Under NPS, pension up to 45% of last salary likely
New Delhi, June 21
The Central government is in the final stages of working out a via media to resolve the clash between the Old Pension Scheme (OPS) and the New Pension System (NPS). The committee set up by the Centre in April to review the pension system for government employees is likely to recommend pension up to 45% of their last-drawn salary.
Five states have reverted to ops
- Under the New Pension System, employees contribute 10% of their basic salary and the government pitches in 14%
- The eventual payout depends on the market returns on that corpus, which is mostly invested by the government
- In contrast, the OPS guarantees a fixed pension of 50% of an employee’s last-drawn salary, without requiring them to contribute anything during their working life
The current NPS requires employees to contribute 10% of their basic salary and the government contributes 14%. The eventual payout depends on the market returns on that corpus, which is mostly invested by the government.
In contrast, the OPS guarantees a fixed pension of 50% of an employee’s last-drawn salary, without requiring them to contribute anything during their working life.
The government is planning to amend the current scheme so that while both employees and the government still make contributions, employees get an assured pension of up to 45% of their last-drawn salary.
The new scheme, the government believes, will assuage the concerns of states that went back to the OPS and cover the whole country with one fiscally sustainable pension scheme.
The Opposition has been promising restoration to the more-attractive OPS which, however, puts an onerous burden on the state exchequer.
So far, Punjab, Himachal Pradesh, Rajasthan, Jharkhand and Chhattisgarh have turned their backs on the NPS and reverted to the OPS.
(With agency inputs)
