7th Pay Commission Update: The central government has said that there is no proposal under consideration for restoration of the Old Pension Scheme and scrapping of the New Pension System (NPS).
7th Pay Commission News: After months of silence, the Modi government has spoken on the demand for restoration of the Old Pension Scheme (OPS) replacing the New Pension Scheme (NPS), which at present covers most of central services, barring the armed forces and a few others.
The NPS was brought in by the Centre in 2004 scrapping the OPS, triggering a major debate nation-wide over whether the new system would protect the interest of central government pensioners in the best possible manner or not. Central government staff have been demanding a return to the old pension regime, citing “payout disparities”.
What’s govt stand on restoration of OPS?
The Centre has recently reiterated that there is no proposal under consideration for restoration of the OPS in respect of central government staff.
In response to a question in Parliament, Minister of State for Finance Pankaj Choudhary recently said in a written reply, “There is no proposal under consideration.”
In her Budget speech, Finance Minister Nirmala Sitahraman on July 23 said that the Committee to review the NPS has made considerable progress in its work. “I am happy that the Staff Side of the National Council of the Joint Consultative Machinery for Central Government Employees have taken a constructive approach. A solution will be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens.”
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She was referring to the committee headed by Finance Secretary T V Somanathan, who has been entrusted with the task to look into the various aspects of the demand seeking return of the Old Pension Scheme and submitting the report to the government.
In a letter addressed to Prime Minister Narendra Modi recently, Shiva Gopal Mishra, Secretary, National Council (Staff Side) of Joint Consultative Machinery (JCM) raised 14 demands covering various pending issues related to central government employees. One of the demands was the restoration of Old Pension Scheme. The letter also demanded lowering the time period for restoration of commuted portion of pension to 12 years from the existing 15 years for central government employees.
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What’s the difference between the OPS and NPS?
The central government employees are arguing that there was a guaranteed pension under the OPS unlike NPS which deducts a certain portion of the basic pay of employees and pays it along with the employer contribution at the time of superannuation.
Under OPS, central government staff do not have to contribute from their salaries during their working years, but they still used to get 50% of the last-drawn salary as pension after retirement. This is not the case with the NPS.
