14 Jan, 2023 10:45 AM

Old Pension Scheme reintroduced in Himachal Pradesh

Old Pension Scheme reintroduced in Himachal Pradesh

In keeping with its election pledge, the Himachal Pradesh administration headed by Chief Minister Sukhvinder Singh Sukhu on Friday authorised the Old Pension Scheme's cleared in the state.

Over 1.36 lakh people work for the New Pension Scheme, including both staff and pensioners (NPS). In the inaugural cabinet meeting, the Congress party made a commitment to reinstate the Old Pension Scheme (OPS).

Sukhu told the media following the cabinet meeting that the old pension scheme's benefits would start to be paid out today and that a notification would be forthcoming. He assured them that we would keep our pledge to give women Rs. 1,500 per month, and he announced the formation of a subcommittee including cabinet members Chander Kumar, Dhani Ram Shandil, Anirudh Singh, and Jagat Negi to create a road plan for the disbursement of Rs. 1,500 per month in 30 days. A committee has also been set up to investigate the possibilities of creating 100,000 employment. About Rs 800 to Rs 900 crores in obligations under the OPS for this year would be covered by resource mobilisation, such as an increase of Rs 3 in the diesel VAT. Sukhu reaffirmed that the state government had not reinstated OPS in order to secure votes, but rather in order to provide social security and protect the dignity of the workers who had written the history of Himachal's progress.

The issue has been thoroughly examined, and despite some hesitations from finance officers, it has been resolved, he continued. All of the employees covered by the New Pension Scheme will now be under OPS. According to Sukhu, the previous BJP government failed to pay arrears of approximately Rs 11,000 crores, including Rs 4,430 crores to employees, Rs 5,226 crores to pensioners, and Rs 1,000 crores for the sixth pay commission's dearness allowance. Sukhu added that the state's debt of Rs. 75,000 crores is the result of the previous BJP government's financial mismanagement and reckless spending.

Over 900 institutions started by the previous BJP administration without funding were de-notified by the government since they needed Rs 5,000 crores to be operational. Government cannot operate under enormous debt, he added, therefore difficult decisions will need to be made. New Pension Policy covers workers who began working for the government on January 1, 2004. (NPS).

The old pension system paid employees with 20 years of service 50% of their final drew pay as pension, but the current pension system is a contributory system in which the government and employees each contribute 10% and 14% of their salaries to the pension fund.

According to Pradeep Thakur, president of the New Pension Scheme Employees Federation Himachal, "we had informed the government that the liability for 2022–23 under the NPS is Rs 1,632 crores out of which employees and Government would deposit Rs 680 crores and Rs 952 crores respectively while the liability under the OPS would only be Rs 147 crores." 

With more opting for the Old Pension Scheme, central government employees will intensify the push for the same.

Here are your top ten takeaways from this story:

  1. In its first cabinet meeting prior to the Himachal Pradesh elections in November, the Congress made a popular pledge to reinstate the so-called Old Pension Scheme (OPS), which would have affected 1.36 lakh individuals and was seen as a major contributing factor in the BJP's defeat.
  2. According to Mr. Sukhu, who called the decree a "Lohri gift" to recognise employees who had contributed to the growth of Himachal Pradesh, it became effective right away, with benefits beginning to be distributed on Friday.
  3. He was reported by news agency PTI as stating, "The topic has been reviewed in depth and despite certain misgivings by finance officers, the issue has been settled and all the employees under the New Pension Scheme would be covered under OPS."
  4. According to Mr. Sukhu, the cost of implementing the OPS this year will be between 800 and 900 crore rupees, which will be offset by measures like a 3 percent increase in the value-added tax or VAT on diesel.
  5. The Chief Minister added that a group of ministers has been established "to provide a roadmap within 30 days" and that the government will keep its pledge to provide $1,500 per month to women. A committee has also been established to carry out the pledge to create 100,000 jobs.
  6. In an assault on the BJP, he said that the previous administration's "financial mismanagement and reckless expenditure" were to blame for the state's debt of 75,000 crore. The government cannot continue to run under such a large debt, he said, so "tough decisions will have to be made."
  7. Many employees who began working for the government after January 1, 2004, who were covered by a programme that had been reformatted and became known as the New Pension Scheme, had made the Old Pension Scheme one of their top demands (NPS).
  8. Prior to Himachal Pradesh, Rajasthan, Chhattisgarh, Jharkhand, and Punjab had announced a reversal to the Old Pension Scheme. While there were jubilation after Mr. Sukhu's declaration in a number of locations, state BJP head Suresh Kashyap accused the administration of deceiving government employees.
  9. The OPS, formed after independence, had no funding plan; there was no corpus for the programme, and the obligation was planned to expand continuously. The new scheme was a long overdue improvement. Government employees were required to contribute a portion of their salaries toward retirement benefits under NPS.
  10. Employees with 20 years of service in the former system received 50% of their final collected pay as pension; under the NPS, employees and the government both had to contribute 10% and 14% of their salaries, respectively, to a pension fund.

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