In a significant announcement ahead of the Assembly elections in Haryana and Jammu and Kashmir, the Narendra Modi-led government at the Centre on Saturday announced the launch of the Unified Pension Scheme (UPS). The government says that the decision, cleared by the Union Cabinet chaired by the Prime Minister, will be implemented from April 1, 2025. Government employees, I&B Minister Ashwini Vaishnaw said, will have the option to choose between the UPS and the National Pension Scheme.
The development came as the NPS, which made the pension quantum dependent on the performance of the contribution of employees and the government to market-linked securities, faced protests from several Opposition-ruled states. The scheme was introduced in 2004 by the then Atal Bihari Vajpayee government. As demands to revert to the OPS grew, the Modi government set up a committee under Finance Secretary TV Somanathan to review the NPS, which eventually came up with the UPS proposal.
As the issue gained political colour, several states reverted to the Old Pension Scheme, a fully government-funded, defined benefit system wherein retirees received 50 percent of their last drawn salary as a lifelong pension, without making any contributions during their service.
Here is a list of states which reverted to the OPS and when:
Chhattisgarh
The Congress-led government reverted to the OPS in 2022. In a notification dated May 11, 2022, the Chhattisgarh government of the Congress led by then CM Bhupesh Baghel announced the state’s decision to revert to the OPS from the NPS with effect from April 1, 2022.
Rajasthan
The Rajasthan government led by then Chief Minister Ashok Gehlot became the first state to revert to the Old Pension Scheme. In February 2022, the state cabinet approved the necessary amendments in the Rajasthan Civil Services (Pension) Rules, 1996; Rajasthan Civil Services (Contributory Pension) Rules, 2005; the various revised pay scale rules; and the Rajasthan Civil Services (Medical Attendance) Rules, 2013.
Himachal Pradesh
Acting on its poll promise, the Himachal Pradesh government led by CM Sukhwinder Singh Sukhu decided to revert to the OPS in its first cabinet meeting held in January 2023. The decision, notified subsequently, stated that the Old Pension Scheme would be restored from April 1, 2023.
Punjab
The Aam Aadmi Party government in Punjab notified the return to the Old Pension Scheme on November 18, 2022, a decision that it claimed would benefit 2 lakh government employees in the state. However, the state is yet to implement it, claiming that the Centre is yet to receive the corpus amount (of the employees) deducted under NPS from January 1, 2004, onwards.
In February 2023, the Centre had informed Parliament that the governments of five states -- Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh -- have informed about their decision to revert to the OPS.
In September last year, the Reserve Bank of India said in its monthly bulletin that a shift by state governments to the OPS will be "fiscally unsustainable" and a "major step backwards".
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