Who is eligible for the old pension scheme?

Central government civilian employees who joined before 1 January 2004, the armed forces, and those who used the 2023 one-time option because their vacancy was advertised before 22 December 2003.

How is pension calculated under the old pension scheme?

50% of the last basic pay or of the average basic pay of the last 10 months, whichever is higher, with a minimum of ₹9,000 and a maximum of ₹1,25,000, plus Dearness Relief.

Do employees contribute under the old pension scheme?

Not towards pension. They contribute to the General Provident Fund (GPF), which is their own savings and is paid back with interest at retirement.

Is the old pension scheme coming back for central government employees?

No such decision has been made. The central government offers NPS and, since April 2025, the Unified Pension Scheme as an option.

Old pension scheme vs NPS

Updated 11 October 2026

The old pension scheme (OPS) pays a retired central government employee 50% of their last basic pay every month for life, plus Dearness Relief, without the employee contributing anything towards it. The National Pension System (NPS), which replaced it for central government recruits from 1 January 2004, is a contributory scheme whose pension depends on how much the invested corpus grows. Since April 2025 there is also a middle option, the Unified Pension Scheme (UPS).

Who is on which scheme

OPS: central government civilian employees who joined before 1 January 2004, and the armed forces, which were never moved to NPS.
NPS: central government employees (except the armed forces) who joined on or after 1 January 2004, unless they opted for UPS.
Exception: a one-time option was given in 2023 to employees who joined on or after 1 January 2004 against vacancies advertised or notified before 22 December 2003, the date NPS was notified. Many of them moved to OPS.
States: most states adopted NPS for their own employees, and a few announced a return to OPS from 2022 onwards. State rules differ and are not covered here.

Key differences

Feature	Old pension scheme	NPS
Type	Defined benefit	Defined contribution, market-linked
Employee contribution towards pension	None (employees save separately in GPF)	10% of basic + DA
Government contribution	None; pension paid from the budget	14% of basic + DA
Monthly pension	50% of last basic pay or average of last 10 months, whichever is more	Annuity from at least 40% of the corpus
Minimum service for pension	10 years, and full 50% from 10 years	No minimum; benefit depends on corpus
Minimum and maximum	₹9,000 to ₹1,25,000 a month (basic pension)	No minimum or maximum
Inflation protection	Dearness Relief twice a year, plus revision by pay commissions	None on a standard annuity
Commutation	Up to 40% of pension for a lump sum	Up to 60% of corpus as a tax-free lump sum
Family pension	30% of last pay (50% for a period), plus DR	Depends on annuity option
Gratuity	Yes	Yes

How OPS pension is worked out

Under the CCS (Pension) Rules, 2021, pension is 50% of emoluments, meaning either the last basic pay or the average basic pay of the last 10 months, whichever is more beneficial. You need 10 years of qualifying service, and since the 6th CPC the full 50% is paid to anyone with 10 years or more; there is no longer a cut for service below 33 years. Nine years and nine months counts as 10 years.

Worked example. An OPS employee retires with a last basic pay of ₹1,00,000. The average of the last 10 months is ₹98,500, so the last pay is more beneficial. Basic pension = 50% × ₹1,00,000 = ₹50,000. DR at 60% = ₹30,000, so monthly pension = ₹80,000. If the employee commutes 40% (₹20,000) at age next birthday 61, the lump sum is ₹20,000 × 12 × 8.194 = ₹19,66,560 and basic pension falls to ₹30,000 for 15 years, while DR stays at ₹30,000 because it is calculated on the full ₹50,000. They also receive their GPF balance and gratuity.

How NPS pension is worked out

Under NPS, 10% from the employee and 14% from the government go into the employee's account every month and are invested in a mix of government bonds, corporate bonds and equity through pension fund managers. At retirement, at least 40% of the corpus must be used to buy an annuity that pays a monthly pension, and up to 60% can be withdrawn tax-free. The annuity is usually a fixed amount, so its value falls with inflation, unlike OPS pension. The NPS calculator projects the corpus and pension for your inputs.

Where UPS fits

The Unified Pension Scheme sits between the two. It keeps the 10% employee contribution of NPS, raises the government share to 18.5%, and in return assures 50% of the average basic pay of the last 12 months, but only for 25 years of service, with a proportionate amount from 10 years and a minimum of ₹10,000. It also gives DR and a 60% family payout. The big remaining gaps compared with OPS are the employee contribution and the 25-year requirement for the full 50%.

Why the debate continues

OPS gives employees certainty but has no fund behind it, so the cost falls on future budgets, which is the reason NPS was introduced. Employee unions continue to demand a return to OPS, including before the 8th Pay Commission, whose terms of reference mention the unfunded cost of non-contributory pension schemes. As of October 2026, the central government's position remains NPS with the UPS option. Official notices are on the DoPPW and PFRDA websites.