At present, discussions are going on in the political corridors about the old pension scheme and the new pension scheme. Rajasthan Chief Minister Ashok Gehlot had last month said that the old pension scheme for government employees has to be reinstated. After this, other states including BJP-ruled Himachal Pradesh and Madhya Pradesh have started making similar demands. Shimla witnessed massive protests last week, while state employees in Madhya Pradesh gear up for a massive demonstration on April 14, the birth anniversary of Bhimrao Ambedkar.
It is noteworthy that in December 2003, the Atal Bihari Vajpayee government abolished the old pension scheme. In return, the New Pension Scheme (NPS) was introduced on April 1, 2004. In view of the opposition to the demand to withdraw the NPS, Himachal Pradesh has constituted a panel under the leadership of Chief Secretary to the government Ram Subag Singh to restore the old scheme.
Himachal Chief Minister Jai Ram Thakur, while replying to the motion of thanks on the Governor’s address, announced the setting up of the panel in the Vidhan Sabha last week. Meanwhile, after Rajasthan, another Congress-ruled state Chhattisgarh is also set to announce the resumption of the old pension scheme from the next financial year. Congress leaders said that former party president Rahul Gandhi discussed the old plan with Gehlot and Chhattisgarh Chief Minister Bhupesh Baghel. In such a situation, let us know what is the difference between old pension scheme and new pension scheme.
Difference between National Pension Scheme and Old Pension Scheme
The National Pension Scheme (NPS) was launched to get rid of pension liabilities for the government. According to a news report citing a research from the early 2000s, India’s pension debt was reaching uncontrollable levels.
NPS allows subscribers (government employees) to decide where they want to invest their money by making regular contributions to the pension account throughout their career. After retirement, they can withdraw a part of the pension amount in lump sum and use the rest to buy an annuity plan.
According to media reports, there was no deduction from the salary of the employee in the old pension scheme. At the same time, in the new pension scheme, 10 percent is deducted from the salary of the employee. Along with this, 14 percent share is shared by the government. The old pension scheme used to have the facility of GPF, but in the new scheme there was no GPF facility. Whereas there is no guarantee of fixed pension in the new pension scheme.
The employees coming under the pension scheme, after getting the full amount after retirement, get about 50 percent of the basic salary as pension.