OPS Vs NPS: The debate of old pension scheme versus new pension scheme has become an election issue. Governments of opposition parties are advocates of implementing the old pension scheme.
What is OPS: The demand for old pension scheme is gaining momentum in the country. For the second time within a month, lakhs of government employees gathered in Delhi on Friday demanding old pension. Government employees organized a warning rally at Ramlila Maidan in Delhi. Earlier in the beginning of October also, lakhs of employees had gathered at Ramlila Maidan demanding old pension and other demands.
These employee organizations called for
Organizations of government employees like All India State Government Employees Federation, Confederation of Central Government Employees and Workers, School Teacher Federation of India, All India State Government Pensioners Federation had called for this. Apart from the education department, organizations ranging from Income Tax to Railways employees had supported the rally.
These are the main demands of the employees
Before moving ahead, let us know about which demands the government employees are continuously protesting and demonstrating. The most important demand of the employees is regarding old pension.
Apart from this, they are making about 9 main demands including confirming the temporary employees, filling all the vacant posts in the central and state government departments, stopping the privatization of PSUs, constituting the Eighth Pay Commission, increasing the basic pension.
The plan changed in 2004
Talking about the Old Pension Scheme, it was discontinued in the year 2004. After January 2004, the National Pension Scheme was implemented in its place, which is also known as the New Pension Scheme. Employees whose employment started after January 1, 2004, are covered under NPS.
What is the old pension scheme?
The old pension scheme is considered more beneficial for the employees. The old pension scheme is actually a guarantee of fixed income for the entire life after retirement. Under this, after retirement, employees get an amount equal to half of the last salary as pension every month.
On top of that, one also gets the benefit of dearness allowance. Dearness allowance is also increased twice a year. The best thing about the old pension scheme is that there is no deduction from the salary during the years of service i.e. while working. Only government employees get the benefit of this pension scheme.
What is the new pension scheme?
The new pension scheme is for government as well as non-government employees. Initially this scheme was also only for government employees, but in 2009 its scope was expanded and it was opened to those working in the private sector also. It was managed by PFRDA. Under this, there are two types of accounts, Tier-1 and Tier-2. Under NPS, employees get tax benefits up to Rs 1.5 lakh.
In NPS, money is deducted from the salary every month. Income earned after retirement is taxable. The amount of pension depends on which option you have chosen in Tier-1 and Tier-2 and how much has been deducted from the salary during the job. The pension amount in this scheme is less than the old pension scheme.
This is how the debate is going on
Overall, the old pension scheme is beneficial for the employees coming under its purview i.e. government employees. The biggest advantages are that money is not deducted from the salary, the pension amount remains high and there is no tax on pension. Right now the demand for restoration of the old pension scheme is in full swing.
This demand has also taken a political color. Many states ruled by opposition parties have announced the restoration of the old pension scheme. This is the reason why now the central government employees have also started raising their demand for old pension. On the other hand, critics of the old pension scheme say that it is not good for the country’s economy, because restoring it will increase the burden on the government treasury.
