Old Pension Scheme is a pension-oriented scheme, while the National Pension Scheme is an investment cum pension scheme. The Old Pension Scheme was discontinued by the Central Governemnt in December 2003. The government had launched the Nation Pension Scheme (NPS) as an alternative for the Old Pension Scheme.
Old Pension Scheme
Key Points
After Retirement, the Old Pension Scheme promises a fixed monthly income to governmenrt employees.
The 50 percent of the last drawn salary provided as a pension.
Tax benefits were not applicable to the employees.
Income under the Old Penshion Scheme was not taxable.
Only Government employees can avail the benefit of pension under the Old Pension Scheme, after retirement.
National Pension Scheme
Key Points
The National Pension Scheme (Contribution based pension Scheme) was introduced by the Central Government on 22nd December 2003.
NPS made as mandatory for all new recruitments by January 2004.
Government Employees as well as Private sector employees also can avail the benefits of pension scheme by NPS.
Under the National Pension Scheme, employees also contribute money from thier salary during their employment period.
Why Government needed to shift from OPS to NPS?
The National Pension Scheme offer a wide range of investment options and choice of Pension Funder (PFs) for planning the growth of the investments in a reasonable manner.
In NPS, subscriber can swith between the investment option from one to another.
NPS provide a hassle-free arrangement for the individual subscribers while he/she shifts to the new job/location, without leaving behind the corpus build, as happens in many pension schemes in India.
NPS account is easily manageable via online method.
Why there is Demand for Restoration of Old Pension Scheme?
Under the Old Pension Scheme, the payout is fixed and there was no deduction from the salary. Employees get their pension according to their last drawn salary, which is half of it. Employees also get the benefit of Dearness Allowance (DA), twice a year. Provision of the General Provident Funder (GPF) was also available under the OPS. While in National Pension Scheme, employees need to deposit 10% of their basic Pay, along with the Dearness Allowance. It can be said that the payout is not fixed.
As per my concern, the Old Pension Scheme is better than NPS. Under OPS, the pension amount is fixed and there was no deduction from employees salary but it should also be mandatory for Private sector employees so that they can also avail the benefits of pension.
