NEW DELHI: The former RBI Governor D Subbarao has issued a piece of warning counsel regarding the danger of retrograding to this norm as some non-BJP-ruled states consider returning to the Old Pension Plan (OPS) scheme. The decision to reinstate OPS, according to the former governor of the RBI, will be unquestionably "regressive." "and will give government employees more privileges at the expense of the general population.

The national government/Pension Fund Regulatory and Development Authority (PFRDA) has been notified by the governments of Rajasthan, Chhattisgarh, and Jharkhand about their determination to reinstate OPS for their employees.

The Himachal Government, however, has already said that it will be implementing the OPS for its personnel. Yet, depending on the employee's preference, the New Pension Plan (NPS) will also continue to be in effect.
Moreover, the Ministry of Personnel on Friday made it possible for chosen central government employees to convert from the NPS to the Old Pension Plan by August 31, 2023.

Employees get defined pension benefits under the Old Pension Plan (OPS). Employees are eligible for a pension equal to 50% of their most recent salary. This programme was discontinued beginning on April 1, 2004, by the BJP-led NDA administration in 2003. The NDA instead unveiled the New Pension Plan. According to the NPS, the government contributes 14% of the pension, with employees contributing 10% of their base pay. The NPS system also applied to the private sector.

"In a country where the vast bulk of people have no social safety net, government officials with an assured pension are a privileged lot," former RBI governor D Subbarao argued in opposition to the negative effects of OPS. It would be unethical morally and financially to further favour them at the expense of the general population, he said.

Subbarao contends that switching to a "pay as you go" pension system will force state governments to forgo funding for schools, hospitals, roads, and irrigation in order to pay for pensions.

The Reserve Bank of India (RBI) also issued a cautionary warning over a return to the previous pension system in January of this year. OPS creates a significant danger on the "subnational fiscal horizon," according to the central bank "and would cause them to accrue unfunded liabilities in the upcoming years.

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