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Government Services

Old Pension Scheme vs NPS vs UPS: How the Three Compare

OPS pays 50% of last pay with no employee contribution; NPS pays what your corpus buys; UPS assures 50% of average basic pay after 25 years.

PN

Written by Priya Nair

Published 9 October 2026·7 min read

On this page8 sections
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The Old Pension Scheme (OPS) pays central government retirees 50% of their last pay with no employee contribution, and it covers only people appointed on or before 31 December 2003. The National Pension System (NPS) pays whatever your invested contributions buy. The Unified Pension Scheme (UPS), an option inside NPS since 1 April 2025, adds an assured payout of 50% of average basic pay after 25 years.

Key facts

Feature OPS NPS UPS
Who is covered (central government) Appointed on or before 31 December 2003 Joined on or after 1 January 2004 (default) NPS members who opted in; new recruits within 30 days of joining
Employee pays Nothing towards pension 10% of basic pay + DA 10% of basic pay + DA
Government pays Pension from the budget 14% to your account 10% to your account plus about 8.5% to a pooled fund
Pension amount 50% of last pay or 10-month average, whichever is higher Depends on corpus and annuity 50% of 12-month average basic pay after 25 years
Minimum ₹9,000 a month None ₹10,000 a month after 10 years
Dearness relief Yes No Yes
Family pension 30% of pay (50% for a limited period in some cases) No fixed family pension; depends on the corpus and exit rules 60% of the payout

The Finance Ministry told the Lok Sabha on 10 August 2026 that there is no proposal to restore OPS for central government employees, citing its “unsustainable fiscal liability”, as Moneycontrol reported.

Who each scheme covers

OPS. The Central Civil Services (Pension) Rules, 2021 apply to civil servants appointed on or before 31 December 2003. NPS became compulsory for central government recruits from 1 January 2004, except the armed forces. A Department of Pension and Pensioners’ Welfare memo of 3 March 2023 let staff recruited against vacancies advertised on or before 22 December 2003 opt back into OPS. That one-time option closed on 31 August 2023.

NPS. Every central government employee who joined on or after 1 January 2004, and did not choose UPS, stays in NPS. Most states also moved new recruits to NPS.

UPS. Existing staff and past NPS retirees had until 30 November 2025 to opt in. New recruits still get 30 days from joining. Our UPS guide covers the opt-in and the one-time switch back to NPS.

Contribution rules side by side

OPS is non-contributory. Employees on OPS subscribe to the General Provident Fund (GPF), at least 6% of emoluments, but that is their own savings, not a pension payment.

Under NPS and UPS you contribute 10% of basic pay plus DA. The difference is where the government’s money goes:

  • NPS: 14% goes straight into your individual account, so the whole amount grows in your name.
  • UPS: 10% goes into your account and about 8.5% goes into a pooled corpus that backs the assured payout.

So a UPS member has less in their own account than an NPS member on the same pay. In return, the payout does not depend on how markets perform.

How the pension amount is set

OPS

Rule 44 of the CCS (Pension) Rules, 2021 sets the pension at 50% of emoluments or average emoluments of the last 10 months, whichever is higher. You need at least 10 years of qualifying service. The pension is at least ₹9,000 and at most ₹1,25,000 a month. You can also commute up to 40% of the pension for a lump sum, and the commuted part is restored after 15 years.

NPS

Nothing is fixed. At retirement, a government subscriber can take up to 60% of the corpus as a lump sum and must use at least 40% to buy an annuity. The annuity rate you get decides your monthly income. Our NPS withdrawal rules explain the exit options, and the NPS calculator gives a rough corpus estimate.

UPS

The assured payout is 50% of your average basic pay over the last 12 months, with 25 years of service. Between 10 and 25 years it is proportionate. On top, you get a lump sum of one-tenth of monthly basic pay plus DA for every completed six months of service. Taking the 60% lump sum from your corpus cuts the assured payout proportionately.

A worked example

Take a central government employee who retires on a basic pay of ₹80,000, with no pay cut in the last year:

Service OPS pension UPS assured payout
25 years ₹40,000 ₹40,000
15 years ₹40,000 Proportionately lower, at least ₹10,000

Both figures exclude dearness relief. OPS reaches the full 50% after 10 years of qualifying service; UPS needs 25. For NPS, the figure depends on the corpus built over the years and the annuity bought with it.

DA, family pension and tax treatment

Dearness relief

OPS pensions get dearness relief, and the CCS rules add extra pension from age 80: 20% of basic pension from 80, rising to 100% at 100. UPS also pays dearness relief, linked to the All India Consumer Price Index for Industrial Workers. NPS has no dearness relief. What you receive is what your annuity plan pays.

Family pension

ItemDetails
OPS30% of pay, with a minimum of ₹9,000 and a maximum of ₹75,000 a month. If the employee dies in service, the family gets 50% of pay for 10 years. If a pensioner dies, that 50% rate runs for 7 years or until the date they would have turned 67, whichever is less.
UPSthe legally wedded spouse gets 60% of the payout drawn just before death, with dearness relief.
NPSthere is no fixed family pension. What the family receives depends on the corpus and the annuity or exit option chosen, so check the rules for your service with your pay and accounts office.

Tax

For FY 2025-26 returns, filed under the Income-tax Act, 1961, the employer’s NPS contribution is deductible under Section 80CCD(2) up to 14% of salary where the employer is the central or a state government. A CBDT office memorandum of 2 July 2025 applies the same NPS tax provisions to UPS. From tax year 2026-27, the Income-tax Act, 2025 moves the NPS deduction to Section 124, according to ICAI’s section-mapping guide. For OPS pensioners, commuted pension is exempt within the limits of Section 10(10A) of the 1961 Act. Monthly pension is taxed as income. A tax adviser can check how these rules apply to your own pension.

States that returned to OPS

Five states have told the Centre and the Pension Fund Regulatory and Development Authority (PFRDA) that they are moving their employees from NPS back to OPS. Their NPS funds as on 26 July 2026, from the Finance Ministry’s 10 August 2026 Lok Sabha reply as reported by Moneycontrol:

State NPS pension fund (₹ crore)
Rajasthan 53,403.89
Punjab 40,673.08
Chhattisgarh 24,030.04
Jharkhand 14,420.90
Himachal Pradesh 12,525.96

The Centre says there is no provision under the PFRDA Act, 2013 or the NPS exit regulations to refund this corpus to the states. It gave the same answer in August 2025, when it named the same five states. If you work for one of them, your state finance department’s orders decide your scheme.

For how NPS works as an investment, see our NPS guide.

Frequently asked questions

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

No. The Finance Ministry told the Lok Sabha on 10 August 2026 that no such proposal is under consideration.

Who is eligible for the old pension scheme?

Central government civil servants appointed on or before 31 December 2003. Those recruited against vacancies advertised by 22 December 2003 could opt in until 31 August 2023.

How do I check whether I am on OPS or NPS?

If you have a PRAN and NPS deductions on your pay slip, you are in NPS or UPS. OPS employees have a GPF account instead. Your drawing and disbursing officer can confirm.

Which states have the old pension scheme?

Rajasthan, Punjab, Chhattisgarh, Jharkhand and Himachal Pradesh have told the Centre they are reverting to OPS for their employees.

Is UPS the same as OPS?

No. UPS needs a 10% employee contribution and 25 years for the full 50% payout. OPS is free for the employee and pays 50% after 10 years.

Can I move from NPS to OPS now?

Not for central government employees. The last one-time option closed on 31 August 2023. You can move from NPS to UPS only as a new recruit.

Sources

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