No Old Pension Scheme restoration: Sitharaman informs Lok Sabha
Finance Minister Nirmala Sitharaman submitted a written reply in Lok Sabha stating that the Indian government has no plans to reinstate the Old Pension Scheme (OPS) for central government employees. The government cited unsustainable fiscal liabilities to justify its decision to go continue with the National Pension System (NPS).
New Delhi: Union Finance Minister Nirmala Sitharaman on Monday informed Lok Sabha that there is no proposal under consideration of the Government for restoration of Old Pension Scheme (OPS) in respect of central government employees covered under National Pension System (NPS).
In a written reply to Lok Sabha, Sitharaman said the government had moved away from OPS due to its unsustainable fiscal liability on the government exchequer.
The government introduced NPS for central government employees (except armed forces) joining service on or after January 1, 2004.
The finance minister said with an aim to improve the pension benefits for such employees, the government formed a committee under the chairpersonship of the then Finance Secretary to suggest measures to modify the NPS.
Details of Unified Pension Scheme (UPS)
The committee held discussions with stakeholders and based on the feedback, Unified Pension Scheme (UPS) was introduced as an option under NPS. The retirement scheme is aimed at providing defined benefits after retirement to the central government employees covered under the NPS.
UPS, introduced on January 24, 2025, as an option under NPS, is designed in a way to ensure payment of assured payouts while also maintaining fiscal sustainability of the fund, Sitharaman stated.
In July 2025, the Government informed to provide tax benefits as available under NPS shall apply mutatis mutandis to UPS as it is an option under NPS. "These provisions ensure parity with the existing NPS structure and provide substantial tax relief and incentives to employees opting for the Unified Pension Scheme,” the release had stated.
Taxation Laws (Amendment) Bill introduced
Meanwhile, Sitharaman introduced the Taxation Laws (Amendment) Bill, 2025, which aims to provide tax exemptions to subscribers of the Unified Pension Scheme. The Taxation Laws (Amendment) Bill, 2025, seeks to amend the Income-tax Act, 1961 and also to amend the Finance Act, 2025.