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Journalism of Courage
Punjab CM Bhagwant Mann Monday announced that the state government was considering implementing the old pension scheme in the state. He also said he has directed the state Chief Secretary to work out the modalities.
What is the old pension scheme?
The old pension scheme was discontinued on April 1, 2004, and replaced with the National Pension Scheme. In the old pension regime, pension was 50% of the last drawn salary of the employee and the entire amount was paid by the government. The national pension scheme (NPS) or contributory pension scheme is effective for the employees who joined on or after April 1, 2004. Under this scheme, the employees contribute 10 per cent of their salary towards pension and the state government contributes 14 per cent. The amount is then deposited with PFRDA where it is invested.
Which states have reverted to the old pension scheme?
Chhattisgarh was the first state to announce the OPS. After that Jharkhand and Rajasthan also announced reverting to the old system. Punjab is the fourth state to say that it is considering restoring OPS, and the announcement has come from the CM. He said that he has directed the Chief Secretary to study the possibility of restoring OPS.
How can the move help AAP politically?
The National Movement for Old Pension Scheme (NMOPS), which has been spearheading a campaign across the country asking the states to revert to the old pension scheme, has announced that it would support any political party in Gujarat and Himachal Pradesh elections, that would promise OPS. If the Aam Aadmi Party (AAP), that now rules Punjab, implements it before elections in these states, it could reap some political benefit in Gujarat and Himachal.
The employees in Punjab have also been demanding the state to restore the OPS scheme. Hundreds of employees in Gujarat had protested in the state on Sunday to demand the old pension system. Similarly, the employees in Himachal Pradesh had also held a protest in Shimla a few days ago in the election-bound state.
What are the financial implications of bringing the scheme back?
The old scheme was scrapped by the Centre in 2004 keeping in mind the financial burden. For instance, Punjab already has a fat pension bill of Rs 11,000 crore annually which burns a hole in the state’s pocket. This is 19 years after the old pension scheme was scrapped. The bill would go up after the old pension scheme is brought back. The state has a debt of Rs 2.63 lakh crore this fiscal which is mounting. The state also has a burgeoning bill of power subsidy at Rs 18,500 crore. It may cross Rs 20,000 crore.
