Old Pension Scheme: What is it?
Old Pension Scheme (OPS) is a defined benefit pension scheme in which government employees receive a fixed pension based on their last drawn salary and years of service. The National Pension System (NPS), which was introduced in 2004, is a defined contribution pension scheme in which employees and the government contribute a certain percentage of the employee’s salary to the pension fund.
On October 1, 2023, thousands of government employees from across India gathered at Ramlila Maidan in Delhi to protest against the central government’s NPS and demand the restoration of the OPS. The protest was organized by the National Movement for Old Pension Scheme (NMOPS), an umbrella organization of over 200 unions and associations representing government employees. Employees from central government, state governments, and public sector undertakings participated in the protest, carrying placards and banners demanding the restoration of the Old Pension Scheme.
The protesters expressed concerns about their post-retirement financial security under the NPS. They argued that the NPS is a market-linked scheme and does not guarantee a fixed pension, which is essential for government employees who serve the nation all their lives.
The protesters also demanded that the central government issue a circular to all state governments and PSUs to restore the OPS for their employees. They threatened to launch a nationwide strike if their demands for Old Pension Scheme were not met.
The protest at Ramlila Maidan was a significant event in the campaign to restore the OPS. It showed the strength and determination of government employees to fight for their rights. The protest also highlighted the political sensitivity of the issue, as several opposition party leaders joined the protest and expressed support for the employees’ demands.
It is important to note that the central government has so far refused to restore the OPS for its employees. However, the protest at Ramlila Maidan has put pressure on the government to Old Pension Scheme and reconsider its decision.
Old Pension Scheme: Why can't the Center implement
There are a few reasons why the Center cannot implement the Old Pension Scheme (OPS):
- Financial burden: The OPS is a defined benefit pension scheme, which means that the government guarantees a fixed pension to its employees based on their last drawn salary and years of service. This is in contrast to the National Pension System (NPS), which is a defined contribution pension scheme in which employees and the government contribute a certain percentage of the employee’s salary to the pension fund. The Old Pension Scheme is more expensive for the government to implement than the NPS, especially in the long run.
- Unsustainability: The OPS is also unsustainable in the long run due to the increasing number of pensioners and the increasing life expectancy of government employees. This means that the government will have to spend more and more money on pensions in the future, which will put a strain on its finances.
- Legal challenges: The central government has already disestablished the OPS for its employees. If it decides to restore the OPS, it may face legal challenges from employees who are currently covered by the NPS.
In addition to these reasons, the central government may also be reluctant to restore the OPS due to political considerations. The OPS is more popular among government employees than the NPS, so restoring the Old Pension Scheme could be seen as a political move to appease government employees. However, the government may also be concerned that restoring the OPS could lead to demands from other groups, such as farmers and teachers, for similar benefits.
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It is important to note that there are also arguments in favor of restoring the OPS. For example, critics of the NPS argue that it does not provide adequate financial security for government employees in retirement. They also argue that the NPS is unfair to employees who have already served the government for many years under the OPS.
Ultimately, the decision of whether or not to restore the Old Pension Scheme is a complex one that the central government will have to make after weighing all of the pros and cons.
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Supreme Court Order on Old Pension Scheme
The Supreme Court on July 9, 2023, upheld the Delhi High Court’s judgment that held that the Old Pension Scheme (OPS) is applicable to the Central Armed Police Forces (CAPF).
The High Court had on January 11, 2023, directed the Central Government to implement the Old Pension Scheme for CAPF personnel who joined service before 2004. The Central Government had challenged the High Court’s judgment in the Supreme Court.
A Supreme Court bench comprising Justices Sanjiv Khanna and Bela M Trivedi stayed the High Court’s judgment and issued notice to the respondents (petitioner CAPF personnel before the High Court) to respond to the Centre’s petition by February 2024.
The Central Government had argued in its petition that the High Court’s judgment was erroneous and that the OPS had discontinued the Old Pension Scheme for all new government employees, including CAPF personnel, from January 1, 2004.
The Supreme Court’s stay of the High Court’s judgment is a setback for CAPF personnel who were hoping to get the OPS benefits. However, the final decision on the matter will be taken by the Supreme Court after hearing all the parties involved.
Meanwhile, the Central Government has continued to implement the National Pension System (NPS) for all new government employees, including CAPF personnel. The NPS is a defined contribution pension scheme in the Old Pension Scheme in which employees and the government contribute a certain percentage of the employee’s salary to the pension fund.
The OPS is a defined benefit pension scheme in which government employees receive a fixed pension based on their last drawn salary and years of service. The OPS is more expensive for the government to implement than the NPS, especially in the long run. Old Pension Scheme This is one of the reasons why the Central Government has discontinued the OPS for new government employees.
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