In a complete about-turn in policy, the government has declared the restoration of the Old Pension Scheme (OPS) for eligible employees in various sectors for their retirement security. Thus, the government has decided for the new vector from the New Pension Scheme (NPS), introduced in 2004, which gives market-based returns.
Opening in support is the vociferous demand for a pension guarantee as generated by the various employee unions and political groups. It is expected that this restoration will be a huge relief for the thousands of government employees retiring soon who joined service before the cut-off date mentioned under the revised guidelines.
What Is Old Pension Scheme?
It is a fixed pension given to retired government employees, depending on the last pay drawn and the number of years served. So, unlike the NPS, the OPS is a fully paid pension by the state, providing lifetime income security, with the possibilities of pension adjustments with variations in DA (Dearness Allowance) with reference to the pay of the institute.
Key Features Of The Policy Change
- Eligibility: People who joined government service before January 1, 2004, and did not opt for NPS are eligible for OPS. A few States may allow others under special provisions.
- Guaranteed Benefits: Usually, the pension under OPS is 50% of the last drawn basic pay, along with DA.
- No Market Risk: Taking a market risk means the return of the investment could be affected by the markets in a good or bad way; OPS being a pension scheme, is more on the safer, predictable side as opposed to NPS.
- Restoration Date: The policy from July 01, 2025, onwards would be implemented first with regards to retroactive benefits under consideration.
Why This Matters
The return of OPS would address the perennial issues of financial uncertainty among retiring employees under the NPS arrangement. It is largely viewed as a pro-employee measure, especially for lower pay grades who depend on pensions for sustenance after retirement.
Conclusion
The restoration of the Old Pension System signals an important policy shift favoring social security over market-based instruments for retirees. With its roll-out, greater clarity is expected to emerge on the inclusion criteria and financial implications hereafter.
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