In a post on social media platform X, Montek Singh Ahluwalia, the former deputy chairman of the Planning Commission has said that going back to the old pension scheme (OPS) is not a good idea. He has added that the new pension scheme (NPS) can always be modified to address concerns.
Speaking to a news agency, Ahluwalia said that certain states going back to the old pension scheme is a mistake.
Difference Between OPS And NPS
The OPS and the NPS differ in their scope. OPS is meant for government employees and is predetermined. Employees do not need to contribute anything and the pension is calculated as a percentage of their last drawn salary. 50 per cent of the employee's last salary and dearness allowance (DA) as pension. This ensures a guaranteed income.
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NPS, on the other hand, is open to both government and private sector employees. NPS requires contributions from the employee, and the employer can also match or exceed his contribution. The pension payouts in NPS, unlike OPS, depend on the performance of the investments made in certain funds, so there is an element of market risk. So, while OPS provides a risk-free pension, the NPS pension is not guaranteed but it offers the employee more investment options and more control over his retirement savings.
Protests And Rollback
There have been massive protests by employees of centre, state, and union territories to restore the OPS and abolish the NPS. The NPS was introduced in 2004 and government employees who have joined service after 2004 have expressed concerns about their retirement savings. The protest was against a deduction of 10 per cent of their monthly salaries as a contribution to NPS.
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While OPS has been mostly disbanded it is making a comeback in several states like Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh. West Bengal has never implemented NPS.
