India’s Finance Ministry has reaffirmed its stance against reviving the Old Pension Scheme for central government employees, citing fiscal sustainability while facing ongoing demands from employee groups seeking guaranteed retirement benefits.
India’s Finance Ministry has again ruled out any plan to revive the Old Pension Scheme for central government staff covered by the National Pension System, saying the proposal is not under consideration. The clarification came in Parliament amid continued pressure from employee groups that have pushed for a return to the older, guaranteed-payout model.
The answer keeps alive a long-running policy divide over retirement security and fiscal discipline. The old scheme promised a pension linked to final salary and years of service, with the government meeting the full cost. By contrast, the National Pension System, introduced in 2004, is a defined-contribution arrangement in which retirement income depends partly on accumulated savings and investment performance.
Officials have repeatedly argued that restoring the old model would create an unsustainable burden on the public finances. That is the central reason the government has stood by the current framework and has instead added the Unified Pension Scheme as an option within the broader NPS structure. The UPS, which takes effect from April 1, 2025, is intended to offer defined benefits after retirement while preserving fiscal control.
According to the Pension Fund Regulatory and Development Authority, the NPS is open beyond central government staff and can be used voluntarily by Indian citizens in India and overseas who are aged between 18 and 85. The scheme remains market-linked and contribution-based, with tax advantages and the potential for higher returns, but also greater risk than the old guaranteed system. For employees who still favour certainty over market exposure, the latest government statement makes clear that any return to the old regime remains off the table.
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