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Business News/ News / India/  'Find less costly ways...': Raghuram Rajan speaks on Old Pension Scheme
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'Find less costly ways...': Raghuram Rajan speaks on Old Pension Scheme

Former RBI Governor Raghuram Rajan said the old pension scheme does involve massive future outlays because of the indexation of pensions to current salaries

Raghuram Rajan, former governor of the Reserve Bank of India (RBI) (Bloomberg)Premium
Raghuram Rajan, former governor of the Reserve Bank of India (RBI) (Bloomberg)

Former RBI Governor Raghuram Rajan has expressed his concern regarding the Old Pension Scheme (OPS).

He said that restarting the old pension scheme would be an enormous obligation in the long run, adding, "less costly ways should be found to address the demands of government pensioners".

The former RBI governor said the old pension scheme does involve massive future outlays because of the indexation of pensions to current salaries.

He has advised state governments said the old pension scheme does involve massive future outlays because of the indexation of pensions to current salaries.

Last week, the central government asked a group of select government employees to opt for the old pension scheme.

As per the Ministry of Personnel, the employees who joined the central government services against posts advertised or notified before December 22, 2003, the day National Pension System (NPS) was notified, are eligible to join the old pension scheme under the Central Civil Services (Pension) Rules, 1972 (now 2021).

Under Old Pension Scheme (OPS), employees get a defined pension. An employee is entitled to a 50% amount of the last drawn salary as a pension.

OPS was discontinued by the NDA government in 2003 with effect from April 1, 2004.

Under the new pension scheme (NPS), employees contribute 10% of their basic salary towards pension while the government contributes 14%.

The governments of Rajasthan, Chhattisgarh, and Jharkhand have informed the central government/ Pension Fund Regulatory and Development Authority (PFRDA about their decision to restart OPS for their employees.

The government of Punjab on November 18, 2022, issued a notification regarding the implementation of OPS for the state government employees who are being covered under NPS. Jharkhand too has decided to revert to OPS.

Last week, the Himachal Pradesh cabinet also finalised the OPS that will benefit 1.36 lakh employees. The government has also kept the provision of NPS active asking the employees to give their consent to the government if they want to be governed under the NPS.

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Published: 07 Mar 2023, 08:36 AM IST
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