The Central Government has recently announced that a one-time option of switching from the new pension scheme to the old pension scheme will be available for certain central government employees.
This is applicable to those employees who have been appointed prior to the date of notification for National Pension System (NPS) i.e. December 22, 2003. The deadline to exercise this one-time option is August 31, 2023.
The Department of Pension and Pensioners' Welfare (DoPPW) issued an office memorandum on March 3, 2023 to offer the one-time switch to eligible central employees opting for the Central Civil Services (Pension) Rules, 1972 (now 2021).
DoPPW clarified in its notification that central government civil employees appointed against roles or vacancies advertised before the NPS notification on December 22, 2003 are eligible to switch to the OPS.
What is the eligibility criteria for availing the option?
In order to avail the option of switching from the NPS to the old pension scheme, certain eligibility criteria must be fulfilled.
Firstly, the employee should be a central government employee, except for those in the armed forces. Additionally, the vacancy or post for which the employee was appointed should have been advertised or notified for recruitment prior to the date of notification for NPS i.e. December 22, 2003.
Are there any consequences of exercising this option?
Once the eligible central government employees choose the old pension scheme under the one-time option by August 31, 2023, they cannot reverse their decision and opt back into the NPS again. Their NPS account will also be closed once they switch to the OPS. An order regarding this matter will be issued on October 31, 2023.
What are the benefits of this option?
This move provides some relief to employees who prefer the old pension scheme and feel that NPS does not offer good benefits. The benefit of the OPS lies in the fact that it offers a lifetime pension after retirement, which is revised periodically. On the other hand, NPS involves an investment of funds with a lump sum payout on maturity.
The central government's decision to allow a one-time switch from the New Pension Scheme (NPS) to the Old Pension Scheme (OPS) brings much-needed respite for eligible central government employees. It provides them with a choice between two different pension schemes based on their convenience.
However, it is important to note that switching from NPS to OPS is a one-time option. Those eligible employees who do not exercise this option by August 31, 2023 will remain covered under NPS.