Difference between Old Pension Scheme and New . Under the Old Pension Scheme, the monthly payments are almost equivalent to 50% of the salary that employees drew the last time before their retirement. In the New Pension Scheme, the employees contribute 10% of their salaries, and 14% is contributed by the employers.
The Supreme Court on Saturday stayed the Delhi High Court judgment that held that old pension scheme is applicable to paramilitary forces. The court has slated the matter for further hearing in February 2024.
| योजना | ओल्ड पेंशन स्कीम |
| विभाग | सरकारी पेंशन स्कीम |
| उद्देश्य | up / national Old Pension / New |
| लाभार्थी | 55-60 Years |
| कुल संख्या | 15 करोड़ |
| वर्ष | 2023 |
| वेबसाइट | https://sspy-up.gov.in/ |
What is New Pension Scheme?
The New Pension Scheme, also called NPS, was introduced in 2003 by the National Democratic Alliance (NDA) government. However, it came into effect in 2004. The New Pension Scheme is available for both employees of the government as well as private sectors. Under this scheme, the employees make a contribution of 10% of their basic salary, and 14% is contributed by the employers.
Employees working in the private sector can also participate in the New Pension Scheme. When you contribute to this scheme, you get more freedom and control of your future. You will be able to benefit from the returns that are linked to the market. In addition to this, 60% of the benefit that you get on maturity is free of taxes. The remaining 40% can be invested in annuities which are 100% taxable.
Old Pension Scheme vs New Pension Scheme – 5 Major Differences between Old Pension Scheme and New Pension Scheme
As per the Old Pension Scheme’s latest news, Chattisgarh and Rajasthan are the two states that came with the announcement of the reversion of the Old Pension Scheme instead of the New Pension Scheme. The reason is that the New Pension Scheme is uncertain, while the Old Pension Scheme comes with a higher financial cost.
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While the states are trying to get the Old Pension Scheme for the employees, let us first discuss the difference between these two concepts. So, here are some of them.
1. Tax benefits:
According to the Old Pension Scheme, the pension amount is tax-free. However, as per the New Pension Scheme, 60% of the amount is free of taxes, and the rest of the 40% is taxable if it is invested in annuities.
2. Return certainty:
The Old Pension Scheme comes with the certainty of return. It is based on the monthly pension on the last salary that the employee was receiving. The New Pension Scheme comes with market-linked returns and has no guarantee.
3. Contributions:
Under the Old Pension Scheme, the monthly payments are almost equivalent to 50% of the salary that employees drew the last time before their retirement. In the New Pension Scheme, the employees contribute 10% of their salaries, and 14% is contributed by the employers.
4. Eligibility:
As the eligibility is concerned, only individuals working in the government sector can receive a pension under the Old Pension Scheme, once they retire from their service. In the New Pension Scheme, any Indian citizen between the age group of 18 years and 65 years can avail of the benefits of this scheme.
5. Flexibility:
In the Old Pension Scheme, there was not much flexibility and the monthly income was fixed. It is not the same in the case of the New Pension Scheme. You will have more freedom and can control your finances. You can have the choice of choosing your asset allocation, and it enables you in generating higher returns as well as creating a huge retirement corpus.
Key features of the Old Pension Scheme include:-
Guaranteed Benefits: –
Employees under this scheme receive a fixed, predetermined pension amount upon retirement, which is usually based on a percentage of their final average salary and years of service.
Employer Responsibility:–
Employers are responsible for funding the pension plan and ensuring that there are sufficient assets to meet the future pension obligations. This can involve making regular contributions to the pension fund.
which place more of the investment and longevity risk on the employees themselves. This shift is often driven by cost considerations and the desire to provide employees with more control over their retirement savings.
Important Link
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FAQ :-
Q IS the old pension scheme coming back?
Is the old pension scheme coming back?
Govt has no plans of returning to the Old Pension Scheme: Finance Ministry sources
Q. What is new pension scheme 2023?
The changes to the National Pension Scheme rules in 2023 are aimed at increasing flexibility,
Q. What is the current status of old pension scheme?
Old Pension Scheme was discontinued by the NDA government in 2003 from April 1, 2004.
Q. Do IAS officers get pension?
IAS Officers continue to enjoy several advantages after retirement.