Why Everyone Loves The Old Pension Scheme

With several states preparing to bring back the old pension scheme, the flaws in the market-linked National Pension System have come under the scanner

- Pratul Sharma

Rajasthan Chief Minister Ashok Gehlot has let out a genie. His government recently announced that it was restoring the old pension scheme (OPS) for its employees, thereby discarding the contributory scheme that had come into effect after India initiated bold pension reforms nearly two decades ago. Several state governments, especially those ruled by parties opposed to the BJP-led Union government, are preparing to follow Gehlot’s lead.

Economists have pointed out that such a populist move would be retrograde, as it can drain state finances. Several states have latched on to the idea, though. In Congress-ruled Chhattisgarh, where the party’s flagship income guarantee scheme NYAY is being implemented for farmers and the landless, the restoration of OPS is set to become a pillar of the party’s evolving alternative economic model. The Congress has already promised to bring back OPS if it comes to power in Himachal Pradesh, where elections are due later this year.

DMK-ruled Tamil Nadu and YSR Congress-ruled Andhra Pradesh have also promised to revert to OPS. The Samajwadi Party’s campaign promise to restore OPS in the run-up to the Uttar Pradesh assembly polls helped it win a majority of postal votes (51 per cent) cast by government employees. For political parties, the electoral gains to be had from backing OPS seem evident now.