Gujarat and Himachal Pradesh ready to go to polls, India’s political tempers
are heating up. Manifestos are being published and tall promises being made.
While both these states currently have Bharatiya Janata Party (BJP) governments
in power, the opposition – Congress and Aam Aadmi Party (AAP) – are both
looking to make a major dent in Narendra Modi’s near-complete control over
northern and western India.

At the
centre of the poll plank in 2022 is the issue of pension for government
employees. Congress has promised to revive the Old Pension Scheme (OPS) if it
comes to power in Himachal Pradesh. AAP had made the same promise in Punjab.
However, the Bhagwant Mann-led government is yet to fulfil the pledge. This, on
the other hand, has caused the party significant trouble in Himachal.

What is
the Old Pension Scheme (OPS)?

The Old
Pension Scheme is the method in which the government paid pensions to its
employees before the introduction of the New Pension Scheme (NPS). Under the
Old Pension Scheme, employees would receive 50% of their last drawn basic
salary as pension along with other benefits. This meant, employees would have a
fair idea of the amount of money they were going to draw every month upon retirement.

The Old
Pension Scheme was discontinued with effect from April 1, 2004.

What is
the New Pension Scheme (NPS)?

The New
Pension Scheme follows a contributory framework similar to the provident fund
model followed by private and government bodies. Under the New Pension Scheme,
employees have to contribute 10% of their monthly salaries towards retirement.
Every government employee is assigned a PRAN (Permanent Retirement Account
Number). The government, on the other hand, pays 14% of the salary plus
dearness allowance. This was raised from 10% in 2019.

The money saved
can then be used by fund managers to invest.

Why do
government employees want the Old Pension Scheme back?

groups have been seeking a return to the Old Pension Scheme ever since the New
Pension Scheme came into effect. Worker unions fear that there will be no
guarantee on fixed returns of the money invested for pensions.

Why is
Old Pension Scheme one of the central planks of Gujarat and Himachal polls?

There are
more than 7 lakh state government employees in Gujarat. Of them, 3-4 lakh will
be impacted by a return to the Old Pension Scheme. Himachal Pradesh has 2.5
lakh government employees. Worker unions in both these states have sought a
return to the OPS. States have the power to withdraw from the New Pension