Old Pension Scheme


  • Demand for restoration of the Old Pension Scheme is growing with each passing day as many employees in Maharashtra and Haryana went on strike on Tuesday seeking its return.
  • Some non-BJP-ruled states including Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have already reverted to OPS and ditched the new pension scheme (NPS). 

What is Old Pension Scheme? 

  • Old Pension Scheme (OPS) is a retirement scheme approved by the central government which provides a monthly pension to the beneficiaries till the end of their life service.

  • Under this, the amount of monthly pension is equal to half of the last salary drawn by an individual.

What is New Pension Scheme? 

  • New Pension Scheme (NPS) is the latest retirement scheme in which the beneficiaries will be able to withdraw 60% of the amount invested after retirement.
  • It was introduced by the central government in December 2003 to replace the defined benefit pension system with defined contribution pension scheme in order to provide old age income security in a fiscally sustainable manner.
  • It was made mandatory for all new recruits to the Government service (except armed forces) with effect from January 1, 2004, and has also been rolled out for all citizens with effect from May 1,2009, on voluntary basis.

Why employees are protesting against NPS?

  • Under Old Pension Scheme (OPS), the pension amount is provided by the government, which increases its liability, whereas the NPS has a contributory mechanism from the employee as well as the government.

Syllabus: Prelims

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