NPS ie National Pension System was implemented by the Central Government in the year 2004. But the struggle between the government and the employees regarding the old pension scheme and the new pension scheme has been going on for a long time. In fact, the employees have been campaigning for the restoration of the old pension system (OPS) for almost 17 years. Even the employees of many states of the country including Uttar Pradesh have been protesting, protesting against it.

Recently, information has been received through the media, that the Central Government is discussing the demands of the employees and for this opinion has been sought from the Law Ministry of the Central Government regarding OPS. In such a situation, it is necessary for us to know, what is OPS and NPS? So let’s know what is Old Pension Scheme (OPS) and also what is the difference between OPS and NPS scheme?

What is Old Pension Scheme?

Central employees consider the old pension system to be better, and for this they have been fighting for a long time. During the Old Pension Scheme (OPS), when the employees retired from the job, their pension was fixed equal to 50 percent of the last salary.

In the old pension system, whether the employee had worked for 40 years or only 10 years, but his pension was determined by the last salary. In the OPS system, the entire pension received by the employees was given by the government and there was a guaranteed return for the contribution of the employees to the GPF.

What is New Pension Scheme (NPS)?

National Pension Scheme (NPS) is a social security initiative launched by the central government for government employees. The new pension system is a mandatory contribution for the employees of public, private and even unorganized sectors except the armed forces on or after January 1, 2004.

The National Pension Scheme (NPS) is being administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Although the NPS scheme was started for all categories of people from the year 2009, in which any person can take advantage of this scheme by contributing to the pension account.

Under NPS, a fixed amount is contributed every month and on retirement, the employee can withdraw only 60 percent of the total amount. Whereas with the remaining 40 percent of the amount, the employee has to buy the annuity plan of the insurance company. The interest earned on this insurance plan every month is received by the employee in the form of pension. In this, there is no guarantee that how much amount the employee will get per month as pension.

What is the difference between OPS and NPS Scheme (OPS & NPS Scheme Difference)?

  • GPF facility is available for the employees in the old pension scheme, but there is no GPF facility in the new pension scheme.
  • In OPS, no deduction is made from the salary of the employee for giving pension, whereas in NPS, a deduction of 10 percent is prescribed every month from the salary.
  • In the old pension scheme, there is a guarantee of getting 50 percent of the final salary on the retirement of the employee, while in the new scheme there is no confirmation about how much pension you will get. Because it is completely dependent on the insurance company and the stock market.
  • The old pension is given by the government whereas in the new scheme the employee is dependent on the insurance company for pension.
  • In case of any dispute, you can fight with the government, whereas in the new scheme, the employee will have to fight with the insurance company.
  • In OPS, if the employee dies while in service, then he gets death gratuity of Rs 20 lakh, whereas there is no facility like death gratuity in NPS.
  • People coming in old pension get family pension and job facility to their family on death in service, whereas pension and job have been abolished in New Pension Scheme.
  • In the old scheme, the pensioner also gets the benefit of dearness and pay commissions after every 6 months, whereas in the new scheme only a fixed pension will be available.
  • The facility of taking loan from pensioner G.P.F. is available in OPS scheme, whereas there is no loan facility in NPS.
  • In the old pension scheme, the employee does not have to pay any tax during retirement, but in the NPS scheme, only 60% of the amount will be received during retirement and it will be taxed.
  • In the old pension scheme, a fixed rate of interest is available on GPF, but the new pension scheme is completely based on the stock market.

Experts Opinion:

According to some experts, the old pension scheme is a safe option for the employees, but under the new pension scheme, money is also invested in equity. Due to which the returns can be quite high when the employee retires after a long period of service. The second thing is that the New Pension Scheme is much better in terms of tax or tax because LIC can claim deduction up to 1 lakh 50 thousand on New Pension Scheme contribution including premium and investment in PPF etc.

Apart from this, claims of other deductions up to 50 thousand can be presented. Altogether up to Rs 2 lakh can be claimed. But the employee has to keep in mind that if the employee’s contribution exceeds 6 lakh 50 thousand in any year, then the additional amount is added to the income, on which the employee has to pay tax.

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