Unified Pension Scheme: A Sustainable Shift in India's Pension Policy

The Indian government has confirmed that the Old Pension Scheme (OPS) will not be reinstated, Parliament was informed on Monday. The government maintains the National Pension System (NPS) for central government employees, with the Finance Minister citing fiscal liabilities as a reason for the shift.

The NPS, a defined contribution-based scheme, was launched for central government employees joining after January 1, 2004, excluding the armed forces. To improve pensionary benefits, a committee was established, leading to the introduction of the Unified Pension Scheme (UPS) under NPS, aiming to provide defined retirement benefits.

UPS was officially introduced via a government notification on January 24, 2025. It offers an assured payout on retirement at 50% of the average basic pay for 25 years of service, with provisions for lesser service periods. Additionally, employees can opt for benefits under the CCS Pension Rules in case of death or invalidation during service.

(With inputs from agencies.)