In recent times, many state governments and the central decision-making bodies were undertaking significant decisions in a short time with respect to the Old Pension Scheme (OPS). The central government has maintained that OPS will not be revisited, but certain state governments have extended it to their employees. Rajasthan, Chhattisgarh, Jharkhand, and Punjab have set the wheels of OPS in motion, which will affect the lives of lakhs of employees.
NPS vs OPS: Which Is Better?
The primary distinction between the National Pension System (NPS) and the Old Pension Scheme (OPS) is that OPS guarantees pensions, whereas NPS is market-driven. In OPS, pensioners get a fixed sum equal to 50% of the last salary given, while under NPS, there is no fixed sum as the pension amount depends on return on investment. Many employee organizations have demanded the restoration of OPS since it is a safe and fixed income scheme.
Clear Stand Of The Central Government
Central government policies have so far remained supportive of NPS, giving States the liberty to carry forward OPS. The Finance Ministry feels the OPS will add an eternal financial burden on the accelerator and go unsustainable in the long run. Some tweaks have been made to the NPS by the central government, and the updates are designed to ensure flexibility and better returns.
Action Of State Governments
States like Rajasthan, Chhattisgarh, and Jharkhand have put OPS back into operation and are also extending the benefit to already retired employees. The Punjab government has also made an announcement for restoring OPS. The Himachal Pradesh government has also initiated some steps in this regard but is yet to be fully implemented.
Petitions In The Supreme Court
A number of petitions have been moved in the Supremes on OPS challenging against NPS and restoration of OPS. The petitioners argued that the NPS is contrary to the interests of employees, and therefore the government must restore OPS. The court has taken this matter very seriously and has directed the government to respond.
What Will Happen In The Future?
The differences between states and the central governments on OPS persist. While some states are applying OPS, the central government is intent on pushing NPS. This subject is likely to see a larger debate in times to come, particularly during election years. Increasing pressure from employee unions could lead to the state being forced into contemplating alternative strategies.
Conclusion
OPS and NPS have their respective advantages as well as disadvantages. OPS provides a stable income stream for pensioners; conversely, NPS has better money-making prospects. Based on their financial planning, employees ought to decide on the option appropriate for them. If you are a gazetted officer, do check your latest state’s pension policy.
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