Delhi OPS Rally: A huge mob of teachers and other employees gathered in Ramlila Maidan in Delhi demanding the restoration of the Old Pension Scheme. This Pension Shankhnaad Maharally was organized under the banner of National Movement for Old Pension Scheme (NMOPS).
Amid rising demand for implementing the Old Pension Scheme (OPS), it is important to know how different it is from the New Pension Scheme i.e. NPS. Along with this, if the government implements OPS, then how much will the burden on the government treasury increase.
What Is Old Pension Scheme?
Under the Old Pension Scheme (OPS), a retired employee gets the right to compulsory pension. This is 50 percent of the basic salary received at the time of retirement. That is, half of the basic pay on which an employee retires after completing his job, is given to him as pension.
In the Old Pension Scheme, after retirement, the employee continues to get the benefit of dearness allowance and other allowances like a working employee, meaning if the government increases any allowance, then the pension increases accordingly.
How OPS Is Different From the New Pension Scheme?
The New Pension Scheme was implemented in the year 2004 and its scope includes those government employees who have been appointed after 2004. While there is a lot of difference between the old and new pension schemes, both also have some advantages and disadvantages.
The biggest difference among these is that under OPS, the pension amount is paid from the government treasury and in this scheme there is no provision to deduct any money from the salary of the employees for pension.
At the same time, 10 percent is deducted from the salary of the employees coming under the purview of NPS. GPF facility is not available in the new pension scheme, whereas in the old pension scheme, this facility is available to the employees.
The new pension scheme is based on the stock market, so there is a possibility of getting better returns in the long term. However, there is a possibility of fund loss in case of low returns.
Calculation of burden on government treasury
It has been said by the government that the Old Pension Scheme (OPS) increases the burden on the government treasury. Regarding this, the Reserve Bank of India (RBI) had released a report last September, in which information about this burden was given along with figures.
According to the report, implementation of the Old Pension Scheme will put more pressure on the fiscal resources and the savings of the states will be affected. If RBI is to be believed, its study has revealed that re-adoption of the old pension scheme will definitely reduce the pension expenditure of the states in the short term, but there will be a huge increase in unfunded pension liabilities in the future. The increase in pension burden due to OPS will be more than the contribution made by the states in NPS by 2030.