The National Pension System is a disaster for retiring employees, says an apex body of various government unions; pension under existing scheme just 15% of that under earlier one.
It is amply clear that the NPS employees despite their contribution of 10% of their wages every month for their entire service are getting only a very meagre pension and are worse off vis-à-vis the OPS. The pension under NPS remain static and there is no dearness relief to compensate the price rise/inflation as available in the OPS.
The OPS, or the Defined Pension Benefit Scheme, assured life-long income post-retirement, usually equivalent to 50% of the last drawn salary. The government bore the expenditure incurred on the pension. The Atal Bihari Vajpayee government in 2003 decided to discontinue the OPS and introduced the NPS.
The scheme, applicable to all new recruits joining Central government service (except the Armed Forces) from April 1, 2004, is a participatory, market-linked scheme, where employees contribute to the pension corpus from their salaries, with matching contribution from the government.