The Old Pension Scheme wildfire must be stopped before it’s too late
Alliance (NDA) government led by PM Atal Bihari Vajpayee. Did the NDA lose the national elections later that year due to the introduction of NPS? There are dishonest pundits who will claim that the NDA paid the price of reforming the pension system. My contention is that electoral outcomes are more swayed by emotional issues, so post facto attribution to single causes is always misleading, if not outright wrong.
Public opinion and voter passion is being stirred by presenting the OPS as ‘pro-people’ and NPS as ‘anti-people.’ Meme creators and slogan writers are busy making graphic and emotive campaigns. It would be a serious setback to fiscal stability if OPS is resurrected. That is not to say that the NPS cannot be tweaked to tackle the issues that have come up, genuine or perceived.
Or that as a political compromise, a hybrid of the OPS and NPS (tilted toward the latter) could be implemented. Pensions under OPS represent mounting unfunded obligations of governments. They are the path to bankruptcy, even if it is the path of the slowly boiling frog in the water.
OPS guarantees a lifetime pension linked to one’s last drawn salary, and keeps rising due to wage indexation. But the NPS nest-egg is jointly created by the employee and employer during the working lifetime. So, there is no unfunded obligation post-retirement.
As cited in an editorial in this paper, a report by Hyderabad-based Foundation for Democratic Reforms (FDR) paints a dismal picture if OPS is allowed to continue. West Bengal never signed on to the 2004 reform to NPS and has stuck to OPS. And states like Rajasthan, Punjab, Chhattisgarh and Jharkhand have announced an intention to join the OPS bandwagon, just like Himachal.
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