New Delhi, June 21
The central government is in the final stages of formulating a media-mediated method to resolve the conflict between the Old Pension System (OPS) and the New Pension System (NPS). A commission set up by the center in April to review the pension system for civil servants is likely to recommend pensions of up to 45% of their last salary received.
Five states resume operations
- Under the new pension scheme, employees contribute 10% of their base salary and the government contributes 14%.
- The final payout is determined primarily by the market return on that corpus invested by the government.
- In contrast, OPS guarantees a fixed pension of 50% of the employee’s last salary received without requiring the employee to contribute anything during their active life.
The current NPS requires employees to contribute 10% of their base salary, with the government contributing 14%. The final payment will depend on the corpus’ market returns, most of which will be invested by the government.
In contrast, OPS guarantees a fixed pension of 50% of the employee’s last salary received without requiring the employee to contribute anything during their working life.
The government plans to amend the current scheme to ensure that employees receive a pension of up to 45% of their last salary while both employees and the government continue to contribute.
The government believes the new scheme will allay the concerns of states returning to OPS and provide a single, financially sustainable pension plan that covers the entire country.
Opposition parties have promised a return to a more attractive OPS, but this has put a heavy strain on the state coffer.
So far, the states of Punjab, Himachal Pradesh, Rajasthan, Jharkhand and Chhattisgarh have turned against the NPS and returned to the OPS.
(with input from agency)
