Why Punjab government opted out of NPS? NPS Vs OPS which is better? On 21st October 2022 Punjab Chief Minister Bhagwant Mann has announced that it has reverted to the old pension scheme (OPS) for state government employees.
After doing this Punjab has became the third state to do so after Rajasthan and Chhattisgarh. According to Finance Minister Harpal Singh Cheema Punjab government’s employees will have the option to enrol in the previous pension plan.
State cabinet had also approved the government employees’ 6% dearness allowance.
What are reasons to rejoin OPS (Old Pension Scheme)?
Restoration of the old pension scheme, which was discontinued in 2004, has been one of the major demands of state government employees.
The decision of Punjab government has come ahead of the Himachal Pradesh and Gujarat Assembly polls, where AAP is trying its luck and had promised to restore the old pension scheme for state government employees if voted to power.
Here are the reasons why government employees may prefer to rejoin OPS:
- Old Pension Scheme provides assured payouts. Employee will get 50 percent of last drawn salary or average emoluments earned in the last ten months, whichever beneficial for employee.
- Family pension is paid to the family members of the deceased pensioners under OPS.
- In OPS employees did not have to contribute towards pension fund.
Reasoning behind NPS
- According to many financial experts Old Pension Scheme was growing liabilities on governments.
- OPS was not feasible for exchequer.
What is the New Pension Scheme?
NPS (National Pension Scheme) is a voluntary Pension contribution system introduced by Government of India. It was initially launched for government employees in 2004 later it was made available for everyone in 2009. It is regulated by National Pension Scheme Trust (NPS Trust) which is specialized division of Pension Fund Regulatory and Development Authority (PFRDA). Similar to PPF and EPF, NPS also comes into EEE (Exempt-Exempt-Exempt) category where entire corpus is tax free. In this article we will be discussing about NPS contribution.
How can a central government employee switch to Old Pension Scheme from NPS?
According to the memorandum issued by the Department of Pension and Pensioners’ Welfare (DoPPW) on October 26, 2022 Central government employees covered by NPS will have the option to switch to the benefits of the old pension scheme in the event of death or disablement.
The memorandum provides details about the options central government employees can exercise under the Central Civil Service (Implementation of National Pension System) Rules, 2021.
As per the rule 10 of the Central Civil Services (Implementation of National Pension System) Rules, 2021, every Government servant covered under the National Pension System shall, at the time of joining Government service, exercise an option in Form-1 for availing benefits under the National Pension System or under the Central Civil Service (Pension) Rules or the Central Civil Service (Extraordinary Pension) Rules in the event of his death or boarding out on account of disablement or retirement on invalidation.
Central government employees who are already covered by the NPS can also exercise such option.
To know more about NPS click on the below link:
Read more:
https://govtschemesin.com/index.php/2022/10/28/samriddhi-2022-23/ https://govtschemesin.com/index.php/2022/10/24/ncap/ https://govtschemesin.com/index.php/2022/10/23/voluntary-subsidy-scheme/