Uttar Pradesh state government provides a one-time option to select employees to opt for the old pension scheme (OPS). Read on to know more.
The Uttar Pradesh state government cabinet announced that it will provide a one-time selection option to state government employees, and staff of government-aided educational institutions to opt for the old pension scheme (OPS). As many as 50,00 teachers are expected to benefit from this scheme
Further employees of autonomous bodies funded by the state where the pension scheme was previously implemented and financed by the state’s consolidated fund will also get this same option to shift to an old pension scheme, Hindustan Times said in a report.
Who Will Get The Option?
This option is only available for those whose job advertisements were published by the government, before the National Pension System notification on March 28, 2005 came. Those employees appointed on or after April 1, 2005, whose post advertisements were published before March 28, 2005, are eligible for this one-time option.
It was on March 28, 2005, that the government announced that these employees joining the service would be enrolled in the National Pension System from April 1, 2005, onwards.
Similarly, the central government had also issued orders granting central employees a one-time option to choose the old pension scheme if they were appointed before the December 22, 2003 notification regarding the implementation of the NPS.
As the Union Finance Ministry is about the table the Union Budget for the fiscal year 2025 by the third week of July, there is an increasing demand urging the Finance Minister to call for the restoration of the old pension scheme (OPS) and the formation of the 8th Pay Commission.
Difference Between NPS and OPS
Old Pension Scheme (OPS): OPS (Old Pension Scheme) ensures that beneficiaries receive monthly pensions for the duration of their lifetime. OPS exclusively covers government employees, ensuring that those under this scheme are provided for in their retirement years. The monthly pension amount is set at half of an individual's last drawn salary and pensioners will receive such a pension amount along with biannual revisions in Dearness Allowance (DA). This will result in an increase in the pension amount semi-annually in line with the DA.
National Pension System (NPS): NPS is a contributory pension plan that has provision to invest in equities or government bonds but comes with low management expense. Government employees must contribute 10 per cent of their salary, with the government contributing 14 per cent to NPS accounts. They can invest this amount in a pension fund they choose that contains a diversified portfolio of government bills, bonds, shares, and debentures. Employees cannot withdraw 60 per cent of the invested amount until retirement at 60 years. Upon retirement, the remaining 40 per cent must be used to purchase an annuity product that will provide monthly pensions.
A Reserve Bank of India (RBI) study had warned in 2023 that the revival of the Old Pension Scheme (OPS) would impose 4.5 times more financial burden on the government National Pension System (NPS) which will hamper the financial security of the future generation.