The Indian government has announced that select central government employees will be given a one-time option to switch from the National Pension System (NPS) to the old pension scheme. This move has been welcomed by many employees who have been demanding the option to switch back to the old scheme.
Under the NPS, employees contribute a percentage of their salary towards a pension fund, which is then invested in the stock market. The old pension scheme, on the other hand, guarantees a fixed pension for employees after their retirement.
The government had introduced the NPS in 2004, with the aim of providing a sustainable and long-term pension solution for government employees. However, many employees have been unhappy with the scheme, as they feel that the returns on their investments are not sufficient, and there is a risk involved in investing in the stock market.
The option to switch back to the old pension scheme will be available to employees who had joined service before January 1, 2004, and who had not opted for the NPS. The move is expected to benefit around 3.5 lakh employees who had been demanding the option to switch back to the old scheme.
The government has clarified that employees who opt for the old scheme will have to forgo the benefits of the NPS, such as the government’s contribution to the pension fund. They will also not be able to withdraw their entire corpus at the time of retirement, as they would under the NPS.
The move has been welcomed by employee unions, who have been demanding the option to switch back to the old scheme for a long time. They have argued that the NPS is a risky investment, and that many employees have lost money due to the volatility of the stock market.
The government’s decision to allow employees to switch back to the old scheme is a welcome move, as it gives employees the option to choose the pension scheme that best suits their needs. However, it remains to be seen how many employees will opt for the old scheme, given that they will have to forgo the benefits of the NPS.