‘Govt. Pension schemes in Rajasthan are revived’; Understand what makes them unique!

The government of Rajasthan has rolled back the Old Pension Scheme (OPS) in the state, which will benefit lakhs of government employees before Holi. Starting January 1, 2004, the old pension scheme will be implemented for all employees hired after that date.

Rajasthan will become the first state to reintroduce the old retirement plan for government employees. However, if elected to power during the upcoming assembly elections in 2022, the Samajwadi Party (SP) and Bahujan Samaj Party (BSP) have also promised to bring back OPS.

National Pension Scheme (NPS) is currently applicable to all states and union territories except West Bengal. NPS was introduced by the Center for new officers and employees entering government service. The program is applicable to all departments except for those in the armed forces.

Ashok Gehlot, the chief minister of Rajasthan, talked about the future security of government employees during the Budget session, saying, ‘The only way these employees can contribute to good governance during their tenure is if they feel secure about their future. I propose that the old pension system be implemented for all employees appointed on or after January 1, 2004’.

NSP vs. OPS

NPS and OPS differ in that while the first is a contributory mechanism, the latter is a defined mechanism. A high cost of pension payments prompted the government to establish NPS. Employees receiving OPS receive half of their final salary as a pension, as determined by a predetermined formula. In addition, they receive an increase in Dearness Relief (DR) twice a year.

As opposed to NPS, which requires employees to deposit 10 percent of their basic pay and dearness allowance. The Centre’s contribution to the same has risen from 10 percent to 14 percent. From now on, state employees will be receiving an increase in employer contributions to their NPS accounts of 14 percent. Thus, the State Government employees’ social security benefits will be optimized and they will be on par with the Central Government employees.