iPSL Newsletter 2023. : The PAYG scheme was proving too expensive and there were apprehensions that it would sooner than later become fiscally unsustainable. Home Social Justice Welfare Schemes Schemes under Ministry of Rural Development National Social Assistance Programme, Presently NSAP comprises of five schemes, namely . Our dream is to make its members achieve their IAS dream. The expenditure on Union civil service pensions was estimated to be 2.31% of the GDP in 2004-05. Employees under the OPS receive benefit from the twice-yearly modification of the Dearness Relief (DR). Your Ultimate UPSC Study Material To Crack IAS Exam, Supreme Court Upholds One-Rank-One Pension. I mastered the art of clearing UPSC CSE Prelims and in the process devised an unbeatable strategy to ace Prelims which many students struggle to do. Your dependants may also receive a pension if you die before them. They provide a steady source of income when one needs the most. The pension is Rs.200 p.m. for persons between 60 years and 79 years. Hence, a PAYG scheme involved direct transfer of resources from the current generation of tax payers to fund the pensioners. It was launched in January 2004 for government employees. UPSL Newsletter 2023. The NSAP at its inception in 1995 had three components namely: National Family Benefit Scheme (NFBS) and. There are no tax advantages because the NPS corpus, which subscribers can utilise to purchase annuities or to draw pensions, is taxable when the plans mature. However, Rajasthan and Chhattisgarh have moved back to the old scheme recently. NPS is a government-sponsored pension scheme. AAP has said it would do so in Punjab. 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The experience so far has been that NPS has given good returns and many experts believe that the annuity is likely to be as attractive as in the old pension scheme, if not better. The NPS for Central government employees was notified on December 22, 2003. This would happen due to improvement in life expectancy, periodical additions to dearness allowance and linking of pension to prevailing levels of salaries. The scheme aims at providing food security to meet the requirements of. Assured income after retirement: In the OPS, upon retirement, employees receive 50 percent of their last drawn basic pay plus dearness allowance or their average earnings in the last ten months of service, whichever is more advantageous to them. Resentment against the new scheme has been simmering and breaks out in mass protests now and then. 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Old Pension Scheme Pension to government employees at the Centre as well as states was fixed at 50 per cent of the last drawn basic pay. 12th, 1st and 2nd Floor, Adichunchanagiri Road, Block K, 1st Stage, Kuvempu Nagara, Mysuru- 570023, Karnataka. The proposal to move from the defined benefit scheme (DB) to a defined contribution scheme (DC) had been under consideration of the Government since the mid-1990s. Burden on Exchequer: Over the last three decades, pension liabilities for the Centre and states have jumped manifold. Contact Us: Call us at 080 69405205 (toll-free), Insta 75 Days Revision Tests for Prelims 2023, Insta 75 days Revision Tests for Prelims 2022, Poverty and Child labour- a vicious cycle, Government measures undertaken to eradicate child labour in India. If you want to enhance your exam preparation and crack the UPSC CSE examination, download the PrepLadder app and get access to the finest study material curated by Indias top UPSC faculty. Thus current scenario warrants reforming NPS and providing a greater degree of assurance to the subscribers. Individuals would have unique retirement accounts, and would be required to invest at least Rs 500 a year. Under the OPS, retired government employees receive a fixed monthly pension based on their last drawn salary and years of service. This scheme aimed at providing food security to meet the requirement of those senior citizens who, though eligible, have remained uncovered under the NOAPS. Thank You, Your details have been submitted we will get back to you. It was introduced for all new recruits joining the Central Government service (except armed forces) from April 1, 2004. Thank You, Your details have been submitted we will get back to you. Don't have an account? Tier 1; recommended a 10% contribution by the employer and employee. First Floor, Dr. Mukherji Nagar, Near Batra Cinema, Delhi 110009. Learn fast and focused. Rajasthan has said it will bring back the old pension scheme in the state from the next financial year, and Chhattisgarh is expected to follow suit. The death of such a bread winner should have occurred whilst he/ she is more than 18 years of age and less than 60 years of age. Finding: Just 3.4 crore people, or less than 11 per cent of the estimated total working population of 31.4 crore, had some post-retirement income security. The NPS is based on the share market and the amount of pension reduces. On 1st April, 2000 a new Scheme known as Annapurna Scheme was launched. Several states are reversing back to the old pension scheme (OPS) from New Pension Scheme. It is clarified that any event of death (natural or otherwise) would make the family eligible for assistance. Populist measure: Some experts are calling it a populist measure as employees are a very vocal and an important pressure group. The pension is Rs.200 p.m. for persons between 60 years and 79 years. Minimum pension was Rs 9,000. Thus current scenario warrants reforming NPS and providing a greater degree of assurance to the subscribers. members who are declared surplus and are covered by the Central Collective Agreement between OPSEU and Management Board of Cabinet. There is an apprehension in certain sections of the staff that the new NPS will not deliver the same benefits as the old scheme. After attaining the age of 80 years, the beneficiary will get Rs.500/ per month. It has been reported recently that Punjab will also revert back to the scheme. Get upto 90% scholarship by taking the BYJU'S National Scholarship Test for IAS. Under OPS, employees are not required to contribute to their pensions and pension was guaranteed. New Pension Scheme (NPS) for Central government employees was notified on December 22, 2003. A ten-year service requirement should be met by the employee. Market Uncertainty: Some employees are worried that the new NPS wont provide them with the same benefits as the previous programme. This early retirement resulted in under-utilization of human resources by the government. 60/20 - Allows members to retire with an immediate unreduced pension if they are at least 60 years old, and have at least 20 years of pension service in the Plan. for central government employees as well as staff of those state governments which adopted this scheme. NPS was introduced in 2004 and made mandatory for central government employees as well as staff of those state governments which adopted this scheme. Auto choice: Allocation is made as per the investors age automatically by NPS. Source: The Times of India, The Times of India, The Times of India, UPSC IAS Prelims 2022 Material| Science and Tech Current Affairs | Biology and Biotechnology Nov. 2021- 31st March, 2022, 9 PM Daily Current Affairs Brief March 25th, 2022, ForumIAS is Indias leading Online website for UPSC IAS Exam Online Preparation and guidance. Short-term gains by Government: They save money since they will not have to put the 10 per cent matching contribution towards employee pension funds. The scheme aims at providing food security to meet the requirements of those eligible old aged persons who have remained uncovered under the IGNOAPS. Third, the government should also revisit the structure of the civil services to ensure that the organizations dont become top heavy over time, as they have now. The accumulated funds would be used to pay pension in annuity form. The 10-year return for the NPS Scheme-Central Government floated by SBI, LIC, and UTI stood at 9.22 per cent; the 5-year return at 7.99 per cent, and the 1-year return at 2.34 per cent. Reason for Discontinuity: It was discontinued given the problem of pension debt sustainability, an ageing population, explicit burden on future generation and the incentive for early retirement (as the pension is fixed at the last drawn salary). Under Old Pension Scheme, employees are not required to contribute to their pensions and pension was guaranteed. Annapurna Scheme: 10 kgs of food grains (wheat or rice) is given per month per beneficiary. Economic, social and political dimensions of the debate demands to have a good understanding of the basics and advance of the issue. Save my name, email, and website in this browser for the next time I comment. Articles revolving around factual data that aims to boost your UPSC CSE preparation and make your dreams become a reality! We will discuss The Old Pension Scheme (OPS) in our today's edition of Current Affairs. Start your learning journey now. Prior to 2004, India had the PAYG plan where the beneficiaries decided how much they wanted to contribute either by having the specified amount regularly deducted or by contributing a lump sum amount. Maturity: Once NPS matures at the age of 60 years, you can withdraw 60 per cent of the proceeds as lump sum. : Under the old scheme, all the burden is being borne by the government and employees get greater disposable income in their hands along with an assurity of pension. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Give wings to your Civil Service aspiration with the best IAS coaching academy in Trivandrum, Have a question? The center provided for pensions by estimating payments to retirees ahead of the Budget every year. The General Provident Fund was a provision of the OPS (GPF). Employees Pension Scheme (EPS): It is a social security scheme that was launched in 1995 by the EPFO (Employee Provident Fund Organization). Its primary objective was targeted at unorganised sector workers who had no old age income security. Dwarfs will also be a n eligible category for this pension. 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Why has the government started the New Pension Scheme and why are now many state governments restoring the Old Pension Scheme? Unsustainable: Pension liabilities would keep climbing since pensioners benefits increased every year; like salaries of existing employees, pensioners gained from indexation, or what is called dearness relief (the same as dearness allowance for existing employees). The other eligibility criteria and the scale of central assistance under the sub schemes of NSAP are as follows. For persons who are 80 years and above the pension is Rs.500/ per month. Inter-Generational Equity Issues: Current generation of taxpayers are paying for pension bill of those who joined government service before 2004 but are contributing to the 10 per cent contribution the state governments have been making for those who joined from January 1, 2004. The demand for the old pension scheme (OPS) is growing in India, particularly after some states announced plans to revert to it. For persons who are 80 years and above the pension is Rs.500/ - per month. For last three months, employees in Himachal Pradesh, were on a hunger strike demanding the restoration of the old pension scheme (OPS). The assistance would be given to every case of death of breadwinner in a family. NPS was introduced to reduce the burden of pension payments on the state. NSAP stands for National Social Assistance Programme. What is the Defined Pension Benefit Scheme (old)? Know More. In its place, the National Pension System (NPS) took effect from April 1, 2004. Start. Unsustainable OPS: The OPS was removed by then government in December 2003. Mail us: enquiry@civils360.com. For instance, employees retiring at 60 and having an average lifespan of nearly 80 years or more have to be paid for over two decades after superannuation. In 2019, the government share of the contribution has been raised to 14% from 10%. Enter your phone number to get the download link of our mobile app. The attraction of the Old Pension Scheme or 'OPS' called so since it existed before a new pension system came into effect for those joining government service from January 1, 2004. Concept- NPS vs OPS: This scheme aimed at providing food security to meet the requirement of those senior citizens who, though eligible, have remained uncovered under the NOAPS. Some political parties are demanding the same in Madhya Pradesh, Assam, Himachal Pradesh and Telangana. Required fields are marked *. How does your pension work? They are also the people who implement government policies and programmes, and widespread disgruntlement amongst them can have an adverse impact on the outcomes. Management of Fund: The savings are pooled into one pension fund which are invested by professional fund managers regulated by the Pension Fund Regulatory & Development Authority (PFRDA). Who among the following can join the National Pension System (NPS)? Attracting Good Talent: The uncertainty regarding NPS may discourage many talented youth to enter into the government sector considering a rise in salaries and other benefits offered by the private sector in the future. The most popular search terms used by aspirants. Today its Indias top website and an institution when it comes to imparting quality content, guidance and teaching for IAS Exam. OPS brings state governments some short-term gains: (Click) FREE1-to-1 on-call Mentorship by IAS-IPS officers | Discuss doubts, strategy, sources, and more, Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024, Supreme Court asks government to grant pension to 32 women IAF officers, Recommended Books for UPSC Exam (Prelims & Mains), Must Read (OLD & NEW) NCERTs for IAS Preparation, CivilsDailys UPSC material and notes: FREE UPSC Materials for you, IAS officer salary after 7th Pay Commission | IAS Promotion Chart | Vs. IPS, IFS, Study Guide : How to prepare Polity for IAS Prelims, Comprehensive Self Study Plan for Indian History | IAS Prelims & Mains, Comprehensive Self Study Plan for Economics| IAS Prelims & Mains, Comprehensive Self-Study Plan for Physical Geography | IAS Prelims & Mains, UPSC IAS Prelims Trend Analysis Year-wise and subject-wise, UPSC Mains Solutions, Sample Answers, Civilsdaily TS Hit Ratio, Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc, Pension to government employees at the Centre as well as states was fixed at. NPS is now regulated under the Pension Fund Regulatory & Development Authority (PFRDA) Act, 2013. It performs the function of appointing various intermediate agencies like. It was made mandatory for all new recruits joining government service from January 1, 2004. of India. Finding: Just 3.4 crore people, or less than 11 per cent of the estimated total working population of 31.4 crore, had some post-retirement income security. Fill the form again here, Your email address will not be published. At present, 10% of basic pay and dearness allowance (DA) is deducted as a voluntary contribution towards it. Indira Gandhi National Widow Pension Scheme (IGNWPS): The eligible age is 40 years and the pension is Rs.300 per month. Pension Liability Remained Unfunded: There is no corpus specifically for pension, which would grow continuously and fund for pension. In 1998, the Union Ministry of Social Justice and Empowerment commissioned a report for an Old Age Social and Income Security (OASIS) project. #B-10, 3rd Floor, Bada Bazar Rd, Old Rajinder Nagar, New Delhi, Delhi 110060, B22, 2nd floor,sector k near bati choka restuarant Aliganj, Lucknow Uttar pradesh Pincode -226024, 3rd Floor, Opposite Hotel Solar Residency, Aramwari, Pathanbagh, Rajbagh, Srinagar-190008, No 12, 1st floor, loukya complex building, saptapur last bus stop Beside sarvamangala hospital petrol bunk Dharwad 580001. The cost of the pension is covered by the government. Factor 90 Allows members to retire with an immediate unreduced pension if their age plus pension service total at least 90 years. What is the Old Pension Scheme? What was the old pension Pay As You Go (PAYG) scheme? It was originally conceived for unorganised sector workers, was adopted by the government for its own employees. The death of such a bread winner should have occurred whilst he/ she is more than 18 years of age and less than 60 years of age. It develops, promotes and regulates the pension industry under the NPS and also administers the. Tax benefits: A tax deduction of up to Rs 1.5 lakh under Section 80C of the Income-tax Act, 1961. Computer Technical Support Scams. They are also the people who implement government policies and programmes, and widespread disgruntlement amongst them can have an adverse impact on the outcomes. Government to ensure that rules on the service matters are in place for the government NPS subscribers. InsightsIAS has redefined, revolutionised and simplified the way aspirants prepare for UPSC Civil Services Exam. About: The scheme assures life-long income, post-retirement. 100 Ques. A custodian has also been appointed to hold the securities with subscribers being beneficial owners of the assets. Fill the form again here, Your email address will not be published. What is Old pension scheme (OPS)? The attraction of the Old Pension Scheme or OPS called so since it existed before a new pension system came into effect for those joining government service from January 1, 2004. It was hence described as a Defined Benefit Scheme, Related: Supreme Court Upholds One-Rank-One Pension, https://indianexpress.com/article/explained/old-pension-scheme-debate-economics-politics-explained-8272808/, https://indianexpress.com/article/explained/gujarat-elections-2022-aap-congress-old-pension-scheme-8266177/. Under the Centres scheme, every government employee is allotted a Permanent Retirement Account Number and has to mandatorily contribute 10% of pay (now 14%), which the government matched, and dearness allowance to the new pension fund. This early retirement resulted in under-utilization of human resources by the government. Minimum pension was Rs 9,000. Companion@360 7 Month programme to sharpen your writing skills REGISTER NOW. Pension to central and state government employees was fixed at 50% of the last drawn basic pay. Get quick access to the latest happenings across the globe. It was effective for all the employees joining government service from January 1, 2004, discontinuing the Old Pension Scheme. NPS allows the subscriber to choose her fund manager and her preferred investment option including a 100% government bond option. On the introduction of NPS, the Central Civil Services (Pension) Rules, 1972 was amended. It makes provisions for pensions for the employees in the organized sector after retirement at the age of 58 years. Unit 209, 210, Tower A 2nd Floor, The pension is Rs.200 p.m. for persons between 60 years and 79 years. New Pension Scheme: The amount you receive depends on your age when you start to receive it, how long you have lived in Canada, and your annual income. National Maternity Benefit Scheme (NMBS). Resentment against the new scheme has been simmering and breaks out in mass protests now and then. Oasis report proposal for the New Pension System became the basis for pension reforms for unorganized sector workers and for government employees. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and Central Government. The National Social Assistance Programme (NSAP) represents a significant step towards the. New Delhi | Updated: November 19, 2022 16:10 IST Follow Us Essential weekly news categorised as per UPSC syllabus. Under the old scheme, employees get a pension under a pre-determined formula which is equivalent to 50% of the last drawn salary. An NPS Trust has also been constituted to regularly oversee performance of fund managers with a trustee bank to efficiently manage fund flows. For one, pension liabilities keep climbing since pensioners' benefits increased every year. Additionally, just like the increase in salaries of the .