Old pension scheme will be implemented again! Know the complete update – Variousinfo

Old Pension Scheme News: For some time now, the demand for re-implementation of the Old Pension Scheme (OPS) has been gaining momentum among government employees. Many state governments have taken steps in this direction and the central government is also considering this issue. Recently some states have decided to restart the old pension scheme for their employees, which will benefit lakhs of employees.

Under the old pension scheme, government employees get 50% of their last salary as pension after retirement. Apart from this, they also get dearness allowance and other benefits. Since the implementation of the New Pension Scheme (NPS) in 2004, employees have to deposit a part of their salary in a pension fund and receive a lump sum on retirement.

Overview of old pension scheme

Why was the old pension scheme closed?

In 2004, the Central Government discontinued the old pension scheme and implemented the New Pension Scheme (NPS). There were several reasons behind this:

• Increasing financial burden: The old pension scheme was putting a huge financial burden on the government.
• Demographic changes: Due to increasing life expectancy, pensions were being paid for longer periods.
• Increasing number of employees: Pension expenditure was increasing due to increase in the number of government employees.
• Economic Reforms: Under the new economic policies, there was a need to reduce government expenditure.

In which states was the old pension scheme implemented again?

Some state governments have decided to re-implement the old pension scheme for their employees:

1. Rajasthan: Rajasthan Government restarted OPS from April 2022.
2. Chhattisgarh: Here also OPS was restored in 2022.
3. Punjab: Punjab government decided to implement OPS in November 2022.
4. Himachal Pradesh: Himachal Pradesh also restarted OPS in 2023.
5. Karnataka: Government of Karnataka announced to implement OPS in January 2024.

Central government’s stance

The central government is not yet in favor of re-implementing the old pension scheme. However, the government is considering the issue and talks are going on with employee organizations. Some key points:

• Prime Minister’s meeting: Prime Minister Narendra Modi has recently met the employee representatives of the Central Government.
• Finance Ministry’s stand: The Finance Ministry has said that it is not financially feasible to re-implement OPS.
• Options are being explored: The government is exploring options to improve NPS so that employees can get better benefits.

Benefits of old pension scheme

Proponents of OPS cite several advantages:

• Assured Income: Guaranteed fixed monthly income after retirement.
• Protection from inflation: Pension keeps increasing with dearness allowance.
• Security to the family: The family gets pension even after the death of the employee.
• No Contribution: Employees do not have to make any deductions from their salary.

What is New Pension Scheme (NPS)?

NPS is a contributory pension scheme which has been in force since 2004. Its main points:

• Both employees and employers contribute to the pension fund.
• The fund is invested in various financial instruments.
• On retirement the employee receives a lump sum and/or annuity.
• There is market risk involved.

OPS vs NPS: Comparative Study

Will OPS come back?

The debate over the return of OPS continues. Some important points:

• Pressure from states: Many states are demanding re-implementation of OPS.
• Financial Challenges: OPS can impose a huge financial burden on the government.
• Demand of employees: Most of the government employees are in favor of OPS.
• Opinion of economic experts: Many experts consider OPS impractical.

Eligibility for OPS

If OPS is implemented again, the eligibility criteria may be:

• Employees appointed before 1 April 2004.
• Employees appointed between 2004–2005 in some states.
• Possibility to choose option for new employees.

Application Process for OPS

If OPS applies again, the application process may be as follows:

1. Issuance of notification by the government.
2. Identification of eligible employees.
3. Filling the application form online or offline.
4. Submitting required documents.
5. Scrutiny of applications at departmental level.
6. Approval and inclusion in OPS.

Effects of OPS

Re-implementation of the old pension scheme may have several implications:

Positive Effects:

• Financial security to employees.
• Increase in attractiveness of government jobs.
• Improve employee morale.

Negative Effects:

• Increasing financial burden on the government.
• Less funds for other development works.
• Inequality with the private sector.

Expert opinion on OPS

Experts from different fields have different opinions on OPS:

• Economists: Most economists consider OPS to be economically impractical.
• Labor Organizations: Labor organizations are in favor of OPS.
• Government officials: Many senior officials are in favor of reforms in NPS.
• Pension experts: Some experts suggest a mix of OPS and NPS.

future of ops

The future of the old pension scheme is still uncertain. Some possible scenarios:

• The Central Government can partially implement OPS.
• Major improvements can be made in NPS.
• There may be different pension policies between the state and the centre.
• A new hybrid pension scheme can be developed.

Disclaimer: This article is to provide information about the Old Pension Scheme. It does not ensure whether the plan will actually be implemented or not. Readers are advised to verify information from official sources and check facts before taking decisions about any scheme.