Govt has no plans of returning to the Old Pension Scheme: Finance Ministry sources

The government has no plans to return to the Old Pension Scheme, sources from the Ministry of Finance confirmed on Friday. Rather, the government is considering giving minimum returns under the New Pension Scheme, the sources added.

Recently, there has been some unrest among pensioners who demanded the restoration of the pension scheme that was earlier in use.

Despite the demand, sources from the Ministry clarified that the new committee would consider how much minimum return should be given to those under the new pension scheme. As of now, about 40% of the corpus is received on retirement. 

In a communication to all ministries, the Department of Personnel and Training (DoPT) had recently said, “The undersigned is directed to inform that the National Joint Council of Action under the banner of ‘Joint Forum for Restoration of Old Pension Scheme’, has planned to organize district-level rallies across the country on March 21, exclusively over OPS.”

Several states like Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have already rolled out the Old Pension Scheme and discontinued the National Pension System (NPS). 

Former RBI Governor Raghuram Rajan had also expressed concerns over the decision of several states to restore the Old Pension Scheme. He said that OPS involves massive future outlays because of the indexation of pensions to current salaries. 

Rajan suggested that states should find less costly ways to address the demands of government pensioners. "This is an enormous obligation, not necessarily in the short run, but in the long run," he said.

Under the Old Pension Scheme, the entire pension amount to a government employee is paid by the government after retirement. The pension amount is not deducted from the salary of the employee during the period of employment.  However, the Old Pension Scheme was discontinued by the NDA government in 2004. The Atal Bihari Vajpayee government had then introduced the National Pension System.