Sitharaman says that a committee will be constituted under the chairmanship of the Finance Secretary to improve the New Pension Scheme. Due to which the National Pension System will become attractive like the old pension scheme.
Finance Minister Nirmala Sitharaman has made a big announcement amidst the ongoing debate regarding the New Pension Scheme. Presenting the Finance Bill 2023 in the Lok Sabha, the Finance Minister said that a committee will be constituted under the chairmanship of the Finance Secretary to improve the New Pension Scheme.
This committee will take care of the interests of the employees keeping in mind the fiscal aspect. The Finance Minister said in the Lok Sabha that a new system will be made regarding NPS, which can be adopted by both the Central and State Governments. According to Finance Minister Nirmala Sitharaman, it has been said to make the National Pension System as attractive as the old pension scheme.
In which states is the old pension scheme still applicable?
The old pension scheme has been implemented in Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh. The government of all these states had also sent a request to the central government to return the funds deposited under NPS to the central government. The new pension scheme was implemented in the country on January 1, 2004
At the same time, the Center had announced in the Lok Sabha a few days ago that in the case of Central Government employees recruited after January 1, 2004, no demand for OPS reinstatement would be considered.
According to the latest report of PFRDA (Pension Fund Regulatory and Development Authority), 26 state governments except Tamil Nadu and West Bengal have notified and implemented NPS for their employees.
Who is outside the ambit of NPS
The total assets spent under the management of National Pension System and Atal Pension Yojana till March 4, 2023 was Rs 8.81 lakh crore. NPS is made applicable to all government employees, except Armed Forces employees, who join the Central Government on or after January 1, 2004. Most of the State/UT Governments have also notified NPS for their new employees.
What is old pension scheme
Before 2004, on the retirement of the employees, half of the salary was given as pension. These rules were applicable only under the old pension scheme. In this scheme, after the death of the retired employee, his family also used to get the amount of pension. Apart from this, the provision of increasing DA after every 6 months was also under this scheme.
What is new pension scheme
In the year 2004, the central government started the new pension scheme. In this scheme, the pension received by the employees was on the basis of their contribution. Think of it like this, 10% of the employee’s basic salary and dearness allowance were deducted and invested in the pension fund.
This scheme is not considered safe, because this scheme is completely based on the ups and downs of the stock market. According to the rules, pensioners under the new pension scheme have to invest 40 percent of the new pension scheme.
Multiplication of new and old pension scheme
There are some advantages and disadvantages of both old and new pension. Under the old pension scheme, the amount is paid from the treasury of the government. At the same time, in the old pension scheme, there is no provision to deduct any money from the salary of the employees for pension. At the time of retirement, half of the salary of the old pension is given to the employees as pension.
Because in the old scheme, the pension is determined according to the last basic salary of the government employee and the inflation rate data. While the new pension scheme is completely based on the stock market. Therefore, there is no guarantee of fixed pension in it. In this scheme, the payment is made according to the movement of the market.
Understand the difference between the two pensions in detail
Under the old pension scheme, no deduction was made from the salary for pension. And in the new pension scheme, 10 percent of the basic salary + DA is deducted from the salary of the employee.
The government’s treasury used to pay for the old pension scheme, so this scheme was considered a completely safe pension scheme. The New Pension Scheme is stock market based. That is, the ups and downs of the stock market decide the profit and loss in it.
In the old pension scheme, at the time of retirement, up to 50 percent of the last basic salary was received as a fixed pension. On the other hand, there is no guarantee of fixed pension at the time of retirement in the new pension scheme.
Understand this difference in such a way that if a teacher, who is getting a salary of Rs. On the other hand, according to NPS, the monthly pension will be fixed on the basis of the contribution made in the pension fund to that teacher in the share market.
In the old pension scheme, dearness allowance is given after 6 months. There is no such rule in the New Pension Scheme.
Which government started the new pension scheme?
The new pension scheme was approved during the tenure of former Prime Minister Manmohan Singh. During that time the UPA government had said that every year 5 lakh 76 thousand crore rupees have to be paid only in the form of pension to the states and the center.
The government had told that Punjab is spending 34 percent every year on pension. On the other hand, Himachal Pradesh is spending 80 percent of its total revenue and Bihar 60 percent. The government had argued that if state expenditure and loan interest were added, the states would have
