No proposal under consideration for restoration of Old Pension Scheme: MoS for Finance Pankaj Chaudhary

New Delhi: There is no proposal under consideration for restoration of the Old Pension Scheme (OPS) due to its unsustainable fiscal liability on the Government exchequer, Minister of State for Finance Pankaj Chaudhary said on Monday.

State Governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh have informed the Centre and the Pension Fund Regulatory and Development Authority (PFRDA) about reversion from National Pension System (NPS) to OPS, he said in a written reply in the Lok Sabha.

Also read: Unfunded OPS likely to exert severe pressure on their finances: MoS Finance


"There is no provision under PFRDA Act, 2013, read along with PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, and other relevant Regulations, vide which the accumulated corpus of the subscribers viz Government contribution, Employees' contribution towards NPS along with accruals, can be refunded and deposited back to the State Government," he said.

Replying to another question, Chaudhary said the restoration of OPS in the States falls exclusively under State policy discretion.

"However, the Comptroller and Auditor General (CAG), in its recent State Finance Audit Reports, has highlighted the fiscal implications of reversion to OPS by the States. The National Pension System (NPS) is a defined contribution-based scheme which was introduced for Central Government employees (except armed forces) joining service on or after January 1, 2004," he said.

With a view of improving upon the pensionary benefits for such employees, a Committee was constituted under the chairpersonship of the then Finance Secretary to suggest measures to modify the NPS, Chaudhary added.

Based on the deliberations of the Committee with stakeholders, the Unified Pension Scheme (UPS) has already been introduced, with effect from April 1, 2025, as an option under NPS with the objective of providing inflation-linked defined benefits with a minimum assured payout of Rs 10,000 per month, after retirement, to the Central Government employees covered under the NPS, he said.

The UPS is a fund-based payout system that relies on the regular and timely accumulation and investment of applicable contributions made by both the employee and the employer (Central Government) to provide an assured monthly payout after retirement, he said.

The total assets under management (AUM) under NPS for Central Government employees as on July 7 is Rs 3.65 lakh crore.

Also read: PFRDA approves four new pension funds, increasing total to 14 for NPS subscribers

In reply to another question, Chaudhary said the Government's fiscal deficit has reduced from 6.7 per cent of GDP in 2021-22 to 4.4 per cent of GDP in 2025-26 (Provisional).

Fiscal deficit in BE 2026-27 has been estimated at Rs 16,95,768 crore (4.3 per cent of GDP), he said.

The steps taken by the Government to adhere to the fiscal deficit and debt consolidation paths that were announced in the previous budgets, while keeping in mind the potential growth trends and emergent development needs, include a focus on Effective Capital Expenditure to spur economic growth, he said.

For example, he said, in BE 2026-27 the borrowings of the Government (Rs 16.96 lakh crore) will be utilised for meeting the Effective Capital Expenditure of Rs 17.15 lakh crore.