Old Pension Scheme – In a move that’s going to change the game for thousands of government employees, the Indian government is bringing back the Old Pension Scheme (OPS) starting in 2025. After years of back and forth over the New Pension Scheme (NPS), this decision comes as a massive relief especially for those nearing retirement or who were appointed before 2004.
What is the Old Pension Scheme?
The Old Pension Scheme, or OPS, is a retirement benefit plan where eligible government employees are guaranteed a monthly pension after they retire. This pension is calculated as 50 percent of their last drawn salary along with dearness allowance (DA), making it a stable and predictable source of post-retirement income.
One major difference from the New Pension Scheme is that employees under OPS don’t need to invest any part of their salary into the scheme. Plus, the pension continues for life and extends partial support to the family after the pensioner’s death.
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Who Can Benefit from OPS in 2025?
Not all employees will automatically be covered under OPS. The scheme will be offered only to a particular group. Here’s what the eligibility looks like:
- You must have joined government service before January 1, 2004
- You should not have withdrawn your funds from the NPS account
- You must have been appointed through official government channels (not contractual or outsourced)
- Both central and state government employees can benefit, but state-level adoption will depend on the respective governments
If you joined after 2004, unfortunately, you’ll stay under the NPS unless new rules are introduced in the future.
Key Benefits of the Old Pension Scheme
Let’s look at why OPS is making a strong comeback and why employees are welcoming it:
- Fixed and Predictable Pension
You’ll receive 50 percent of your last basic salary plus DA as your monthly pension. - No Market Risks
Unlike NPS, which is tied to market performance, OPS gives guaranteed returns. - No Salary Deduction
Employees don’t have to contribute anything. It’s fully funded by the government. - Dearness Allowance Benefit
Your pension will increase with inflation because it’s linked with DA revisions. - Family Pension
In case of the retiree’s death, their spouse or dependent family member will continue to receive pension support.
OPS vs NPS – What’s the Real Difference?
Here’s a quick comparison that helps clear the confusion:
| Feature | Old Pension Scheme | New Pension Scheme |
|---|---|---|
| Type | Defined Benefit | Defined Contribution |
| Monthly Pension | Fixed | Depends on market |
| Employee Contribution | None | 10% of salary |
| Government Contribution | Not needed | 14% of salary |
| Market Risk | None | High |
| DA Benefits | Yes | No |
| Family Pension | Yes | Partial |
| Early Withdrawals | Not allowed | Allowed with conditions |
States Supporting OPS in 2025
Several state governments are already either implementing or considering a return to OPS. These include:
- Rajasthan, Chhattisgarh, Punjab, Himachal Pradesh – Implemented
- Jharkhand, Kerala – Under review
- Tamil Nadu – Demanding return to OPS
- West Bengal – Never moved to NPS
So if you work in one of these states and meet the criteria, there’s a good chance you’ll benefit soon.
How to Apply for OPS in 2025
If you qualify and want to switch to the Old Pension Scheme, here’s what the process generally involves (though official circulars will provide the final steps):
- Confirm Eligibility – You must have joined before 2004 and not taken out your NPS funds.
- Submit an Application – File a written request with your HR or department head.
- Attach Necessary Documents – You’ll need your appointment letter, joining report, service book details, and a declaration that you haven’t withdrawn NPS money.
- Wait for Department Review – The department will verify and process your application.
- Receive Confirmation – Once approved, you’ll be notified officially and your OPS status will be confirmed.
Documents Required:
- Appointment order
- Service record
- Latest salary slips
- Proof of identity
- NPS non-withdrawal declaration
Will It Affect the Government’s Budget?
Yes, reviving OPS is definitely going to increase the government’s financial load because pensions under OPS are paid from the government’s own fund—not from any investment pool like NPS. Economists have raised concerns about the long-term sustainability of this model. However, for employees, it’s a major win. It offers peace of mind, stability, and a guaranteed income post-retirement.
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The return of the Old Pension Scheme is one of the biggest reforms for government employees in recent years. While there’s still debate over the economic implications, there’s no doubt that this move brings massive relief to those who’ve been demanding a stable, risk-free pension system.
If you’re a pre-2004 government employee, now is a good time to start preparing the necessary documents and checking in with your HR department. Keep an eye out for the official circular so you can apply and make the switch smoothly.
