old pension scheme statesold pension scheme states

Chhattisgarh first state to restore old pension scheme Minister of State for Finance Bhagwat Karad also asserted that the Centre is not considering any proposal to restore the OPS in respect of the central government employees recruited after January 1, 2004. Why was the NPS brought in, and what were the changes made when it was implemented in 2004? A Defined Benefit Plan is commonly recognized as a "pension" in the United States. Himachal Pradesh is expected to issue similar orders soon. Punjab requires additional budget of nearly Rs 18,000 crore for implementing OPS. On several states reverting back to OPS, the Finance Minister Nirmala Sitharaman expressed "We should look at a reasonable balance and what we are leaving for generations to come. Editorial | The old and the new: On the demand for the Old Pension Scheme. It seems the remaining non-BJP-ruled states might also make this switch sooner or later. Have such a policy for the country as a whole. The primary bone of contention is that the NPS does not guarantee a certain amount. Published Date:January 17, 2023 8:06 PM IST. The structure of these plans guarantees a payout to a retiree following their date of retirement. There is, however, a strong build-up of employee sentiment in these states. Get your daily dose of business updates on WhatsApp. States, despite the shocks of the global financial crisis in 2008-2010 and Covid-19 epidemic in 2020-22, have managed to live within their fiscal deficit limits of 3% of GSDP for almost 15 years. The solution is to restructure the NPS. (Representative image from Reuters). If you do not have an account please register and login to post comments. [10], A Policy Research Report by World Bank in 1994 titled "Averting the Old Age Crisis" gave rise to the worldwide discussion on pension sector reforms. Several states are reintroducing the old pension scheme (OPS) and this has drawn criticism from various political leaders, economists, financial planners and subject matter experts. Rajasthan has said it will bring back the old pension scheme in the state from the next financial year, and Chhattisgarh is expected to follow suit. Prime Minister Manmohan Singh took enormous personal interest to make this pivot happen. These are valuable and handy resources for the fiscally strapped Rajasthan government to spend on its pet development schemes and freebies. You may refuse to accept browser Cookies by activating the appropriate setting on your browser. No deduction will be made from a salary for pension. (Getty Images) A traditional pension plan provides a . Pension obligations for employees brought under OPS will be about three times the governments contribution to their pensions in the NPS. About: The scheme assures life-long income, post-retirement. Many employees covered under NPS are the pre-2004 regularised employees who are in their fifties now. Pension expenditure of States in 1980-81 as a proportion of total revenue receipts (which includes grants & other receivables from centre) was 2.1 per cent. These cookies are used by us or by our third-party service providers to analyse how the sites are used and how they are performing. . Tamil Nadu, Maharashtra, Gujarat and Karnataka. [42], An organized body aiming to mobilize all the government employees across states for demanding restoration of OPS. [4] Old Pension Scheme has a colonial legacy. You are now subscribed to our newsletters. Their debt levels are at 40% of the GDP on average compared to the States that are really resisting this pressure Tamil Nadu Maharashtra, Karnataka whose debt levels are only 20%. How will Old Pension Scheme play out for CM Gehlot in poll-bound Published Date: January 17, 2023 8:06 PM IST. This is what the Rajasthan Chief Minister or Himachal Chief Minister said: Pension is a State subject. The States trying to revert to the OPS are also fiscally badly managed States historically, lest it be construed as a comment on the current government. Comments have to be in English, and in full sentences. [10] It almost doubled in a decade from 5.4 per cent in 1990-91 to more than 10 per cent in 2000-01. The pension outgo rose to 15,367 crores which was 0.56 per cent of the GDP and 5.8 per cent of net revenue receipts in 2003-04. This allows our sites to recognize your device from those of other users on our sites. Check Business Breaking News Live on Zee Business Twitter and Facebook. The New Pension Scheme (NPS) is a scheme in which employees pay to their pension corpus from their salary, with the government matching their contributions. And this is not about political partisanship. Governments of Kerala, Andhra Pradesh, and Assam have also formed committees regarding . 7th Pay Commission Must be Implemented: Karnataka Govt Employees Threaten Indefinite Strike From March 1, Good News For Pensioners: This State Reinstates Old Pension Scheme, Guidelines to be Issued Soon, Thousands of Gujarat Govt Employees, Including School Teachers, Go On 'Mass Casual Leave'. Calculating all the expenditures, you have some 10-15 per cent of your receipts for development expenditures. What Is Old Pension Scheme? [20], Saugata Bhattacharya, Executive VP & Chief Economist at Axis Bank, termed the disaster of bringing back of OPS as a ticking fiscal time bomb. We may also allow our third-party service providers to use cookies on the sites for the same purposes identified above, including collecting information about your online activities over time and across different websites. Basically, it allows all government employees to contribute a certain percentage of their salary to the GPF. Earlier this year, the Central government set up a committee under the leadership of the Finance Secretary to review the working of the NPS and evolve an approach that addresses the needs of government employees while maintaining fiscal prudence. The State Government demanded return of the entire corpus of 39,000 crores accumulated till date in the NPS accounts of its employees who joined the workforce after enactment of PFRDA law. manishsiq Published On November 3rd, 2022 Table of Contents About Old Pension Scheme (OPS) "[13], Congress-led United Progressive Alliance (UPA) government Pension Fund Regulatory and Development Authority (PFRDA) Bill 2005 in the Parliament to replace an Ordinance introduced in late 2004 by the earlier BJP-led National Democratic Alliance (NDA) government. Old Pension Scheme: Why it is at centre of poll discourse in state after state For three months between August and October, employees in Himachal, organising themselves under the New Pension Scheme Employees' Association, were on a hunger strike demanding the restoration of the old system Written by Vidhatri Rao Thats a justifiable peeve. Under this, the amount of monthly pension is equal to half of the last salary drawn by an individual. The Old Pension Scheme for State Government employees was reinstated by Chief Minister Bhupesh Baghel on 11 May 2022. [16], The ever increasing year-on-year budgetary allocation for pension expenditure can be attributed to a number of factors which include expansion in the number of Government employees; extension of pension benefits to those employed in various non-Government offices like Grant-in-Aid Institutions and Local Bodies; impact of various pay revisions; introduction of wage indexation, and significant improvement in life expectancy which results in prolonged payment of pension to retirees. Nawanshahr, July 6. It is one of the cases where you are appearing to save money today while creating huge problems for future generations and future governments"[22], Reserve Bank of India in its 2022 bulletin on Risk Analysis of State Finances mentioned the numerous drawbacks of opting for OPS particularly in terms of medium-term fiscal sustainability and the tax burden on future generations. For this to happen, the Government of India will have to display the kind of leadership which Prime Minister Manmohan Singh had shown in mainstreaming NPS and Arun Jaitley had exhibited in getting states adopt GST. For reprint rights: Inciting hatred against a certain community, D-St Indices Retreat After Hitting Fresh All-time Highs, Reliance Retail set to Cancel All Public Shares, To Regulate OTT Apps or Not? The third-party service providers that generate these cookies, such as, social media platforms, have their own privacy policies, and may use their cookies to target advertisement to you on other websites, based on your visit to our sites. New Delhi: The Old Pension Scheme (OPS), which was discontinued across India by the Atal Bihari Vajpayee-led Bharatiya Janata Party government in December 2003 and replaced by the New Pension Scheme (NPS) from 2004, has become an albatross around the BJP's neck, threatening to ruin the party's poll prospects in many states, ThePrint has learnt. Praveen Chakravarty: In my view, its an intellectually lazy response. It might not be surprising if, like farm loan waiver schemes, their resistance also starts weakening and the BJP states also make an about-turn. While the older pension scheme offered defined benefits to all government employees without any contribution on their part, the NPS requires employees to contribute a sum throughout their. Even their retirement dues were routinely delayed. Pensions will become completely unfunded in the OPS system from completely funded in the NPS system. So, it took care of your retired life. . [10], Combined expenditure for all states put together jumped by 125 times to Rs 386,001 crore in 2020-21 from Rs 3,131 crore in 1990-91. PAYG works well in the booming economy where active contributors outnumber the current pensioners. If you require any information or clarification regarding the use of your personal information or this privacy policy or grievances with respect to use of your personal information, please email us at response@zeemedia.esselgroup.com. [33], The 2022-23 Himachal budget noted that salaries account for 26% and pensions costs 15% of states expenses. [11], A major portion of outgo in government revenue is paid as pension benefits to its retired employees and hence considered as economic liability with potential to adversely impact the "fiscal soundness of the Government entities. Who contributes to the Union? While the older pension scheme offered defined benefits to all government employees without any contribution on their part, the NPS requires employees to contribute a sum throughout their working years. 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Demand for Restoring the Old Pension Scheme After a few years the state governments will have to shell out pension payments to them. Committed expenditure in the state budgets consisting of interest payments on borrowed money and salaries to government employees along with pensions for retirees accounts for a significant portion of the total revenue expenditure (over 35%) in states like Kerala, Punjab, Haryana, etc., leaving little scope for developmental expenditure. OPS has its origins since British rule when the Royal Commission (Lee Commission) on civil establishments in 1924 recommended half the salary during active service to be given as pension after retirement for its recruits serving in India. Four states Chhattisgarh, Rajasthan, Jharkhand, and Punjab have abandoned the New Pension Scheme (NPS) and resuscitated the Old Pension Scheme (OPS). (PS: The disruption isnt over yet), Vaishnaw reveals new colour of Vande Bharat, Congress means loot ki dukan, jhooth ka', BJP's dig at Rahul over his visit to farmers, Protests in Bangladesh after Quran burning, 'Both BRS, Congress dangerous for Telangana', ATS files chargesheet against DRDO scientist, Odisha train tragedy: CBI remand for 3 accused, Choose your reason below and click on the Report button. Five states inform Centre about reverting to old pension scheme The Economic Survey 2004-05 highlighted pension reforms in the chapter on Public Finance. This page was last edited on 3 June 2023, at 21:18. What is Old Pension Scheme? All you need to know | Photo Credit: ANI. Second, the states might get the accumulated NPS corpus belonging to their employees. [38], Tripura scrapped OPS and implemented NPS in 2015. A bill introduced in the Massachusetts legislature in 1903 was probably the first to offer assistance to the aged on a State level. List of States That Have Gone Back To Old Pension Scheme - India.Com Under a PAYG scheme, current generation of workers contributes by paying taxes for the pensions of retired workers belonging to previous generation. But does that entail going back to the OPS? Praveen Chakravarty: Like I said earlier, this is a State subject. First, this is actual data, which is that 20% of expenditure [not revenues] for Himachal government is spent on pension, whereas its 12% for Tamil Nadu and 10% for Rajasthan. We must let States come up with their own schemes, and different States can either borrow, adapt and choose what works best for them. Under the old scheme, employees get a pension under a pre-determined formula which is equivalent to 50% of the last drawn salary. So, I dont think the demand per se is about non-contribution, the demand is more to do with the guaranteed pension. The National Pension System or NPS is a measure to introduce a degree of financial stability Mutual Funds are one of the most incredible investment strategies that offer better returns MUMBAI: The move by Rajasthan and Chhattisgarh state governments to stop providing for future, Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. Delhi, you have no right to interfere. And thats absolutely right. And that is how it should work. Old Pension Scheme - Wikipedia This financial tool allows one to resolve their queries related to Public Provident Fund account. [37], N. Uttam Kumar Reddy, Lok Sabha Congress MP from Suryapet Assembly constituency and former MLA, demanded restoration of OPS and made electoral promise of the same if Congress is voted to power in the 2023 Telangana state elections. Its not only bad economics, its also bad politics, because if you want to take 20% of the expenditure which belongs to all the people and give it to the top 4% of households in a particular State, that is inherently a bad transfer. Persistent Cookies In case you cant find any email from our side, please check the spam folder. We also use cookies to administer our sites and for research purposes, zeenews.india.com also has contracted with third-party service providers to track and analyse statistical usage and volume information from our site users. The National Movement for Old Pension Scheme (NMOPS), which has been spearheading a campaign across the country asking the states to revert to the old pension scheme, has announced that it would support any political party in Gujarat and Himachal Pradesh elections, that would promise OPS. Explained: Why govt employees are demanding restoration of Old Pension Centre Needs To Draw The Line For States: 'Old Pension Scheme' Is Rohit Azad: My suggestion would actually be guaranteed pension similar to the OPS which is 50% of your last pay drawn, which is inflation indexed, but with contribution from the employees. The orders issued by the Governments of Chhattisgarh and Rajasthan have following principal features: NPS stands repealed from the date specified in the order. It did not pass. However, the Old Pension Scheme was discontinued by the NDA government in 2004. We use persistent cookies to improve your experience of using the sites. You can find out more by clicking This month, government employees in Karnataka withdrew their indefinite strike after the state government announced a 17% hike in basic salary. It also mentioned the "stray instances" of the existence of excessive count of retirees availing pension probably due to absence of periodic and strict verification of the records of all the State Government pensioners.[10]. The New OPS model surrenders all fiscal gains. This was an entitlement for government employees for their services rendered during the tenure which often lasted more than three decades. The NPS system made the governments pension liabilities determinate and much lower in longer-term assessed actuarially. The NPS started with the decision of the Government of India to stop defined benefit pensions, Old Pension Scheme (OPS) for all its . Since pension is both a reward for continuous service till the formal age of retirement as well as a form social security in old age, India favored a restructured pension ensuring a balance between retirement benefit of the government employees and the financial burden on the economy by moving from DB scheme to DC scheme. Government of India should offer a fair fiscal consolidation package with fair and reasonable borrowing limits and NPS as a necessary component. In Focus podcast | Is there a middle way between the Old Pension Scheme and the New Pension Scheme? Some non-BJP-ruled states including Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have already reverted to OPS and ditched the new pension scheme (NPS). These third-party service providers use persistent Cookies to help us improve user experience, manage our site content, and analyse how users navigate and utilize the sites. [10], The cost of pension payments of the State Governments to its retired employees in 1979-80 was Rs. [13] India need a universal pension plan for its entire population, especially the elderly which is estimated to reach 31.5 crores (315 million) by 2050. Judges after a twelve-year service are eligible for lifetime defined benefit pension under OPS. Because the truth is worth it.). Praveen Chakravarty is a political economist and chair of the Data Analytics Group of the Congress party; Rohit Azad is an economist teaching at JNU. It did not consider the pension as an ex gratia payment, but a payment to employees for their past services rendered. Oops! Users can access their older comments by logging into their accounts on Vuukle. Some features used on this website may involve a cookie being sent to your computer by a third party. However, demographic changes in these highly industrialised and post-industrialised societies have made such pension commitments unsustainable in the long run. One reason the U.S. can't quit China? State governments are still bound by the FRBM laws. Under the Old Pension Scheme, the entire pension amount to a government employee is paid by the government after retirement. What Punjab's move to restore old pension scheme means It would be if can get that out. Maharashtra Chief Minister Eknath Shinde on Tuesday urged state government staffers, who have gone on an indefinite strike seeking restoration of the Old Pension Scheme (OPS), to call off their agitation, stressing that the government was positive and sympathetic about their demand. Public Safety Personnel Retirement System: Members can choose to receive various types of retirement plans within the PSPRS, but the decision comes down to when you were hired.If you fall under Tier 1 or 2, you are forced into a defined benefit plan, whereas Tier 3 members can also take part in a defined contribution plan.Benefits include disability pension, health insurance, survivor benefits . It was much lower than the 23.6 per cent growth in pension payments. The National Pension System (NPS) is a defined contribution pension system administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA), created by an Act of the Parliament of India. Download The Economic Times News App to get Daily Market Updates & Live Business News. Chhattisgarh: After announcing the state budget in December 2022,cabinet led by Chief Minister Bhupesh Baghel decided decided that employees can shift back to the OPS after making a submission to deposit the contribution made by the state towards the National Pension System (NPS) and the dividend earned thereon. The National Pension Scheme (NPS) was launched in 2004. They get 50% of the last pay as a pension for their entire post-retirement life (the spouses also get if employees pre-decease). [25], West Bengal and Tripura were the only two states that did not immediately repealed OPS once NPS was implemented from 1 January 2004. If you have questions regarding the SPT Program, please see the documents listed below, or contact SHPO at (602) 542-4009 or rtp@azstateparks.gov. Looks like you have exceeded the limit to bookmark the image. Reverting to old pension scheme poses big financial risk, RBI warns Edited excerpts: Lets start with a bit of history. No doubt NPS is fiscally responsible and OPS fiscally disastrous for the states. Should States revert to the Old Pension Scheme? - The Hindu The information provided below about cookies also applies to these other tracking technologies. Likewise, if you share any content on this website through social networks (for example by clicking a Facebook like button or a Tweet button) you may be sent cookies from these websites. The New Pension Scheme is much better as at least there is funding for it. Decision to revert to OPS has been further motivated by the prospects of improvement in their finances in the short term. Comment | The old pension scheme as a burden on the poor. The OPS is fundamentally unjust. Unless you have adjusted your browser setting so that it will refuse cookies, our system will check if cookies can be captured when you direct your browser to our sites. The old pension scheme became their latest weapon. Rajasthan: The Ashok Gehlot-led Congress government in Rajasthan successfully restored the OPS. For further information about how to do so, please refer to your browser help / tool or edit section for cookie settings w.r.t your browser that may be Google Chrome, Safari, Mozilla Firefox etc. [33] On 3 March 2023, the state government declared that there will be no deduction in salaries towards NPS accounts of 1.36 lakh employees effective from April and those who were retired from service after 15 May 2003 will also be eligible for OPS. More than 17 lakh state government employees, including those in government schools and colleges, will go on an indefinite strike from Tuesday to press for a return to the Old Pension Scheme (OPS). So, if Punjab, Himachal and Madhya Pradesh want to revert to the OPS, they dont have the money for it, which means they have to borrow from the Union. India ranked 100 in FIFA Rankings: Indian Football returns to top 100 after five years. Having a pure DB or PAYG system of pension costs heavily on the Government finances. I believe Andhra Pradesh already has a revised NPS framework. Continuing with Rajasthan example, its share in the NPS corpus should be in excess of Rs. It noted the decrease in overall states' budget allocations towards medical and public health. Comment | Guaranteed pension is not bad economics. They cannot be abusive or personal. Repealed from 1 January 2004, it had a defined-benefit (DB) pension of half the Last Pay Drawn (LPD) at the time of retirement along with components like Dearness Allowances (DA) etc. Subscribe To Our Daily Newsletter And Get News Delivered Straight To Your Inbox. Poll-bound BJP states push for old pension scheme 'In HP - ThePrint Himachal Pradesh became the latest state to announce its decision to revert to the dearness. Unfunded pensions are a big fiscal debt/liability for the governments. [15], The Supreme Court of India in one of its judgement noted that pension for a retiree "is neither a bounty nor a matter of grace depending upon the sweet will of the employer." [4] However, Gratuity and Provident Fund are received as lumpsum at the time of retirement. Return of NPS Schemes; Scheme portfolio; Change my scheme preference / fund manager; I want to contribute to my PRAN; I want to know the tax benefits; I want to withdraw. The NPS system was introduced in the country in 2004 after considerable studies and discussions by the BJP-led National Democratic Alliance (NDA). 25,000 crore. click here! This will alert our moderators to take action. Will the heft of the merged HDFC behemoth hit the prospects of other Indian banks? Mumbai: Under pressure from state employees and opposition parties, the Maharashtra government Tuesday announced the formation of a three-member committee to conduct a comparative study of the old and new pension schemes and submit a time-bound report. Old Pension Scheme: Under the Old Pension Scheme, approximately 50 per cent of the last drawn salary was provided as pension. [32] The CM announced restoration of OPS benefits on 13 January 2023 for the current 1.60 lakh employees and 1.30 lakh pensioners in Himachal Pradesh. It is no brainer why all the government staff wants OPS. Old Pension Scheme: In Rajya Sabha, PM Modi says states shouldn't be While the Centre can set up a committee at best, it can provide some framework and guidelines and say this is the NPS but its still entirely contingent on the States to choose whether to opt for it or not. Your Reason has been Reported to the admin. This is a subscriber only feature Subscribe Now to get daily updates on WhatsApp, Copyright © HT Digital Streams Limited, Copyright 2023 HT Digital Streams Ltd All Right Reserved, Data recap: Jio phone, tomato prices, stocks, and more. zeenews.india.com understands that your privacy is important to you and we are committed for being transparent about the technologies we use. Under the OPS there was the provision of the General Provident Fund (GPF).