In a good news to thousands of employees in Himachal Pradesh, the state government has announced that it will restore old pension scheme. The newly elected government took the decision during its first cabinet meeting held on Friday. The Himachal Pradesh government will soon issue the guidelines for the implementation of the scheme.
In 2004, the National Pension System (NPS) replaced the old pension scheme or the defined benefit scheme in placefor the government employees. However, the government employees have been criticizing the NPS or the defined contribution scheme because of its lack of security and predictability in terms of post-retirement benefits.
The state government said that the decision to restore OPS was taken after considering the demands and concerns of the employees. The scheme will be in place for all the government employees who were covered under the old pension scheme prior to its discontinuation in 2004, and will also be applicable for new employees.
The OPS is a traditional pension scheme in which benefits are defined and are based on the length of service and salary of the employee. Under this scheme, a fixed pension amount and a gratuity is given to the employee and it is calculated on the basis of the number of years of service and the last drawn salary.
Difference between OPS and NPS
The OPS is a traditional pension scheme in which benefits are defined and are based on the length of service and salary of the employee. On the other hand, the NPS is a defined contribution scheme in which the benefits are offered on the basis of the employee’s contributions and investment returns.