old pension scheme states

Under the old scheme, employees get a pension under a pre-determined formula which is equivalent to 50% of the last drawn salary. There is enough evidence globally, that unfunded pension schemes can lead to extreme fiscal stress at some point in time. Its actually 12% if you take all the revenues into account. Should States revert to the Old Pension Scheme? - The Hindu click here! A bill introduced in the Massachusetts legislature in 1903 was probably the first to offer assistance to the aged on a State level. Under the old pension scheme, the entire pension amount is given by the government. ", "One Hundred Twentieth Report On Action Taken On One Hundred Tenth Report Of The Committee On "Pensioner's Grievances - Impact Of Pension Adalats And Centralized Pension Grievances Redress And Monitoring System (CPENGRAMS)", "RBI Publications - State Finances: A Study of Budgets of 2022-23", "Central civil servant pension payments in India: Issues and concerns", "Pensions: Constitutional office holders must lead by example", "Govt allows pension portability in IITs, IIMs", "Select central govt employees get one-time option to opt for old pension scheme", "Select Central government employees can opt for Old Pension Scheme", "Understanding Defined Benefit Pension Plans", "Report of the Group to Study the Pension Liabilities of the State Governments", "HIGH LEVEL EXPERT GROUP RECOMMENDS REGULATORY AUTHORITY FOR PENSION", "Report of the Comptroller and Auditor General (CAG) of India on Performance Audit on 'National Pension System' (Audit Report No. On several states reverting back to OPS, the Finance Minister Nirmala Sitharaman expressed "We should look at a reasonable balance and what we are leaving for generations to come. In addition, governments pay Dearness Allowance (DA) on pensions. This cookie policy explains how and why cookies and other similar technologies may be stored on and accessed from your device when you use or visit zeenews.india.com websites that posts a link to this Policy (collectively, the sites). Under the Old Pension Scheme, approximately 50 per cent of the last drawn salary was provided as pension. There is, however, a strong build-up of employee sentiment in these states. Rohit Azad: My suggestion would actually be guaranteed pension similar to the OPS which is 50% of your last pay drawn, which is inflation indexed, but with contribution from the employees. This is what the Rajasthan Chief Minister or Himachal Chief Minister said: Pension is a State subject. The NPS system was introduced in the country in 2004 after considerable studies and discussions by the BJP-led National Democratic Alliance (NDA). The States trying to revert to the OPS are also fiscally badly managed States historically, lest it be construed as a comment on the current government. So, you are both saying some changes are needed, whether to the OPS or to the NPS. Chips. It seems the remaining non-BJP-ruled states might also make this switch sooner or later. The select group of government servants can opt for this option by August 31, 2023. [1], To a question in 2022 Lok Sabha session raised by Asaduddin Owaisi of AIMIM, the ruling BJP Government has clarified that there is no proposal under consideration for restoration of the Old Pension Scheme (OPS). So, I could make the argument that the future generations of Tamilians and Maharashtrians and Kannadigas are paying for this reversion to the OPS for the elite government employees of Punjab and Himachal and Madhya Pradesh. By postponing the current expenses to the future, states risk the accumulation of unfunded pension liabilities in the coming years, the central bank said. And its really only four or five States that are net contributors to the Union kitty. These cookies, for example, let us recognize that you have created an account and have logged in/out to access site content. - have certain advantages (e.g., non-transferability, perks, non-uniform terms and conditions of employment) which are not available to regular Government employees. These are valuable and handy resources for the fiscally strapped Rajasthan government to spend on its pet development schemes and freebies. Read more on Latest Business News on India.com. Second, the states might get the accumulated NPS corpus belonging to their employees. So, the question is, should 10% or 20% of the total pool of expenditure be spent on arguably the top two to 3% of households in that State? And why pit one State against the other? Since pension is both a reward for continuous service till the formal age of retirement as well as a form social security in old age, India favored a restructured pension ensuring a balance between retirement benefit of the government employees and the financial burden on the economy by moving from DB scheme to DC scheme. [15], The Supreme Court of India in one of its judgement noted that pension for a retiree "is neither a bounty nor a matter of grace depending upon the sweet will of the employer." Most states seeking return to old pension scheme are in bad shape And this is not about political partisanship. Old Pension Scheme - Wikipedia Thousands of Mumbai. It did not consider the pension as an ex gratia payment, but a payment to employees for their past services rendered. The New Pension Scheme is much better as at least there is funding for it. Download the Mint app and read premium stories. [42], An organized body aiming to mobilize all the government employees across states for demanding restoration of OPS. Log in to our website to save your bookmarks. "[43], Defined Benefit Pension vs. The pressure of pensions on Central and State finances is becoming increasingly burdensome. The employees had demanded interim relief of a 40% increase in basic salary and revision of salaries as per the 7th Pay Commission. They would have fewer resources for development work. A major risk looming large on the subnational fiscal horizon is the likely reversion to the old pension scheme by some states. The Quintneither endorses nor is responsible for the same. Government of India should offer a fair fiscal consolidation package with fair and reasonable borrowing limits and NPS as a necessary component. Explained: Why govt employees are demanding restoration of Old Pension In fact, Chief Minister Ashok Gehlot voraciously spoke in favour of the scheme he implemented in his state while he was campaigning for the Congress party in Himachal Pradesh during the assembly elections. You may refuse to accept browser Cookies by activating the appropriate setting on your browser. zeenews.india.com understands that your privacy is important to you and we are committed for being transparent about the technologies we use. The employees contribute to their tax-exempt General Provident Fund (GPF) account, which is paid back to them with interest on retirement or before, in addition to the pension. [32] The CM announced restoration of OPS benefits on 13 January 2023 for the current 1.60 lakh employees and 1.30 lakh pensioners in Himachal Pradesh. Users can access their older comments by logging into their accounts on Vuukle. Under a PAYG scheme, current generation of workers contributes by paying taxes for the pensions of retired workers belonging to previous generation. This is an opinion piece and the views expressed above are the authors own. Why Has RBI Cautioned States Against Reversion To OPS? [16], The ever increasing year-on-year budgetary allocation for pension expenditure can be attributed to a number of factors which include expansion in the number of Government employees; extension of pension benefits to those employed in various non-Government offices like Grant-in-Aid Institutions and Local Bodies; impact of various pay revisions; introduction of wage indexation, and significant improvement in life expectancy which results in prolonged payment of pension to retirees. For example, if you view or listen to any embedded audio or video content you may be sent cookies from the site where the embedded content is hosted. Employees will no longer make any pension contributions. [27] Gehlot has considered the option to escalate this matter to Supreme Court if funds are not returned and claimed the BJP lost the 2022 state elections to Congress including Himachal Pradesh "over the issue of OPS". Its primarily a political response. The OPS is fundamentally unjust. Download The Economic Times News App to get Daily Market Updates & Live Business News. Committed expenditure in the state budgets consisting of interest payments on borrowed money and salaries to government employees along with pensions for retirees accounts for a significant portion of the total revenue expenditure (over 35%) in states like Kerala, Punjab, Haryana, etc., leaving little scope for developmental expenditure. If they get higher than that, if the market returns deliver higher, so be it, but I am definitely in favour of a minimum guarantee. Also read | Select Central government employees can opt for Old Pension Scheme. The annual saving in fiscal resources that this move entails is short-lived. The state has accumulated a debt of Rs 74,622 crore and Sukhvinder Singh's government plans another debt of Rs 3,000 crore to pay salaries and arrears for its employees. What Is Old Pension Scheme? 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