The debate surrounding the restoration of the Old Pension Scheme (OPS) for central government employees has intensified once again. The main reason for this is the lack of expected support for the Unified Pension Scheme (UPS) from employees. Despite the government extending the deadline for joining the UPS several times, a large number of employees have stayed away from the scheme.
The UPS was presented as a balanced alternative to bridge the gap between OPS and NPS. However, recent figures show that this experiment has failed to win the trust of central government employees.
Low participation in UPS increases demand for OPS
According to official figures shared in the Lok Sabha, only 1.22 lakh out of approximately 23 lakh eligible central government employees have opted for the UPS. The government had extended the deadline to November 30th, but despite this, the expected number of employees did not join.
This situation has allowed employee organisations and opposition MPs to raise the demand for the restoration of OPS more strongly. They argue that when employees do not trust the new schemes, the government should return to the old and reliable system.
What is the fundamental difference between OPS and NPS-UPS?
Under the Old Pension Scheme, government employees receive 50 percent of their last drawn basic salary as a pension after retirement. This also includes dearness allowance. The biggest advantage of this scheme is that the entire responsibility for the pension rests with the government, and the employee does not have to make any contribution.
On the other hand, NPS and UPS are entirely contribution-based systems. In these schemes, both the employee and the government make regular contributions during the service period. The pension received at the time of retirement depends on the investments made in the market and the returns earned on them. This uncertainty is the biggest concern for employees.
Government clarifies its stance in Parliament
In response to questions asked in the Lok Sabha on December 15th, Minister of State for Finance Pankaj Chaudhary clearly stated that there is no proposal under consideration by the government to restore the OPS for central government employees. He clarified that there is no plan to reinstate the Old Pension Scheme (OPS) for employees covered under the National Pension System (NPS) or the Unified Pension System (UPS). The government believes that the current pension reforms are more financially sustainable.
What is the reason for the popularity of OPS?
The OPS remains popular among government employees because it guarantees a stable and assured income for life. It is not affected by market risks, and the pension increases with inflation. This is why a large number of employees are demanding a return to the OPS instead of the new schemes.
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States have adopted OPS, but challenges remain
The government also informed that states like Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have notified the Pension Fund Regulatory and Development Authority (PFRDA) of their decision to reinstate the OPS for their employees. However, the central government has clarified that there is no legal provision to return the previously accumulated NPS funds to the states.
Consequently, the states that have reverted to the OPS are facing several practical difficulties at the administrative and financial levels. Under the current rules, the pension corpus accumulated under the NPS cannot be returned or transferred.