No mention in manifesto, BJP says will relook into OPS after committee report

Tribune News Service

Aditi Tandon

Shimla, November 6

The ruling BJP on Sunday said it would move forward on the issue of the old pension scheme (OPS) on the basis of a report of a panel the state government had formed, with the party top brass moving cautiously on the issue.

BJP Himachal election management committee convener Mangal Pandey said the committee was engaged with the subject and was studying it.

Refraining from making a manifesto-level commitment on the vexed issue that triggered protests by nearly 1.17 lakh government employees enrolled under the National Pension Scheme in the poll-bound state, the BJP chose to let the matter rest for a while and said the Centre and the state would need to sit together to address the matter.

The rival Congress, meanwhile, pledged to revert to the OPS in its manifesto released yesterday and said such a decision would be taken in the first Cabinet meeting, if the party comes to power

in the state.

The OPS was scrapped in 2003 and replaced with the new National Pension Scheme which was implemented from 2004.

At the time of the transition, all states, including Himachal Pradesh, barring Tamil Nadu and West Bengal, had switched to the new system.

Himachal retained the NPS under the Congress government led by late Virbhadra Singh.

Enquiries on why the BJP was avoiding the manifesto-level commitment on the issue revealed that rough estimates had suggested a massive financial liability on the Centre, should it go back to the old system.

The estimated burden could upset the government’s fiscal responsibility targets, something the country can ill-afford with several developing economies staring at recession.

“A formal commitment in one state could mean triggering a slew of demands from other states to restore the OPS. Any such move needs to be thought through and cannot be based solely on electoral considerations,” a BJP source said, adding that a vast private and unorganised sector favoured the NPS which allows private individuals to join the system too.

The OPS was a system under which a retiree got assured pension benefits at the end of service. Pension amounted to 50 pc of the last basic salary drawn plus dearness allowance or average earnings in the last ten months of service whichever was more beneficial. The Congress governments in Chhattisgarh, Rajasthan and the AAP government in Punjab have announced the OPS.

Chhattisgarh Chief Minister Bhupesh Baghel said he had written to the Centre to return Rs 17,000 cr of state employee deposits under the NPS but the Centre had said it can’t do so.

“We are exploring legal options. The government cannot deny to return the money which belongs to employees,” Baghel said.

Rajasthan CM Ashok Gehlot is also engaged with the Centre on the vexed matter which appears to have no easy solutions.

DECODING OPS

• Under the old pension scheme, a retiring employee received as pension 50% of the last basic salary drawn plus dearness allowance or average earnings in the last 10 months of service, whichever more beneficial
• Those in service for 10 years were eligible under old pension scheme, which guaranteed a substantial payout on retirement
• The employee didn’t need to make any contribution towards pension and even the family pension was guaranteed, making government service attractive

DECODING NPS

• State govt contributes 14% of monthly basic salary of employee to NPS and employee contributes 10% for retirement corpus
• Deposits managed by a pension fund manager for better returns, which are market-driven, with the employee given the option to invest in a range of asset classes, including government securities
• On retirement, employee can withdraw from corpus 60% as tax-free lumpsum but must convert the rest 40% into annuities to generate pension for lifetime

WHY THE TRANSITION

The government had made the transition from the old pension scheme (OPS) to new pension scheme (NPS) in 2004 on account of the rising burden on the exchequer coupled with the gradual increase in life expectancy which was making OPS unsustainable

About The Author

Tribune News Service

The Tribune News Service brings you the latest news, analysis and insights from the region, India and around the world. Follow the Tribune News Service for a wide-ranging coverage of events as they unfold, with perspective and clarity.

Join Whatsapp Channel of The Tribune for latest updates.

#BJP