Old pension scheme upsc

Old Age Pension Scheme, AAP, Congress: Congress and AAP are promising to switch to the Old Pension Scheme. Congress has already reverted to the Old Pension Scheme in Rajasthan and Chhattisgarh, and AAP has said it would do the same in Punjab. Turning the clock back on reform is bad politics, and certainly bad economics. Here’s why. What was the Old Pension Scheme? Pension to government employees at the Centre as well as states was fixed at 50 per cent of the last drawn basic pay. The attraction of the Old Pension Scheme or ‘OPS’ — called so since it existed before a new pension system came into effect for those joining government service from January 1, 2004 — lay in its promise of an assured or ‘defined’ benefit to the retiree. It was hence described as a ‘Defined Benefit Scheme’. To illustrate, if a government employee’s basic monthly salary at the time of retirement was Rs 10,000, she would be assured of a pension of Rs 5,000. Also, like the salaries of government employees, the monthly payouts of pensioners also increased with hikes in dearness allowance or DA announced by the government for serving employees. DA — calculated as a percentage of the basic salary — is a kind of adjustment the government offers its employees and pensioners to make up for the steady increase in the cost of living. DA hikes are announced twice a year, generally in January and July. A 4 per cent DA hike would mean that a retiree with a pension of Rs 5,000 a month would see her monthly income...

List of Contents • • • • • • Source: The post is based on an article “ Making a case for the Old Pension Scheme” published in The Hindu on 17 th October 2022. Syllabus: GS 2 – Governance Relevance: benefits of old pension scheme News: The governments of Rajasthan and Chhattisgarh, Punjab has announced to revert back to the Old Pension Scheme (OPS) form the New Pension Scheme (NPS). What is Old Pension Scheme (OPS) and New Pension Scheme (NPS)? OPS is an assured inflation-indexed monthly family pension till a government employee or her spouse live(s). The OPS payment level is linked to the last pay an employee drew while in service. Whereas, the NPS is the amount that an employee can draw as a pension after retirement. Its value is determined by the market value of the contributions made by the employee. What are the benefits of Old Pension Scheme (OPS)? First, the pension drawn in NPS is lower than the OPS (Chart 1). Second, NPS is dependent on the market prices of equity/bonds in which the amount is invested. Therefore, a crash in the markets can affect the pensioners. Whereas, OPS is a fixed government expenditure irrespective of an economic slowdown or a stock market crash. This makes it useful in counter-cyclical policy measure during a crisis. What are the arguments against OPS? It has been argued that the OPS acts as burden on the exchequer as it accounts for 25% of the States’ budget. However, it may not be correct because three other parts of States’ revenue receip...

• Open menu • • • • • • • • • • • • • • • • • • Open menu • • • • • • • • • • • • • • • • • Open menu • • • • • • • • • • • • • • • • • • • • • • • • • • • Open menu • • • • • • • • • • Open menu • • • • • • • • • • • • • • • • • • • • • • • Open menu • • • • • • • • • • • Open menu • • • • • • • • • • • • • Open menu • • • • • • • • • Open menu • • • List of Contents • • • • • • • • • For 7PM Editorial Archives click Introduction The National Pension Scheme (NPS) was introduced on January 1, 2004 for all employees of the Union Government appointed on or after this date. Most State governments also adopted this scheme for their staff. However, some states are having a re-think and planning to revert to the old pension scheme, which is an unfunded ‘pay as you go’ scheme. Rajasthan and Chhattisgarh have already reverted to the old pension scheme. Some political parties are demanding the same in Madhya Pradesh, Assam, Himachal Pradesh and Telangana. What was the old pension ‘Pay As You Go’ (PAYG) scheme? Prior to 2004, India had the PAYG plan where the beneficiaries decided how much they wanted to contribute either by having the specified amount regularly deducted or by contributing a lump sum amount. Under this, the entire pension amount was borne by the government while fixed returns were guaranteed for employee contribution to the General Provident Fund (GPF). Governments paid 50% of the last drawn salary plus DA as pension to employees after retiring, and half of that to ...

More • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Latest Current Affairs • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Guaranteed Pension Scheme, Old Pension Scheme, and New Pension Scheme The Union Finance Ministry has expressed interest in a new model put forth by the government of Andhra Pradesh at a time when the nation is discussing the merits of the Old Pension System (OPS) vs the New Pension Scheme (NPS). This topic assumes relevance for the Indian economy section of the Guaranteed Pension Scheme (GPS) The Chief Minister of Andhra Pr...

After Rajasthan chief minister Ashok Gehlot said last month that the older pension scheme for government employees is to be revived, other states have begun making similar demands, including the Bharatiya Janata Party-ruled Himachal Pradesh and Madhya Pradesh. The national pension scheme (NPS) took effect from April 1, 2004.(REUTERS) The old pension scheme was done away with in December 2003 by the BJP-led central government when Atal Bihari Vajpayee was prime minister. Its substitute, the National Pension Scheme (NPS), took effect from April 1, 2004. In wake of protests demanding the NPS be rolled back, Himachal Pradesh has formed a panel led by Ram Subagh Singh, the chief secretary to the government, to restore the old scheme. Also Read | Himachal assembly in session: Congress walks out over old pension scheme Himachal chief minister Jai Ram Thakur announced the setting up the panel last week in the Assembly while replying to the Motion of Thanks to the governor's address. Meanwhile, after Rajasthan another Congress-ruled state - Chhattisgarh - i What is the new pension scheme? The National Pension Scheme (NPS) was launched as a way for for the government to get rid of pension liabilities. According to a news report that cited research from the early 2000s, India's pension debt was reaching uncontrollable levels. The NPS allows subscribers (government employees) to decide where they want to invest their money by contributing regularly in a pension account throughout thei...

Defined Pension Benefit Schemes (DPBS), which guarantee a pension on retirement, are facing a crisis of funding across the world. This is an ever-increasing challenge, as the old live longer (arguably retirees live even longer, due to better diets and first-world level medical care), and demographic transitions reduce the number of young to pay for the old. Making pension promises today through DBPS schemes such as the old pension scheme, which is paid to government employees recruited up to 2003 as well as that for armed forces personnel, payable 35 years later, is effectively borrowing from our very young and yet unborn children. The New Pension Scheme (NPS), launched in 2004, and adopted across the country (except West Bengal), ensures that governments pay for the concomitant pension liabilities as they incur them. What, then, has prompted the Government of Rajasthan to take the fiscally unwise, indeed irresponsible, decision to withdraw from the NPS, and revert to DPBS? At first blush, it may seem that the decision is prompted by the elections due in the state next year. That may have been a consideration, but, surely, it is not the only one. There are other reasons, too. Editorial | Perhaps the most important of these is the considerable fiscal pressure the state governments currently feel, as they are bearing the burden of both expenditure on defined pension, and their contribution to NPS, and both are rising. In Rajasthan, for example, the current number of pensione...

MENU MENU • • • • • • • • • • • • • • • • • • • • • Current Affairs • • • • • • Quizzes(Prelims) • • • • • • • Mains • • • • • • • • • Analyticas: Optional Subjects • • • • • • • • • • • • • • • • • • • • • Current Affairs • • • • • • • • • • • • • Quizzes • • • • • • • • Mains • • • Interview • • • Questions Papers & Syllabus • • • • • • • • • • • • • • General Studies – 1 • • • • • • • • • General Studies – 2 • • • • • General Studies – 3 • • • • • • • General Studies – 4 • • • Source: • Prelims: Elderly population in India, Schemes for old age people, OPS, Provident Fund pension scheme, EPFO, etc • Mains GS Paper I & II: Schemes for vulnerable sections of society and performance and issues associated with these schemes etc ARTICLE HIGHLIGHTS • The demand for the old pension scheme (OPS) is growing especially after a few States announced that they would be reverting to it. INSIGHTS ON THE ISSUE Context Elderly Population: • The National Elderly Policy defines people in the 60+ age group as elderly. • According to the Population Census 2011, there are nearly 104 million elderly persons in India. Old Pension Scheme(OPS): • The scheme assures life-long income, post-retirement. • Employees get a pension under a predetermined formula which is equivalent to 50% of the last drawn salary. • They also get the benefit of the revision of Dearness Relief (DR), twice a year. • The payout is fixed and there was no deduction from the salary. • Under the OPS, there was the provision of ...

• About us • • • • • • • Prelims • • • • • • • • • • • • • • • • • • • • Practice Quiz • • • • • • • • • • • • • • • • • Mains & Interview • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Current Affairs • • • • • • • • • Drishti Specials • • • • • • • • • • • • • • • Test Series • • • • • • • • • • • • • • • • • • • • • State PCS • • • • • • • • • Videos • • • • • • • • • • • • • • • • • • • • • • • • • • • Quick Links For Prelims: New Pension Scheme, Old Pension Scheme, PFRDA. National Pension Scheme, Unorganized Sector. For Mains: Old Pension Scheme, National Pension Scheme. Why in News? A few political parties are promising to restore to the Old Pension Scheme in some states. What is the Old Pension Scheme? • About: • The scheme assures life-long income, post-retirement. • Under the old scheme, employees get a pension under a pre-determined formula which is equivalent to 50% of the last drawn salary. They also get the benefit of the revision of Dearness Relief (DR), twice a year. The payout is fixed and there was no deduction from the salary. Moreover, under the OPS, there was the provision of the General Provident Fund (GPF). • GPF is available only for all the government employees in India. Basically, it allows all the government employees to contribute a certain percentage of their salary to the GPF. And the total amount that is accumulated throughout the employment term is paid to the employee at the time of retirement. • The Government bears the exp...