**Executive Summary**
This document is a response to a parliamentary question regarding the fiscal implications of states reverting from the National Pension Scheme (NPS) to the Old Pension Scheme (OPS). It clarifies that such shifts fall under state policy discretion but highlights concerns about the long-term financial risks associated with OPS, including increased liabilities and constraints on capital expenditure. The information is based on data available as of December 31, 2025.
**Key Points / Main Content**
* **State Discretion:** States have the authority to extend NPS to their employees. Shifts from NPS to OPS fall exclusively under State policy discretion.
* **States reverting to OPS:** The State Governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh, have informed the Government/PFRDA about reversion from National Pension System (NPS) to Old Pension Scheme (OPS).
* **Accumulated NPS Corpus:** As of 31.12.2025, the accumulated NPS corpus for states that have informed about reverting to OPS is as follows:
* Chhattisgarh: 2,87,859 subscribers; Total contribution amount is Rs. 12,359.95 cr; Total Asset Under Management is Rs. 22,762.93 cr.
* Himachal Pradesh: 1,10,425 subscribers; Total contribution amount is Rs. 8,104.96 cr; Total Asset Under Management is Rs. 11,128.10 cr.
* Jharkhand: 1,17,352 subscribers; Total contribution amount is Rs. 8,142.32 cr; Total Asset Under Management is Rs. 14,428.28 cr.
* Punjab: 2,09,514 subscribers; Total contribution amount is Rs. 23,828.31 cr; Total Asset Under Management is Rs. 33,905.12 cr.
* Rajasthan: 5,19,800 subscribers; Total contribution amount is Rs. 28,364.67 cr; Total Asset Under Management is Rs. 51,434.26 cr.
* **Fiscal Risks of OPS:**
* CAG reports indicate that OPS may lead to increased fiscal liabilities and undermine State-level Fiscal Responsibility and Budget Management (FRBM) targets.
* RBI reports indicate that savings from OPS are short-lived and can lead to accumulation of unfunded pension liabilities.
* The pension burden on OPS is projected to outpace NPS contributions by 2030s, posing risks to fiscal sustainability.
* **FRBM Compliance:** All States have enacted their Fiscal Responsibility and Budget Management (FRBM) Acts, and compliance is monitored by the respective State Legislature.
* **Government/PFRDA Actions:** States have been informed that unfunded OPS may exert severe pressure on their finances and constrain capital expenditure.
**Impact Analysis**
**State Governments**
* **Impact:** Reversion to OPS could provide short-term fiscal savings but poses long-term risks to fiscal sustainability, potentially leading to increased liabilities and constrained capital expenditure.
* **Action Required:** Monitor FRBM Act compliance and address long-term fiscal risks associated with OPS.
**State Legislatures**
* **Impact:** Responsible for monitoring compliance of States with their respective FRBM Acts.
* **Action Required:** Monitor compliance of states with FRBM acts, especially considering the OPS reversion.
**State Employees**
* **Impact:** Employees who are subscribers to NPS will be affected by the change to OPS.
* **Action Required:** None explicitly mentioned in the document.
**Central Government/PFRDA**
* **Impact:** Required to monitor state government's fiscal decisions and inform them of the financial risks.
* **Action Required:** Continue to highlight the potential negative impacts of OPS reversion on state finances and promote adherence to FRBM targets.
Key Entities Referenced
Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013: Governs the National Pension System (NPS) and provides the regulatory framework relevant to state decisions on reverting to the Old Pension Scheme (OPS).
National Pension System (NPS): The primary pension scheme being discussed; states are considering reverting from it.
Old Pension Scheme (OPS): The pension scheme that some states are considering reverting to from NPS, raising concerns about fiscal implications.
Fiscal Responsibility and Budget Management (FRBM): Framework aimed at ensuring fiscal discipline; adherence to its targets is a concern with OPS reversion.
Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh: States that have informed the Government/PFRDA about reversion from NPS to OPS.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO. 1609
ANSWERED ON MONDAY, 9 FEBRUARY, 2026/ MAGHA 20, 1947 (SAKA)
Long-term Fiscal Implications of State Reversion from NPS to OPS
1609. SHRI ANURAG SINGH THAKUR
Will the Minister of Finance be pleased to state:
(a) the details of the regulatory framework governing State decisions to revert from the National Pension
Scheme (NPS) to the Old Pension Scheme (OPS) and whether such shifts require approval of the
Central Government or fall exclusively under State policy discretion, if so, the details thereof;
(b) whether the Government is aware that certain States in the country, including Himachal Pradesh, have
attempted a return to OPS despite accumulated NPS funds being non withdrawable under the PFRDA
Act, 2013, and the statutory provisions that safeguard contributors’ retirement corpus, if so, the details
of accumulated funds, State-wise;
(c) whether the Government has taken note of the recent CAG reports highlighting that OPS reversion is
tightening State budgets, increasing committed liabilities and if so, the details thereof;
(d) the projected fiscal impact of OPS reversion on such States and the mechanisms available to ensure
adherence to Fiscal Responsibility and Budget Management (FRBM) targets; and
(e) the steps taken by the Government to highlight concerns that OPS reversion may constrain capital
expenditure and create long-term inter-generational fiscal liabilities?
ANSWER
MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) Section 12(4) of the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013,
stipulates that any State Government or administrator of a Union territory may, by notification, extend the
National Pension System to its employees. Such shifts fall exclusively under State policy discretion.
(b) The State Governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh, have
informed the Government/PFRDA about reversion from National Pension System (NPS) to Old Pension
Scheme (OPS). The details of accumulated NPS corpus of the subscribers under these States, as on
31.12.2025, are as below:
Name of State No. of Subscribers Total contribution Total Asset Under
amount (Rs. in cr) Management (Rs. in cr)
Chhattisgarh 2,87,859 12,359.95 22,762.93
Himachal Pradesh 1,10,425 8,104.96 11,128.10
Jharkhand 1,17,352 8,142.32 14,428.28
Punjab 2,09,514 23,828.31 33,905.12
Rajasthan 5,19,800 28,364.67 51,434.26(c) Comptroller and Auditor General (CAG), in its recent State Finance Audit Reports, has highlighted the
fiscal implications of reversion to OPS by certain States. The reports indicate that OPS, being an unfunded
defined benefit pension scheme, is likely to lead to an increase in committed fiscal liabilities over the
medium to long term that threaten to undermine State-level Fiscal Responsibility and Budget Management
(FRBM) targets.
As per Reserve Bank of India (RBI) Report titled “State Finance: A Study of Budgets of 2022-23”, the
annual saving in fiscal resources that reversion to the OPS entails is short-lived. By postponing the current
expenses to the future, States risk the accumulation of unfunded pension liabilities in the coming years.
(d) As per assessment in RBI Bulletin (September, 2023), while reversion to OPS may result in a reduction
in pension outgo in the short run, it would lead to a significant build-up of unfunded pension liabilities in
the long run. The pension burden on reversion to OPS is projected to outpace NPS contributions by 2030s,
thereby posing risks to fiscal sustainability. Further, all States have enacted their Fiscal Responsibility and
Budget Management (FRBM) Acts and compliance with the FRBM Acts is monitored by the respective
State Legislature.
(e) Government/PFRDA has addressed the States highlighting that the unfunded OPS is likely to exert
severe pressure on their finances especially with increasing longevity, which may constrain capital
expenditure to be incurred by such States and create long-term inter-generational fiscal liabilities.
*******