Old Pension Scheme (OPS)
Recently, the Punjab Government has approved the revival of the Old Pension Scheme (OPS).
Earlier, the states of Rajasthan and Chhattisgarh have also implemented the Old Pension Scheme (OPS) in place of the New Pension Scheme.
- Under this, it was decided to give 50% of the last basic pay as pension to the central and state government employees.
- It does not require employees to contribute to their pension.
- This plan provides assured or ‘defined’ benefits to the retiree. For this reason it is also called ‘defined benefit plan’.
- Apart from this, the increase in dearness allowance announced by the government is also included in the monthly payment of the pensioners.
Issues related to OPS:
- Under this, there is no fund specifically available for pension, while pension liabilities are increasing every year.
- The New Pension Scheme is now called the National Pension System (NPS). It was notified in the year 2004. It aims to reform the pension scheme and make it more sustainable.
- Unlike OPS, in NPS government employees make a monthly contribution at the rate of 10% of their salary and the government also contributes at the same rate.
- The funds are then invested in 8 prescribed investment schemes through pension fund managers.
- NPS has been made mandatory for employees recruited in the service of Central Government (except Armed Forces) and Central Autonomous Bodies on or after January 2004.
- Pension Fund Regulatory and Development Authority is the regulatory body for NPS.
Source – The Hindu