What Punjab’s move to restore old pension scheme means

The old pension scheme was discontinued on April 1, 2004, and replaced with the National Pension Scheme.

Punjab Chief Minister Bhagwant Mann. (PTI)

Punjab CM Bhagwant Mann Monday announced that the state government was considering implementing the old pension scheme in the state. He also said he has directed the state Chief Secretary to work out the modalities.

What is the old pension scheme?

The old pension scheme was discontinued on April 1, 2004, and replaced with the National Pension Scheme. In the old pension regime, pension was 50% of the last drawn salary of the employee and the entire amount was paid by the government. The national pension scheme (NPS) or contributory pension scheme is effective for the employees who joined on or after April 1, 2004. Under this scheme, the employees contribute 10 per cent of their salary towards pension and the state government contributes 14 per cent. The amount is then deposited with PFRDA where it is invested.

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Which states have reverted to the old pension scheme?

Chhattisgarh was the first state to announce the OPS. After that Jharkhand and Rajasthan also announced reverting to the old system. Punjab is the fourth state to say that it is considering restoring OPS, and the announcement has come from the CM. He said that he has directed the Chief Secretary to study the possibility of restoring OPS.

How can the move help AAP politically?

The National Movement for Old Pension Scheme (NMOPS), which has been spearheading a campaign across the country asking the states to revert to the old pension scheme, has announced that it would support any political party in Gujarat and Himachal Pradesh elections, that would promise OPS. If the Aam Aadmi Party (AAP), that now rules Punjab, implements it before elections in these states, it could reap some political benefit in Gujarat and Himachal.

The employees in Punjab have also been demanding the state to restore the OPS scheme. Hundreds of employees in Gujarat had protested in the state on Sunday to demand the old pension system. Similarly, the employees in Himachal Pradesh had also held a protest in Shimla a few days ago in the election-bound state.

What are the financial implications of bringing the scheme back?

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The old scheme was scrapped by the Centre in 2004 keeping in mind the financial burden. For instance, Punjab already has a fat pension bill of Rs 11,000 crore annually which burns a hole in the state’s pocket. This is 19 years after the old pension scheme was scrapped. The bill would go up after the old pension scheme is brought back. The state has a debt of Rs 2.63 lakh crore this fiscal which is mounting. The state also has a burgeoning bill of power subsidy at Rs 18,500 crore. It may cross Rs 20,000 crore.

Kanchan Vasdev

Kanchan Vasdev is a Senior Assistant Editor in The Indian Express’ Punjab bureau. She is a highly experienced journalist with 22 years of expertise covering high-stakes politics, governance, and social issues in Northern India. Professional Background Role: Primary reporter covering the Punjab Chief Minister’s Office (CMO), government policies, and the Aam Aadmi Party (AAP) leadership in the state. Experience: She previously worked with The Tribune and has played a key role in launching various city editions. Special Projects: Abandoned Brides: Authored a monograph on brides abandoned by NRIs as part of the Prabha Dutt Memorial Fellowship. Environment: Worked as a Centre for Science and Environment (CSE) fellow, focusing on the pollution levels in the Satluj river. Recent Notable Articles (Late 2025) Her recent reporting focuses on the legislative strategies and political maneuvers of the Bhagwant Mann-led Punjab government: 1. Legislative & Governance Standoffs "Punjab govt advances special Assembly session to pass resolution against VB-G RAM G Bill" (Dec 20, 2025): Reporting on the state's move to block the Centre's "Viksit Bharat" mission, which the state claims will undermine MGNREGA. "Punjab govt doubles down on special sessions, sixth in January" (Dec 19, 2025): Detailing the AAP government's use of special sessions as a legislative tool amid tensions with the Governor. "Punjab asks 'VIP teachers' working near Chandigarh to go back to border districts" (Dec 16, 2025): Reporting on CM Mann's move to end the practice of influential teachers avoiding postings in remote areas. 2. Political Analysis & Rural Polls "Punjab rural polls: Why Akalis are likened to dinosaurs in Punjab" (Dec 19, 2025): Analyzing CM Bhagwant Mann's rhetoric against the Shiromani Akali Dal (SAD) following local body elections. "AAP claims win in 78% Punjab zila parishads as counting continues" (Dec 18, 2025): Breaking down the results of the 2025 rural elections. "Rahul Gandhi and Sidhu alike, says Bhagwant Mann" (Dec 13, 2025): Covering the CM's critique of the Congress leadership. 3. Law Enforcement & Bureaucracy "Suspended Punjab IPS officer Ravjot Kaur Grewal awaits reinstatement" (Dec 10, 2025): Investigative reporting on the bureaucratic red tape involving the Election Commission and the state government. "Punjab declines to give parole to Amritpal Singh" (Nov 27, 2025): Detailing the state government's refusal to grant parole to the radical preacher and sitting MP. 4. Welfare & Economy "Punjab government's plan to add more freebies to 'atta-dal' scheme hits funds roadblock" (Dec 4, 2024): An analysis of the fiscal challenges facing the state's flagship food security program. "Mann leads Punjab delegation to Japan and South Korea for investor outreach" (Dec 2, 2025). Signature Beat Kanchan Vasdev is known for her insider access to Punjab's political executive. Her writing provides deep insights into how state policies are formulated and the friction points between the state government and central authorities. Her dual expertise in environment and law allows her to report on complex issues like the "Farmhouse Policy" (Dec 18, 2025) and river pollution with a unique policy-oriented lens. X (Twitter): @kanchan99 ... Read More