Maharashtra Cabinet Gives Nod To OPS Benefit For 26,000 Employees Who Joined Service After Nov 2005

Syllabus: GS-II

Subject: Governance

Topic: Welfare schemes for vulnerable sections.

Issue: Pension Scheme.

Context: Maharashtra cabinet approves one-time option for state govt employees joining after Nov 2005 to opt for Old Pension Scheme (OPS).


  • Move addresses a long-standing demand but has a limited scope, benefiting a specific group of employees.
  • Decision follows protests by employees demanding restoration of OPS.
  • Benefits 26,000 employees selected before Nov 2005 but receiving joining letters later.
  • OPS discontinued in 2005, offers monthly pension without employee contributions.
  • Employees have six months to choose OPS or stick with New Pension Scheme, with a two-month document submission deadline.


Old Pension Scheme (OPS):

  • OPS assured government employees a pension of 50% of their last drawn salary.
  • Described as a ‘Defined Benefit Scheme,’ it provided a defined and secure retirement benefit.
  • Discontinued by the Central government in 2003.

Concerns with OPS:

  • Unfunded pension liability led to no specific corpus for continuous payouts.
  • ‘Pay-as-you-go’ scheme caused inter-generational equity issues, burdening the present generation with the rising pensioner costs.
  • Lack of a clear plan for future funding prompted the discontinuation of OPS in 2003.

What is New Pension Scheme (NPS)?

  • NPS, introduced in April 2004, replaced OPS by the Central government.
  • Open to employees in public, private, and unorganized sectors, excluding the armed forces.
  • Administered by the Pension Fund Regulatory and Development Authority (PFRDA).
  • Eligibility: Indian citizens aged 18-60, including NRIs.
  • Minimum annual contribution: Rs. 6,000; failure to contribute results in account freezing.


Conclusion: OPS, with its defined benefit of 50% last drawn salary, provided assurance to government employees but faced challenges like unfunded pension liability and inter-generational equity issues, leading to its discontinuation in 2003.

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