Thread on Old Pension Scheme vs NPS💸:
The Old Pension Scheme and the National Pension Scheme (NPS) are two retirement investment plans in India.
The Old Pension Scheme and the National Pension Scheme (NPS) are two retirement investment plans in India.
The NPS is a long-term retirement investment plan administered by the PFRDA, Ministry of Finance, Govt. of India, where employees contribute 10% of their salary (Basic + Dearness Allowance), and the employer contributes 14% towards the employees’ NPS accounts.
NPS was launched in 2004 for govt. employees, and subsequently, various State Governments and Private Sectors adopted this architecture.
An individual not covered by govt. or corporate sector can join NPS under the All Citizens of India sector. NRIs can also open NPS accounts, but OCI and PIO cardholders, and HUFs are not eligible.
NPS is designed on a defined contribution basis, and the accumulated wealth depends on the contributions made and the income generated from investment of such wealth.
On the other hand, the Old Pension Scheme, which guaranteed life-long income after retirement, was discontinued in 2004.
Pension to govt. employees at the Centre and states was fixed at 50% of the last drawn basic pay, and only govt. employees are eligible for receiving a pension after retirement.
8/ Income under the old pension scheme doesn’t attract tax, and the expenditure incurred on the pension is borne by the government.
Like the salaries of govt. employees, the monthly payouts of pensioners also increased with hikes in dearness allowance or DA announced by the government for serving employees.
What do you think which system is better? let us know in the comments
Learn more about such topics that will help you Ace prelims with us
Prelims 360 : courses.upscprep.com
Learn more about such topics that will help you Ace prelims with us
Prelims 360 : courses.upscprep.com
Read more at: upscprep.com
Loading suggestions...