These Central Govt. Employees Get One-Time Option To Return To Old Pension Scheme

The Centre has extended a one-time opportunity to select government employees to switch from the new pension scheme to the old pension scheme. But once opted, they cannot reverse to NPS again

Outlook Money
March 6, 2023
These Central Govt. Employees Get One-Time Option To Return To Old Pension Scheme

Certain central government employees covered by the National Pension System (NPS) will now have the option to switch to the Central Civil Services (Pension) Rules, 1972, commonly referred to as the Old Pension Scheme (OPS). This is, however, a one-time option that should be exercised by August 31, 2023. Once opted, they cannot reverse to the NPS again.


The Centre gave this one-time option after receiving representations from government employees whose jobs were notified before the NPS notification came. In fact, these employees should have come under the domain of OPS, but they were appointed late, and so they were covered under NPS.

The Department of Pension and Pensioners’ Welfare (DoPPW) issued an office memorandum on March 3, 2023, describing eligibility for switching to the OPS.


A central government employee, except for those in the armed forces, who has been appointed to a post or vacancy advertised for recruitment prior to December 22, 2003, is eligible to switch to the OPS.

DoPPW said in a notification: “It has now been decided that in all cases where the central government civil employee has been appointed against a post or vacancy which was advertised and/or notified for recruitment and/or appointment, prior to the date of notification for National Pension System i.e., December 22, 2003, and is covered under the National Pension System on joining service on or after January 1, 2004, may be given a one-time option to be covered under the CCS(Pension) Rules, 1972 (now 2021).”

“Those government servants who are eligible to exercise the option in accordance with…above, but who do not exercise this option by the stipulated date, shall continue to be covered by the National Pension System,” DoPPW added.


NPS requires government employees to contribute 10 per cent of their basic pay, dearness pay, and dearness allowance every month, which is deducted from their salary bill.

An equal amount will be provided by the government, and both contributions will be held in a non-withdrawable account from which 40 per cent will not be withdrawable upon retirement and then used to provide a monthly pension. The subscriber will be taxed on 40 per cent of this corpus when he/she receives his/her pension. Here, OPS has comparative advantage in terms of tax payment.

OPS offers monthly payment that is equivalent to 50 per cent of the last salary drawn.

Notably, state governments of Rajasthan, Chhattisgarh, and Jharkhand had asked the Centre to return the accumulated corpus of subscribers under NPS to be allocated towards OPS. The Centre informed that there is no provision under law to refund the NPS funds to any of the state governments.

“The collected money will not come into the hands of the state government. When the right time comes, only then will this money be given to the employee,” IANS quotes Union Minister of Finance Minister Nirmala Sitharaman.

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