Old Pension System(OPS) vs New Pension System(NPS)

All opposition political parties worth their salt have released their election manifestos condemning NPS and promising OPS, if they get elected.

Already Congress has reverted back to OPS in Rajasthan, calculating that they will be able to save on Pension in the initial years upto middle of next decade and then the Pension bill will balloon."In the longterm everybody is dead" is what Lord Maynard Keynes said. So Long term is far off politically.

OPS is inherently beneficial to Govt employees as they dont contribute to their Pension from their Salary but is wholly unsustainable fiscally and it also benefits Govt employees at the cost of Common man by shifting the burden of their Pension to the tax payers .It is like robbing Peter to pay Paul.If the fiscal deficit exceeds the target fixed by RBI and Govt, then it means the present State Govt is kicking the can down the road for future generations to service the bloated borrowings due to higher fiscal deficit today.

But NPS is the right solution for the long term and if some tweeking can be done to make it attractive that should solve the problem of government retirees.

In the current NPS, many retired Government servants are saying their pension income is not 50% of last drawn salary, On top of it , the pension also fluctuates and there is no revision considering the cost of inflation ,based on Dearness Allowance computation. These are available for Pensioners under the OPS.

If these are addressed thro proper restructuring of NPS,that should be acceptable to retirees who are currently under NPS.

GOI has appointed with Finance Secretary as the Head of a Committee that would look into the Pension issues of the Government employees. This Committee would study and provide the path forward for streamlining the NPS to bring it in line with more attractive OPS.

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