OPS vs NPS: Demand to restore OPS in place of NPS for central government employees; know what Govt says

OPS vs NPS: Demand to restore OPS in place of NPS for central government employees; know what Govt says

In response to the demand for the Guaranteed Old Pension Scheme (OPS) in place of the existing National Pension System (NPS) for the central government employees by the Joint Forum for Restoration of Old Pension Scheme (NJCA), the department of expenditure of finance ministry said, “It is informed that the Committee formed under the Chairmanship of FS & SE to look into the issue of NPS has already had two rounds of detailed discussion with the Staff Side of National Council (JCM) and the valuable views of the NC(JCM) have already been noted by the Committee.”

“Further the points mentioned by JFROPS vide its letter dated 11.01.2024 have already been placed before the committee,” the finance ministry said in a letter dated January 23, 2024,” the ministry said.

Restore OPS in the place of NPS: Proposal to Govt

In a memorandum dated January 11, 2024, the Joint Forum for Restoration of Old Pension Scheme(NJCA), constituted under the banner of the NJCA, demanded that the finance ministry should restore the defined non-contributory and guaranteed Old Pension Scheme in place of contributory National Pension System for central government employees — including railways, defence, postal, income tax, accounts and audit, central secretariat, Isro, DAE, etc., autonomous bodies, paramilitary forces, all the state govt./Union territory employees, including primary teachers, high school and higher secondary teachers, College and University Teachers, etc. It will be applicable for those employees who are recruited on or after January 1, 2004.

“… owing to the reason that the National Pension System(NPS) fails to yield fruitful results, because a meagre amount, as Pension, is being paid to those superannuated under the contributory NPS, different organizations of the central government employees, state government employees as well as Teachers’ Organizations(right from Primary School to University level) have been persistently demanding restoration of the Defined Non-Contributory and Guaranteed Old Pension Scheme in place of Contributory NPS,” the memorandum said.
“It would be quite appropriate to mention here that the Staff Side of the National Council(JCM) has repeatedly raised its voice to restore Defined Non-contributory and guaranteed Old Pension Scheme in place of contributory NPS for all the Government Employees, irrespective of their date of appointment, and subsequently in the Standing Committee Meeting of the NC/JCM, held under the Chairmanship of Secretary(Pers.), DoP&T on 14th December 2007, wherein, from the Government Side, the following assurance was given:- ‘For employees who had entered w.e.f. 01.01.2004 are not likely to be worse off visa-vis the current pension system in force, as the replacement rate would match the present one. Thus, NPS is a win-win situation for employees and the Government. Regrettably, despite the aforesaid assurance, no fruitful result has yet been evolved and there is no comparison between the benefits under the OPS and those associated with the NPS,” it added. NJCA mentioned a comparative chart which will clear the situation more effectively, as per the memorandum.

OPS vs NPS, as per NJCA

Old Pension Scheme New Pension Scheme
Non-contributory, defined and guaranteed Contributory and no-guarantee for minimum pension
After 10 years of qualifying service, 50% of the last basic pay of the employees is guaranteed as the basic pension No such guarantee and pension depends on the accumulated funds in the pension account i.e. 40% of the corpus should be invested in annuities of SBI, LIC, ICICI and HDFC & the return is only 7% per annum approximately
To compensate price rise/inflation depending upon the Consumer Price Index two installments of Dearness Relief on the basic pension is given every year i.e. on 1st of January and 1st of July. No compensation for price rise and the pension remains static.
While on retirement/superannuation 40% of the pension can be commuted and taken in advance and the same will be restored back after 15 years from the date of commutation. No such provision is available
After death of the pensioner, family pension is eligible for the spouse, unmarried daughters, divorcee daughters, widow daughters, physically challenged and mentally retarded children are eligible for family pension. Family pension provision is available in the NPS only if an employee die in service depending upon the option given by him. However, family pension is not available after the death of the pensioner.
20% additional basic pension – after 80 years and less than 85 years of age.
30% additional basic pension – after 85 years to less than 90 Years of age.
40% additional basic pension – after 90 years to less than 95 years of age.
50% additional basic pension – after 95 years to less than 100 years of age.
100% additional basic pension – after 100 years or more
No such provision.
Pension is Revised/Enhanced after every Pay Commission or whenever pay hike in basic pay with retrospective effect takes place after superannuation. No such provision exists, since pension in NPS based on the accumulated fund in the corpus on the date of retirement/superannuation.

Restoration of OPS: What Govt said

Earlier in December 2023, the Centre informed the Lok Sabha that there is no proposal to date to consider restoring the Old Pension System for its employees. “There is no proposal under consideration of the Government of India for the restoration of the old pension scheme in respect of Central Government employees recruited on or after 01.01.2004,” Minister of State in the Finance Ministry Pankaj Chaudhary said in a written reply in Lok Sabha. He mentioned that representations have been received from time to time, which include the request for the restoration of the old pension scheme.

He added that a committee has been set up under the chairmanship of the Finance Secretary to look into the issue of pensions under NPS in respect of government employees and to, inter alia, examine whether in the light of the existing framework and structure of the NPS, as applicable to government employees, any changes therein are warranted.

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Author: Shirley