Evolution of Pension Schemes
Old Pension Scheme (OPS)
Provided a fixed pension based on the last drawn salary, ensuring financial stability for retirees.
The government bore full responsibility for pension disbursement, insulating retirees from market risks.
Enabled predictable income, allowing for effective retirement planning.
New Pension Scheme (NPS)
Introduced in 2004, this model involves employee and government contributions to a fund invested in financial markets.
Pension payouts are tied to market performance, exposing retirees to financial volatility and uncertainty.
Viewed as a neoliberal shift reducing state welfare responsibilities, resulting in less security for retirees compared to the OPS.
Unified Pension Scheme (UPS)
Aims to provide universal pensions while balancing state and market roles, addressing NPS shortcomings.
Critics argue that it offers lower returns than the OPS, requires 25 years of service for full benefits, and primarily covers Union government employees.
The UPS must incorporate safeguards against market fluctuations and ensure broader inclusivity beyond just government employees.
Impact on Retirees
The shift from OPS to NPS has left retirees more exposed to market risks, impacting their financial stability, especially during economic downturns.
The global retreat from neoliberal policies and the impact of events like the COVID-19 pandemic have reignited demands for stronger social safety nets in India.
With the emergence of the UPS, there is potential to create a more balanced and secure pension system, providing better support for all retirees.
Inclusivity and Coverage
A significant portion of India’s informal workforce lacks pension coverage, highlighting the need for the UPS to address these gaps.
The level of government contribution in the UPS requires attention to ensure a more equitable pension system.
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