In the run-up to the Assembly elections in Harya and Jammu and Kashmir the Narendra Modi led government announced the UPS. The Union Cabinet chaired by the Prime Minister has given its approval to the scheme which will come into operation from 1st April 2025. Employees working in government can choose between the UPS or the current National Pension Scheme (NPS), said the I&B Minister Ashwini Vaishnaw.
The introduction of UPS has come in the wake of criticisms on the NPS that has linked pension amount to market- linked instruments based on contribution from employees and government. Begun in 2004 as a policy-making of the Atal Bihari Vajpayee government, the NPS is currently experiencing pressure to return to the Old Pension Scheme (OPS). Thus, to counter it, the Modi government formed a committee headed by Finance Secretary TV Somanathan to revisit NPS which led to the UPS proposal. With the debate turning more political, several states reverted to OPS, a government-sponsored program that offered lifetime pension at 50 per cent of the last drawn salary without the employees’ contribution.
States that reverted to the OPS include:States that reverted to the OPS include:
- Chhattisgarh: Chhattisgarh Congress chief minister Bhupesh Baghel’s government reinstated IAS through the issue order on May 11, 2022.
- Rajasthan: In February 2022, under the rule of Gehlot, the state of Rajasthan went back to the OPS.
- Himachal Pradesh: The incumbent government under the chief minster Sukhwinder Singh Sukhu resumed the OPS from the month of January, 2023.
- Punjab:The Aam Aadmi Party government has said that they would be rolling back to the OPS on 18 November 2022; however, this decision has not yet been put into practice.
In its October monthly bulletin, the RBI said that rolling back to the OPS is ‘fiscally unsustainable’ and amounts to ‘rollback to a major step backwards’.
