New Delhi: The Centre ruled out any possibility of replacing the new pension scheme (NPS) with the old pension scheme (OPS) that was in force before 2004. In a written reply to a question in this regard, Minister of State for Finance & Corporate Affairs Anurag Thakur said, “There is no proposal to replace the NPS with old pension scheme in respect of Central Government employees recruited on or after 01.01.2004.”
There has been a demand from several quarters, including trade unions and pressure groups, to reintroduce the ops as it provides more security to the retired employees than the new one. However, the government category denied all speculations, citing the reasons “due to rising and unsustainable pension bill, the Government had made a conscious move to shift from the defined benefit, pay-as-you-go pension scheme to defined contribution pension scheme now called as National Pension System (NPS). The transition also helped in freeing the limited resources of the Government for more productive and socio-economic sectoral development.”
The NPS based on the contribution of the employees was introduced in 2004 and since then it has been facing opposition as employee unions of central and state governments find the OPS better as it was based on fixed pension amount.
The biggest point of opposition to the NPS is that it doesn’t provide guaranteed pension to its subscribers and the unsustainable pension bill on the exchequer is the main reason the government doesn’t want the OPS back.
All government employees who joined the service on or after January 1, 2004, fall under the NPS based on the defined contribution with two tiers – Tier-I and II. Contribution to Tier-I is mandatory for all Government servants (except the armed forces in the first stage), whereas Tier-II will be optional and at the discretion of Government servants.