Pension schemes and their beneficiaries are under fire right now because pensioners are always ranting about troubled pension schemes that are all-too actual in nature.Presently, there is a raging debate among the pensioners, government employees, and public at large on issues concerning pension schemes and how pensioners are doing really well. Barely a couple of months ago, the Union government rolled out a unified Pension Scheme (UPS) intended to replace the current National Pension Scheme (NPS) for its employees, scheduled for full operation by April 2025, thus It brings in a more wondrous opportunity for all employees who joined after 2004. To stay with the NPS or to choose the new UPS?Comparative introduction of two contrasted schemes. Established defined contribution scheme brought by NPS replaces old pension scheme-OPS since 2004.The members contribute to their NPS account, which comprises 10% of their salaries, while the central contributes an additional 14%.The corpus itself is invested in a mix of government securities, equity stocks, and corporate bonds in a manner similar to that of mutual funds. When it comes to settlement, 40% of the amount has to be dealt with an annuity. Whereas, with the Unified Pension Scheme-UPS ,that lionizes a guaranteed pension of 50% of the average pay of the last 12 months, is only in favor of those individuals who served for 25 or more years.The rate of government contribution under the UPS 18.5% whereas employee rate stands at 10%.
UPS offers a mass and offers a lump sum retirement benefit. UPS has assured benefits for providing a more secured retirement plan. Employment with UPS will entitle those whose calculations are worked upon rustic in nature to assured pensions at least 50 percent of their basic average base salary, through the provisions of salaries including compensatory allowances for staff who have similarly worked there for about 25 years. In the case of an employee’s death, the spouse will be paid a family pension equal to 60 percent of the deceased employee’s pension. For any service of atleast 10 years, the minimum assures of Rs. 10,000. Backing up the assured pension and family pension with inflation under the UPS. The graduate in the UPSeares will deserve Dearness Reliefs grants. Reimbursement to employees upon quitting substantially sums amount. The public UPS would also provide him with the following:
1. Higher Government Contribution:- One of the most significant advantages of UPS is the increased government contribution of 18.5% ,compared to 14% under NPS .This boost in contribution is expected to result in a larger pension corpus, ensuring better financial security post-retirement.
2. Guaranteed Pension:- UPS guarantees a pension equal to 50% of the average salary over the last 12 months of service. This assurance makes UPS a safer option for risk –averse employees, particularly given the market volatility that can impact the returns on NPS investments.
3:- Minimum Payout and Lump Sum Benefits—For employees with at least 10 years of service ,UPS offers a minimum monthly payout of Rs 10,000, providing a safety net for lower earning employees. Additionally, the scheme includes a lump sum payment at retirement ,linked to the duration of service, offering further financial support.
4: - Investment Flexibility and Market Risks:- While UPS offers a guaranteed pension, it limits the potential of higher return that NPS might offer through market linked investments. Under NPS, employees can choose from various investment options, including up to 65% in government securities, 15% in equities, and reminder in corporate bonds.
Yet, they are still at risk from market fluctuations, thus affecting the actual pension to be received. UPS, on the other hand, gives its employees protection from market fluctuations, thus providing income in retirement that is stable and predictable. This stability, especially for those nearing retirement, may, in fact, have more value than mere possible returns that may be obtained from the NPS. Others argue that this move takes us back from all that the NPS did toward linking the pension benefits to market mechanism. Nevertheless, nothing really changes this: UPS, as yet, was innately based on a defined contribution scheme but provides the extra cushions to assure a minimum pension. It is equally an answering call to the steep demand from all government employees for such a guaranteed pension but not a return to unfunded liabilities of the Old Pension Scheme. UPS provides a platform where the government contribution stands at 18.5%, compared with 14% under NPS. The incremental employer contribution towards the pension corpus, the UPS is expected to bring a signficantly larger pension fund corpus and better financially secured post-retirement. Under UPS, employees contribute 10% of their salary while government contributes 18.5%. Under NPS, employees contribute 10% of their salary while government contributes 14%.
OPS means that the entire cost will have to be borne by the government, with no contributions whatsoever coming from employees. UPS is related to all India consumer price index - CPI for industrial workers. According to the government, UPS is going to benefit 23,00000 government employees. The UPS is at present designed for central government employees only, but it will soon be applied in the states and UTs as well. Union cabinet has decided and announced the UPS because the government employees were dissatisfied with the NPS because of the financial risks it posed by being linked to market risks and because there was no guarantee of the payment of monthly pension, and they were, thus, demanding OPS. But the government devised UPS very meaningfully to take out the resentment and insecurity of monthly pension. Surprising the paper has mentioned that erstwhile the Finance Department of Jammu and Kashmir UT has ordered the physical verification of the pensioners to be done by the respective treasury officers and all that during this period of blistering heat and the humid pour. And forced old pensioners to stand in long queues at the treasury officer's related office and to complete multi formalities for getting the PPO verified along with physical verification. One wonders as to why is government putting the old pensioners to trouble off and on. This is to be assessed on the other hand that due to the old verification and the provisions made by the government each year/SIC each month to notify and instruct this innocent lot to produce living certificates.
Government should ascertain, in this age of science and technology, the existence of pensioners through means of digital application. Quite a few government pensioners from Jammu and Kashmir are at present settled not only in the region but also across the country. The finance department of Jammu and Kashmir promised no ways for the physical verification of such pensioners. This has all the while created innumerable problems and dissatisfaction among these pensioners. Either the government should relieve all the pensioners outside Jammu and Kashmir from physical verification or give some mechanism whereby these pensioners can get their pension and physical verification from outside Jammu and Kashmir at the places they are staying, through Jammu and Kashmir Bank or any bank from where they used to draw monthly pension to keep their dignity intact with no further video calls from the office.The full forms of PPO is, says some pensioners connoting they are "pensioners prisoner order". About the UPS ,it is rather better than NPS as it has no element of risk involved with the pension .On the other hand; NPS has a very high yield since it has the market risk. A high number of pensioners support the NPS, so it should go on for those pensioners that support it, while they should have an option between the UPS and NPS to choose. The unified pension scheme introduced by the union cabinet under Prime Minister Narendra Modi has been the cause of wishful opposition and great anger among the state employees. The government employees now want the OPS back, which they think is far superior.
Retirement had financial security and peace of mind by OPS, which is not guaranteed by UPS. The ongoing turmoil has indeed been fueled by the continuation of OPS for MPs and MLAs while denying this privilege to government employees. Employees question the rationale behind this very selective application of the pension policies. Why so, if OPS is still valid and beneficial for lawmakers? What about the other people who serve the public through various government departments? It should not be out of place to mention that a pensioners' organization called the National Old Pension Restoration United Front is anti-Ups and asked the prime minister, through a memorandum, to revert to OPS in the interest of old-age pensioners. Some do maintain that OPS is the best since it does not come with any risk associated with it and provides the highest security of minimum pension under the old scheme. No pension scheme can be said to have a hundred percent advantage, but UPS does have an edge by ensuring better contribution of 18.5% from the government. However, there are still some who consider OPS as better in terms of financial security to the pensioners and therefore the government should concede the demand for restoring OPS to rid the market risks associated with NPS and to act on this and concede the demand of the pensioners.
(Writer:- Vivek Koul and Co-Writer:- Omkar Dattatray)
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