The request for the reinstatement of the former pension plan is being submitted on behalf of central personnel as well as state and local government employees. In many places where the BJP is not in power, the old pension (OPS) has been reinstated in response to employee demands. Employees in Rajasthan, Chhattisgarh, Himachal Pradesh, Punjab, and Jharkhand have begun receiving benefits under the Old Pension Scheme. However, the Reserve Bank of India (RBI) has cautioned against the state government’s choice.
The financial burden will increase with the Old Pension Scheme restoration.
According to RBI, restoring the OPS will put a further financial strain on the states. The central bank stated in its assessment that this action poses a significant danger for the future in “State Finances: Study of Budget of 2022-23” (State Finances: A Study of Budgets of 2022-23). In the years to come, this choice may lead to an issue with underfunded pension liabilities. According to RBI, certain states may modify their current pension plans.
The central government is aware.
The decision of the governments of Chhattisgarh, Rajasthan, Himachal Pradesh, Punjab, and Jharkhand to reinstate the OPS has been sent to the Central Government. These governments had pledged to reinstate the old pension in their electoral manifestos. Following this, there is a political standoff between states with and without BJP rule. According to RBI, the decision to reinstate the previous pension will only result in a temporary reduction in fiscal resources each year.
In OPS, financing is handled in this manner.
Let us remind you that the OPS was terminated on April 1st, 2004, by the BJP-led NDA government. The National Pension Scheme (NPS) was implemented as a substitute. According to this, government workers contribute 10% of their base pay towards a pension. The government’s contribution to this amounts to 14%. Employees in the private sector are also counted in the NPS.
According to experts, the old pension is not financially viable. This is a duty that puts an ever-increasing strain on the exchequer. D Subbarao, a former governor of the RBI, already discussed the detrimental effects of OPS extensively.
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