The OPS controversy has caused heated debates to rage on throughout India in 2025 and has captured the attention of both employees and policymakers alike in the government. Under pressure of union lobbies and the current political winds, this pressing of the issue of reviving this form of defined-benefit pensions remains a burning issue. The guarantee of payments after retirement has generated optimism among people, but the side of the government and the emerging options such as Unified Pension Scheme ( UPS) are changing the scenario. This is an insight into the recent developments and we are in a better position to understand the position by 2025.
Why OPS Meets Resistance
The central government, through the Minister of Finance, Nirmala Sitharaman emphatically declared in August 2025 that there are no plans of restoring OPS to NPS-covered workers. The reason? Unaffordable pressure on the exchequer. OPS did not get contributions of its employees and was funded entirely through government reserves, inflating debts. This position was once again reinstated in the Monsoon Session of parliament crushing hopes of a complete revival.
Unified Pension Scheme: A New Dawn
In order to overcome the concerns about the market-linked returns of NPS, the government announced the UPS on January 24, 2025, which will take effect as of April 1, 2025. This plan is a combination of NPS that is contributory in nature and OPS that is characterized by its secured benefits. Those employees who have worked 25 years are entitled to half their average basic pay during the past 12 months. The shorter tenures are to entitle to proportionate pensions, such as to secure a general scope.
UPS Key features
The UPS provides a minimum of 10 000 rupees per month given to an employee with at least 10 years of employment. It has inflation-renumerated Dearness Relief and a 60-percentage family pension in case of the later demise of an employee. Unlike OPS, UPS has 10 percent staff-pay obligation and 18.5 percent share by the government and hence remains fiscally sustainable. It means that employees might change in favor of NPS to UPS till September 30, 2025, but it is indelible.
| Aspect | Old Pension Scheme (OPS) | Unified Pension Scheme (UPS) | National Pension System (NPS) | Weightage | Weightage |
|---|---|---|---|---|---|
| Pension Type Defined benefit Non- contributory Defined benefit Contributory Market-linked Contributory | |||||
| Pension Amount 50 percent of last drawn salary. 50 percent of 12 month average pay (25+ years). Varies with market returns. | |||||
| Employee Contribution None | 10% of basic pay + DA | ||||
| Government contribution Full funding | 18.5 per cent of basic pay + DA | 14 per cent of basic pay + DA | |||
| Minimum PensionNot specified 10,000 per month (10+ years)None | |||||
| Inflation Adjustment Yes, through Dearness Allowance Yes, through Dearness Relief |
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