The new Guaranteed Pension Scheme (GPS) for the Andhra Pradesh government employees is a hybrid model between the present Contributory Pension Scheme (CPS) and the Old Pension Scheme (OPS), according to its Finance Minister Buggana Rajendranath.

The GPS was being introduced in view of the long-standing demand from the employees for review of CCS. However, as reversal to the non-contributory OPS was not financially feasible, the guaranteed pension system is a middle path, he said.  The gains from the investment portion of CPS were only below 20 per cent and the new systems will be ‘beneficial’ as it has a guaranteed pension component, the Minister said. 

Under the GPS, all State government employees will be eligible for a guaranteed monthly pension of 50 per cent of their last drawn basic salary. There will be an addition of dearness relief (DR) twice a year, which will increase the quantum of pension. “Those who have 10 years of service, will also get a minimum of ₹10,000 as pension. In case of the death of a pensioner, 60 percent of the sum will be given to the spouse. There will be other benefits like coverage under the State government health scheme,’‘ the Minister said before the GPS bill was passed in the State Assembly.

Explaining the rationale behind not implementing the OPS as demanded by the employee associations, Rajendranath said the fiscal deficit, which should be not higher than 3 per cent, will reach 8 percent by 2050 in the event of reversal to the old pension scheme. 

Huge burden

As per the State government data, the expenditure on pension to those who are currently under OPS is ₹20,400 crore which will go up to ₹33,546 crore if all those under CPS migrate to the old system. There will be many retirements in 2045 which will become a huge burden on the State Exchequer if all those are brought under OPS, the minister added.  

After the scrapping of the OPS in 2004 and the introduction of the New Pension Scheme (NPS), the CPS was brought in by State governments. There have been demands in many States for the reintroduction of OPS. Some States, including Chhattisgarh, Rajasthan, Himachal Pradesh Punjab and Delhi, are mulling reverting to OPS.

However, in view of the ‘impossibility’ of going back to OPS, the new guaranteed pension system model can be picked by the other States in future, he added.