Union Home Minister Amit Shah has indicated that the government will consider reinstating the Old Pension Scheme (OPS) upon receiving a report from a committee specifically formed to examine the issue. The OPS, a defined-benefit pension scheme, was discontinued in 2004 and replaced with the National Pension System (NPS), a contributory scheme where both employees and the government make contributions.
The decision to discontinue the OPS has drawn criticism from various quarters, particularly government employees and trade unions, who have been advocating for its restoration. In 2022, the Congress-ruled states of Chhattisgarh and Rajasthan revived the OPS, further intensifying the debate.
Responding to Shah’s statement, Rajasthan Chief Minister Ashok Gehlot asserted that the OPS is a guarantee, not a matter for a committee. He emphasized that his government is committed to implementing the OPS and will make it permanent through legislation.
The Central government, in April 2023, established a four-member committee, headed by the Finance Secretary, to examine the issue of pensions under the NPS and devise a solution that addresses the concerns of government employees while maintaining fiscal responsibility.
The OPS, which provided a guaranteed lifetime income post-retirement, typically equivalent to 50% of the last drawn salary, was discontinued in 2004. The government bears the expenses incurred on the OPS, while the NPS is a contributory scheme where employees contribute to their pension corpus from their salaries, with matching contributions from the government.
The ongoing debate surrounding the OPS highlights the differing perspectives on pension schemes and the financial implications of their implementation. The committee’s report is expected to provide valuable insights that could shape the government’s decision on the future of the OPS.
