applicable conditions.
OPS vs NPS vs UPS: Understanding the Difference
For Government employees, understanding the basic distinction is important.
| Feature | OPS | NPS | UPS |
| Basic structure | Defined-benefit pension | Defined-contribution | Defined-benefit features within NPS framework |
| Employee contribution | Traditional OPS structure | Contribution-based | Operates as an option under NPS |
| Investment-linked corpus | No | Yes | Based on prescribed UPS/NPS framework |
| Assured benefit | Traditional pension formula | Not a conventional fixed pension guarantee | Assured payout subject to conditions |
| Inflation linkage | Through applicable pension/DA framework | Depends on corpus/annuity structure | Inflation-linked benefits |
| Central Government position | Not being restored | Continues | Introduced from 1 April 2025 |
Note: This table is a simplified comparison. Actual pension entitlement depends on the applicable rules, service period, date of joining, option exercised and other conditions.
Government Says High-Level Committee Was Already Constituted
Another important point in the Lok Sabha answer is that the Government had already constituted a committee under the chairpersonship of the then Finance Secretary to suggest measures for modifying NPS.
The committee considered issues related to pensionary benefits and held discussions with stakeholders.
The Government subsequently introduced Unified Pension Scheme (UPS) with effect from 1 April 2025.
Therefore, the Government’s response indicates that the policy response to concerns regarding NPS has been the introduction of UPS rather than restoration of OPS.
₹3.65 Lakh Crore NPS Assets: Government Reveals Latest Figure
The Lok Sabha reply also provides an important figure regarding the pension assets accumulated under NPS.
According to the Government:
Total Assets Under Management (AUM) under NPS for Central Government Employees
As on 26 July 2026: ₹3.65 lakh crore
This is a significant pension corpus accumulated under the NPS framework for Central Government employees.
The figure demonstrates the considerable scale of the NPS system after more than two decades of operation.
Why the ₹3.65 Lakh Crore Figure Is Important
The NPS corpus represents contributions accumulated and invested over time for Central Government employees covered under the system.
For employees and pension stakeholders, this figure is important because it shows the scale of the pension fund and the financial assets managed within the NPS framework.
However, AUM should not be confused with the pension payable to an individual employee.
An employee’s eventual retirement benefit depends on factors such as:
- Employee contribution
- Government contribution
- Length of service
- Investment performance
- Pension corpus
- Applicable rules
- Retirement date
- Option exercised under the applicable pension framework
What Does This Mean for Central Government Employees?
The Lok Sabha reply provides several important takeaways.
1. No announcement of OPS restoration
The Government has not announced restoration of OPS for Central Government employees in this reply.
Instead, it has defended the move away from OPS on fiscal sustainability grounds.
2. NPS remains important
NPS continues to form the underlying pension framework for employees covered by it.
3. UPS is the Government’s reform measure
The Government has highlighted UPS as the mechanism introduced to improve pension benefits while retaining the contribution-based framework.
4. ₹3.65 lakh crore is under management
The Government reported NPS AUM of ₹3.65 lakh crore as on 26 July 2026 for Central Government employees.
5. State OPS decisions are different
State Governments have their own policy discretion regarding pension arrangements, and their decisions should not automatically be interpreted as a change in Central Government pension policy.
OPS Restoration Demand: Why Employees Continue to Raise the Issue
The demand for restoration of OPS has continued because employees and employee organisations have raised concerns about the uncertainty associated with market-linked pension accumulation under NPS.
The principal debate revolves around the difference between:
Defined Benefit vs Defined Contribution
Under a conventional defined-benefit model, pension is determined through a prescribed formula.
Under a defined-contribution model, the retirement benefit is linked to contributions and the accumulated corpus.
The introduction of UPS represents an attempt to address some of the concerns regarding pension adequacy while retaining the broader NPS framework.
UPS vs OPS: Why the Debate Is Still Important
The Government’s Lok Sabha answer does not mean that the debate over OPS versus NPS/UPS has ended.
Employees and associations continue to examine questions such as:
- Whether the assured payout under UPS is adequate.
- How inflation protection operates.
- How pension is calculated.
- What happens in different service-length situations.
- The treatment of family pension.
- The role of employee contributions.
- The financial implications for Government.
- Whether employees should prefer UPS or another available option under applicable rules.
Therefore, employees should examine the actual UPS rules and Government orders rather than relying solely on headlines or social-media interpretations.
Key Points from Lok Sabha Answer on OPS
Lok Sabha Question
Unstarred Question No. 3636
Date of Answer
10 August 2026
Subject
Restoration of OPS
Ministry
Ministry of Finance – Department of Financial Services
Key Government Position
The Government moved away from OPS due to its unsustainable fiscal liability.
NPS Status
NPS continues as a defined-contribution pension system for covered Central Government employees.
UPS
Introduced from 1 April 2025 as an option under NPS.
NPS AUM
₹3.65 lakh crore as on 26 July 2026 for Central Government employees.
What Should Government Employees Do Now?
Employees should avoid making pension decisions based solely on the political debate surrounding OPS.
Instead, they should carefully examine their individual circumstances.
Consider:
- Date of joining Government service.
- Applicable pension scheme.
- Length of qualifying service.
- Current pension corpus, where applicable.
- UPS eligibility.
- Option already exercised, if applicable.
- Expected retirement date.
- Family pension implications.
- Applicable Government orders and rules.
For employees who have questions regarding their pension option, it is advisable to refer to the latest official Government orders and applicable rules.
Important for NPS and UPS Subscribers
The latest Lok Sabha answer should be understood as a policy clarification, not as a new order changing the pension scheme.
There is no indication in the answer that OPS has been restored for Central Government employees.
Instead, the Government has reiterated:
OPS → Fiscal concerns
NPS → Defined-contribution pension system
UPS → Government’s enhanced pension-benefit option introduced from 1 April 2025
Conclusion
The Government’s latest Lok Sabha response on 10 August 2026 provides an important update on the continuing OPS-NPS-UPS debate.
The Central Government has maintained that it moved away from OPS because of the fiscal liability associated with the old pension system. At the same time, it has pointed to the Unified Pension Scheme (UPS) as the reform introduced to improve pension benefits for eligible Central Government employees.
The Government has also disclosed that NPS assets under management for Central Government employees stood at ₹3.65 lakh crore as on 26 July 2026.
For Central Government employees and pension stakeholders, the key message is clear:
There is no announcement of restoration of OPS in this Lok Sabha reply. The Government’s present pension policy continues to focus on NPS and the UPS framework.
Employees should therefore follow official Government notifications and detailed scheme rules before taking any decision regarding their pension option.
Jai Hind.