Rules of old pension scheme changed: There is a big news for government employees. The Central Government has made some important changes in the rules of retirement and pension. With these changes, employees will get many new options and facilities. The special thing is that now employees can take voluntary retirement after 20 years of service.
These new rules will not only benefit the existing employees, but it is also a good opportunity for those who want to do government jobs in the future. Let us know about these changes in detail and understand what their impact will be.
Why was there a need for change in the pension scheme?
Under the old pension scheme (OPS), there was a huge financial burden on the government. Therefore, the New Pension Scheme (NPS) was launched in 2004. But NPS also had some shortcomings which needed to be removed. Therefore, the government has now again made some changes so that the employees can get more benefits.
Highlights of the new rules
| Description | Information |
| voluntary retirement | Can take after 20 years of service |
| notice period | 3 months notice will have to be given |
| beneficiary | All central government employees |
| effective date | From 1st April 2024 |
| basis of pension | As per NPS rules |
| other benefits | GPF, gratuity etc. will be available |
| Option | Can choose OPS or NPS |
| Last date of application | Till 31 August 2023 |
New rules for voluntary retirement
- Now employees can take VRS anytime after completing 20 years of service
- To avail VRS it will be necessary to give notice 3 months in advance
- Employer cannot refuse VRS application
- VRS taker will get pension as per NPS rules
- All other benefits like GPF, Gratuity etc. will be available like regular retirement.
Option to choose between OPS and NPS
The government has given some employees the opportunity to choose between the Old Pension Scheme (OPS) and the New Pension Scheme (NPS):
- This option is for those employees who were appointed to the advertised posts before 22 December 2003.
- For this you will have to apply by 31 August 2023
- Those who do not apply till this date will remain in NPS only.
- Those opting for OPS will get the amount deposited back into their NPS account.
Highlights of New Pension Scheme (NPS)
- NPS is a contributory pension scheme
- Both employees and government contribute in this
- 60% of the amount can be withdrawn in lump sum on retirement
- The remaining 40% has to be used to purchase annuity which provides monthly pension.
- NPS account is portable and remains active even after changing jobs
- In this the employee has the freedom to choose the investment option.
What was the Old Pension Scheme (OPS)?
- In OPS, the employee used to get 50% of the last salary as pension.
- The employee did not have to make any contribution in this
- The government bore the entire expense
- With the increase in dearness allowance, pension also increased.
- This scheme was putting a huge financial burden on the government.
Impact of new rules
- Employees will get more flexibility
- After 20 years, you can start another career by taking VRS.
- The pension burden on the government will reduce
- Employees can get better returns from NPS
- By giving the option of OPS, the demand of old employees will be fulfilled.
Response of employee organizations
- Many organizations are still demanding the return of OPS
- They say that there is no guarantee of pension in NPS
- But the government believes that NPS is a more sustainable system.
- Some state governments have announced to bring back OPS.
expert opinion
Economic experts believe that the withdrawal of OPS could be economically fatal. According to him:
- OPS puts a huge burden on the government
- This leaves less money for development works.
- NPS is a better and sustainable system
- But NPS also needs some improvement
government’s side
The government says that the new rules are in the interest of the employees. According to him:
- This will give employees more options
- You can get better returns from NPS
- The financial burden on the government will reduce
- Future generations will not be burdened with debt
Tips for Employees
- Understand your options thoroughly
- Know the advantages and disadvantages of both OPS and NPS
- Take the decision according to your age and length of service
- Think carefully before taking VRS
- Choose the right investment options in NPS
conclusion
The new rules can be beneficial for both the employees and the government. This will provide more options to the employees and will also reduce the financial burden on the government. But to take full advantage of these, employees will have to understand their options well and take decisions thoughtfully.
Disclaimer: This article has been written for information purposes only. Change in pension rules is a complex issue and there can be different opinions on it. Please take government orders and expert advice before taking any decision. The author or website will not be responsible for any wrong decision.
