Implementation of Old Pension Scheme OPS to be detrimental for larger public: Ex-RBI governor D Subbarao
- Former RBI Governor D Subbarao said the decision to restart OPS will be decidedly a ‘regressive move’ and will provide more privilege to government servants at the cost of the larger public
With several non-BJP-ruled states contemplating going back to Old Pension Scheme (OPS) system, the former RBI Governor D Subbarao has made a piece of cautionary advice about the danger of retrograding to this rule. The ex-RBI Governor said the decision to restart OPS will be decidedly a “regressive move” and will provide more privilege to government servants at the cost of the larger public.
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.
Meanwhile, the Himachal Government has already announced that it will be implementing the OPS for its employees. However, the New pension Scheme (NPS) will also remain active, based on the choice of the government employee.
Moreover, the Ministry of Personnel on Friday also opened an opportunity for a selected central government staff where they can switch from NPS to Old Pension Scheme by 31 August 2023.
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. The NDA-led BJP government abolished this scheme in 2003 with effect from April 1, 2004. Instead, the NDA introduced New Pension Scheme. Under the NPS, government employees contribute 10% of their basic salary towards their pension while the government contributes 14%. The private sector was also included under the NPS system.
Speaking against the ill-effect of OPS, former RBI governor D Subbarao said, "In a country where the large majority of the people have no social safety net, government servants with an assured pension are a privileged lot". "Privileging them even further at the cost of the larger public will be morally wrong and fiscally detrimental," he said.
According to Subbarao, if state governments revert to a 'pay as you go' pension scheme, the burden of pensions will fall on current revenues which in turn means foregoing schools, hospitals, roads, and irrigation.
In January this year, the Reserve Bank of India (RBI) also sounded a note of caution on reversion to the old pension scheme. The central bank said that OPS poses a major risk on the “subnational fiscal horizon” and would result in the accumulation of unfunded liabilities in the coming years for them.
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Business NewsNewsIndiaImplementation of Old Pension Scheme OPS to be detrimental for larger public: Ex-RBI governor D Subbarao
First Published:4 Mar 2023, 10:53 AM IST
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