The Centre’s move to continue the New Pension System (NPS) for central government employees has been supported by former Deputy Chairman of erstwhile Planning Commission Montek Singh Ahluwalia, who feels that states going back to the Old Pension Scheme (OPS) are taking a wrong decision.
The Atal Bihari Vajpayee government in January 2004 introduced the NPS for most central government departments, replacing the OPS. Barring the armed forces and select government departments, all central staff were brought under the purview of the NPS which seeks contributions from both employees and the Centre.
Ever since the OPS was scrapped in 2004, central government employee unions have been demanding the restoration of the old scheme in place of the New Pension System (NPS), arguing that it does not provide any guaranteed pension on retirement like the OPS.
Also read: New NPS Rules: Central govt employees to enjoy bigger retirement corpus, higher pensions now
Favouring the Centre’s move to continue the NPS, Ahluwalia told news agency ANI that he remained of the view that “around the world the pension scheme which is based on pay as you go (where) you make pension demands and do not make any provisions for them and the government simply pays the pension…it’s a bad idea”.
“The fact that we moved away from that scheme (OPS) to the New Pension Scheme and that was actually done during the Vajpayee government, I think that was a right decision. Throughout the UPA it continued and that was a right decision. As far as the central government is concerned, it still continues,” the former deputy chairman of the erstwhile Planning Commission said.
Ahluwalia went on to say that some states going back to the Old Pension Scheme is a “mistake”. He stressed that the government can always modify the NPS to take care of the concerns raised but bringing back the OPS is a “bad idea”.
Old Pension Scheme Vs New Pension System
Applicability:
NPS: Applies to new recruits joining the central government service from January 1, 2004.
OPS: Applies to government employees who joined service prior to January 1, 2004.
Funding:
NPS: Contributions are made by both the employee and the government.
OPS: Entire pension expenditure is borne by the government.
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