What is the Old Pension Scheme (OPS)?

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Overview:

The finance ministry recently said governments of five states -- Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh -- had informed the Centre about their decision to revert to the old p

About Old Pension Scheme (OPS):

  • Under the OPS, employees get a defined pension. 
  • Only government employees were eligible to receive a pension under the OPS after retirement.
  • Under this, an employee is entitled to a 50% amount of the last drawn salary as pension.
  • The pension amount is not deducted from the salary of the employee during the period of employment. 
  • The entire pension amount to a government employee is paid by the government.
  • Under the OPS, a retired government employee used to get the benefit of the revision of Dearness Relief (DR) twice a year. 
  • There was the provision of the General Provident Fund (GPF) under OPS. 
  • The scheme was discontinued in 2004.

 

What is the General Provident Fund (GPF)?

  • GPF is available only for government employees in India. 
  • It allows all government employees to contribute a certain percentage of their salary to the GPF.
  • The total amount accumulated throughout the employment term is paid to the employee at the time of retirement.
  • Interest rates on GPF are revised periodically according to the government’s issued notifications.

 


Q1) What is National Pension System (NPS)?

NPS is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life. NPS seeks to inculcate the habit of saving for retirement amongst the citizens.

Source: "5 States To Restart Old Pension Scheme": Minister Informs Lok Sabha