Is Punjab heading towards UPS-like pension scheme? Here’s what its notification suggests

The Punjab government in November 2022 announced that all of its employees covered under the National Pension System (NPS) would be given the benefits of the Old Pension Scheme (OPS). Now, in its new notification dated September 13, 2026, the Punjab government has said that while the intent of the November 2022 notification is to provide the OPS to its employees, the nature of the scheme will continue to be the ‘defined contributory pension scheme’.

The state government further said that it is taking an extension of four months where it would comprehensively examine the administrative feasibility, financial implications, and operational modalities for the implementation of the proposed modified pension scheme after thorough examination of recent developments, including the UPS.

The Punjab government also said that it would study the best practices being followed in other states and recommend any other alternative pension model for the State.


Does Punjab government want to adopt UPS-like scheme for its pensioners?

The notification doesn’t clarify whether the proposed pension scheme will be on the lines of the UPS, but it gives an impression that the scheme can be similar to the one where an employee and their employer both contribute to the retirement corpus of the employee, and where employees also get assured pension on completion of certain years of service. While the UPS is a scheme within the NPS ecosystem, it is available only to government employees.


Under which pension scheme(s) are Punjab government employees covered?

At present, Punjab government employees who are not covered under the OPS are covered under the NPS. However, when the Aam Aadmi Party came to power, it announced the return of OPS for state government employees.

What is the difference between Old Pension Scheme (OPS), National Pension System (NPS), and the Unified Pension Scheme (UPS)?

Old Pension Scheme (OPS)

It is a defined-benefit, non-contributory scheme, where employees don’t contribute to their retirement corpus but get an assured pension at retirement. The pension amount is 50% of the last pay drawn or the average of the basic pay drawn during the last 10 months of service, whichever is higher.

National Pension System (NPS)

It’s a contributory and market-linked scheme where both the employee and employer contribute to the retirement corpus of the employee. In the NPS, which came into effect on January 1, 2004, the employee can choose among equity and debt investment options. The pension amount is not fixed and is based on the value of the retirement corpus at the age of retirement.

Unified Pension Scheme (UPS)

It is also a contributory pension scheme like the NPS, but it also provides assured pension security like the OPS. UPS subscribers can get a minimum of Rs 10,000 monthly pension on the completion of at least 10 years of service. They can get a maximum of 50% of the average basic pay from the last 12 months upon completion of at least 25 years of service.