8th Pay Commission: Big blow to government employees! Why will it be difficult to implement the old pension scheme?

Old Pension Scheme: During the meetings of the 8th Pay Commission, the constant demand of the Government Employees Unions has been to reintroduce the ‘Old Pension Scheme’. Over the years, organizations have been demanding that the ‘Old Pension Scheme’ be implemented in place of the ‘National Pension System’. But during the 8th Pay Commission deliberations, the debate on the issue has gained momentum once again. Even employee representatives have now begun to admit that scrapping the NPS altogether may not be as easy as it once seemed. Now the question arises that why exactly is this?

Challenging return to OPS?

As a matter of fact, almost two decades have passed since the NPS was implemented. During this period, funds of over ₹16.5 lakh crore have been accumulated under the scheme through contributions from both employees and the government. This capital is invested in the stock market, government bonds and various corporate instruments through public sector financial institutions like LIC, SBI and UTI.
As a result, if the government decides to revert to OPS altogether, this huge amount will have to be withdrawn from the market suddenly. Such an action would cause severe volatility in both the stock market and the bond market. Moreover, this may create the risk of increasing the intensity of liquidity crisis.

For precisely this reason, many labor unions are now not only calling for a complete return to OPS; Instead, they are now demanding ‘OPS-like guarantees’. Especially under the current framework of NPS or through an ‘integrated pension scheme’ the hope is strong.

Employees still demand ‘OPS’?

Despite financial market complexities, government employees demand ‘old pension scheme’; This is because this scheme assures them a 100% safe and inflation-proof future for life. Under OPS, not a single rupee is deducted from an employee’s salary towards pension; The entire cost of pension is borne by the government from its own budget.

In contrast, under NPS/UPS employees are required to contribute 10 percent of their basic salary to the pension fund every month. These employees feel that it is unfair to be deducted from their hard earned income in this way. Moreover, under OPS the government revises ‘Dearness Allowance’ twice a year, while no such provision is available in NPS.