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Difference between old and new pension scheme in 4 points and why it is a polling board

It is a raging poll issue in Himachal Pradesh. Congress’ poll on bringing back the old pension scheme has told political analysts whether the pledge will succeed in denting the BJP’s performance in the upcoming parliamentary elections in the hill state.

The Aam Aadmi party had also jumped on the bandwagon and pledged to implement OPS if the party forms the government. And while the state’s ruling Bharatiya Janata Party (BJP) has made no promises, it has said it will proceed based on the report of the panel set up by the Jai Ram Thakur-led government.

Congressmen at the district office in Dharamshala.  (Photo: Srishti Choudhary/ Nieuws18)
Congressmen at the district office in Dharamshala. (Photo: Srishti Choudhary/ Nieuws18)

News18 Explains why the scheme has become a hot topic in the state:

What is the difference between OPS and NPS?

Old pension scheme (OPS)

• Employees in the OPS receive 50 percent of their last drawn base salary plus redundancy pay or their average income in the last ten months of service, whichever is greater. The employee must fulfill a ten-year conscription, explains a report from Mint.

• Employees are not obliged to contribute to their pension under OPS. The guarantee of a post-retirement pension and a family pension was an incentive to join the government. There was no pressure to build a pension fund. Increasing life expectancy has made OPS unsustainable for governments.

New Pension Scheme (NPS)

• Government employees contribute 10% of their base salary to their NPS pension, while their employers contribute up to 14%. Employees in the business community can also voluntarily participate in the NPS, although some rules have been changed.

• The client has much more flexibility and a greater sense of control over her fate with NPS. Regardless of equity or debt, a professional pension fund manager can ensure superior returns and a larger pension corpus. The Mint report further explains that, unlike defined benefit plans, NPS is a defined contribution plan. If you’re not into risk, the guaranteed payout feature in OPS is undeniably attractive.

Why is NPS against?

The opposition can be explained by the points mentioned in a letter recently shot from the minister by the federal government’s federation of workers’ unions, which calls it a disaster for old and retired employees.

According to the federation, a Defense officer who recently retired after more than 13 years of service received only 15% of the insured pension he would have received under the OPS.

The civil servant with a base salary of Rs 30,500 received a monthly pension of Rs 2,417 under the NPS as opposed to the Rs 15,250 pension he would have received under the OPS.

Another civil servant with a base salary of Rs 34,300 received a monthly pension of Rs 2,506 after more than 15 years of service while according to the OPS he would have been entitled to a pension of Rs 17,150.

And why Himachal has a special interest in this problem?

Himachal Pradesh, which goes to the polls on November 12, has about 2.5 lakh government employees.

Another 1.90 lakh workers are now retired and receiving a pension. According to News laundrydespite the fact that only 55 lakh voters decide the fate of political parties, these active and retired government employees, along with their family members, make up a strong voter base.

The Himachal New Pension Scheme Employees Association (NPSEA), an organization founded in 2015 to demand the return of the OPS, has mobilized people on the ground and raised awareness of the issue through its social media platforms. Bharat Sharma, general secretary of the NPSEA, said OPS recovery is a major political issue in the Hill State.

What news18 has learned on the ground

A retired government official Hari Singh Verma told News18 of his woes. “The BJP has not done any work, our pension has also been halted. We went to court, but in vain. Priyanka Gandhi Vadra has promised an old pension scheme… we are in favor of that. There is so much inflation, a gas bottle costs Rs 1,100. What will a poor man do?” says Verma. READ MORE

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