Old Pension Scheme Vs NPS: In recent times, Old Pension Scheme has been implemented in many states, so it is becoming the biggest election issue in Madhya Pradesh in the upcoming assembly elections. Opposition party Congress has announced to implement the Old Pension Scheme if it comes to power in the state. But an article published in the RBI Bulletin warns that the financial condition of the states may deteriorate if the old pension scheme is adopted. After re-implementation of the old pension scheme, it is possible to increase the pension burden of the government by 4.5 times as compared to the new pension scheme.
RBI’s study on the effects of OPS
In the article written in the RBI Bulletin issued for the month of September, which is not the opinion of the RBI, it was told that a study has been done on the effects of OPS. The article said that while adopting pension reforms in the first decade of the present century, most of the states adopted the National Pension System in which contribution has to be made to get pension. But in recent times, the demands for reinstatement of the old pension scheme have increased and some states have also implemented it in their states.
Pension burden on states will increase
According to the bulletin, a study has been done on the contribution of the states in NPS and the financial implications of adopting the Old Pension Scheme by all the states. According to the study’s conclusion, re-adoption of the old pension scheme will reduce the pension expenditure of the states in the short term but will see a huge increase in unfunded pension liabilities in the future. The increasing pension burden due to the old pension scheme will exceed the contribution of the states to NPS by 2030.
Pension burden of 0.9% of GDP by 2060
According to an RBI study, on adoption of the Old Pension Scheme, the pension expenditure will increase by about 4.5 times of the estimated pension expenditure under NPS. The burden on the treasury due to the Old Pension Scheme will increase to 0.9 percent of GDP by 2060.
Financial reforms will face a setback
The RBI bulletin warned that when most of the countries in the world are moving towards defined contribution plans for pension, returning to the old pension scheme by the states will prove to be a step that weakens the benefits of the previous financial reforms. The study said that withdrawal of the old pension scheme can destabilize the financial condition of the states.
Central government also under pressure
After the implementation of the Old Pension Scheme by the states, the Modi government at the Center is also under pressure because in 2024
Also read- Get more latest business news updates