OLD PENSION SCHEME (OPS) (Syllabus: GS Paper 3– Economy)

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Context: State Governments demand improved pension payments amid controversy over NPS impact on mid-career regularized.

  • Some states, such as Himachal Pradesh, Chhattisgarh are facing this issue as they have large numbers of employees whose total years of service is around 10 years, an issue that has also been raised in the discussions of the Centre-appointed committee to look into improving the National Pension System NPS) for government employees.

Old Pension Scheme (OPS)

  • About: The scheme assures life-long income, post-retirement. 

oIt is also known as the “Defined Benefit Scheme,” providing government employees with 50 percent of their basic salary to secure their future.

  • Amount of pension derived: 50 per cent of the last drawn salary
  • Avail: Only government employees.
  • Scheme was discontinued: in 2004.


New Pension Scheme (NPS)

  • About: This pension programme is open to employees from the public, private, and even the unorganized sectors except those from the armed forces.
  • Introduced by: Central government in April 2004.
  • Objective: To invest in a pension account at regular intervals during the course of their employment.
  • Nodal agency: Pension Fund Regulatory and Development Authority (PFRDA)
  • Eligibility: Any Indian citizen between 18 and 60 years can join NPS. NRIs (Non-resident Indians) are also eligible to apply for NPS.
  • Permanent Retirement Account Number (PRAN): Every NPS subscriber is issued a card with a 12-digit unique number called PRAN.
  • Minimum contribution in NPS: The subscriber has to contribute a minimum of Rs. 6,000 in a financial year.


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