Andhra Pradesh’s Guaranteed Pension Scheme (GPS) has caught the Centre’s attention as it is seen to have the best of both the Old Pension Scheme (OPS) and the New Pension Scheme (NPS) elements.
According to a report by the Indian Express (IE), The officials believe the scheme “is interesting”, although it needs to be studied in detail.
So what is the new GPS to be brought in by the AP Government
The scheme was proposed for the first time in April 2022 and offers a guaranteed pension of 33 percent of the last drawn basic pay without any deduction to the state government employees.
For this, they would need to contribute 10 percent of their basic salary every month, and the state government will match it.
If the employee is willing to contribute a higher 14 percent every month, they will receive a guaranteed pension of 40 percent of their last drawn salary.
According to AP Finance Minister Buggana Rajendranath, the market conditions will not influence the pension under GPS, which is nearly 70 percent higher than the current pension being offered under CPS, in line with the current interest rates.
The state government also said that the NPS or CPS would give lower returns than the GPS. The scheme was proposed to replace the Centre’s NPS, which is called the Contributory Pension Scheme (CPS) in the state.
Under the CPS (Contributory Pension Scheme) scheme, the quantum of how much pension will be received on the basic pay per month at the time of retirement cannot be calculated exactly.
The government has restructured the GPS to increase pensions by 33 percent on the last month’s salary. In November last year, a federation of Central government employees’ unions wrote to the Cabinet Secretary to restore the OPS, stating that the NPS is a disaster for retiring employees in their old age.
Representatives of several employee unions said they would consider the proposal thoroughly and submit their suggestions which they consider appropriate. The committee set up to discuss the CPS with union leaders and met them at the Secretariat in Velagapudi in April. Finance Minister Buggana Rajendranath, a member of the committee, said that Chief Minister YS Jagan Mohan Reddy wanted to ensure that the government employees benefitted after retirement. He said the implementation of the old pension scheme was a feasible factor in view of the state’s economic conditions, future generations of government employees, and the welfare of the people.
Apparently, officials in the state government said the Union Finance Ministry has been sounded out about this model. No formal approval has been sought as yet about this, however, Finance Ministry officials said the AP model was interesting and needed to be studied in detail.