What is the difference between Old Pension Scheme and New Pension Scheme? And in which people get more benefit. Let’s understand it.
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some states Old Pension Scheme Means re-implementing OPS. Recently, the Punjab government had said that it is considering re-implementing OPS for its employees. If the proposal is passed, Punjab will be the fourth state to re-implement OPS. Earlier, states like Rajasthan, Chhattisgarh and Jharkhand have also implemented the old pension scheme. Now the question will be in your mind that Old Pension Scheme and New Pension Scheme What is the difference between And in which people get more benefit. Let’s understand it.
Old Pension Scheme (OPS)
In the Old Pension Scheme, the employees get 50% of their last drawn salary plus dearness allowance at the time of retirement or the average earnings of the last ten months of service, whichever is more beneficial to them. In this, it is necessary for the employee to serve for 10 years.
Under OPS, the employees do not have to contribute towards their pension. One of the advantages of a government job was that the person would get a pension after retirement. Hence, there was no need to create a fund by saving money for the post-retirement period.
New Pension Scheme (NPS)
In the New Pension Scheme, government employees have to contribute 10% of their basic salary to it. Whereas, the government contributes up to 14 per cent in the NPS scheme. Private sector employees can also contribute to NPS voluntarily. However, some rules have been changed.
In this pension scheme, the person also gets tax benefit. You can claim a tax deduction of up to Rs 1.5 lakh under section 80C of the Income Tax Act using this scheme. Apart from this, an additional deduction of Rs 50,000 is also available for investment under 80CCD (1b).
In NPS, with the help of a professional pension fund manager, one can earn higher returns and build a substantial retirement corpus. The old pension scheme was closed by the BJP-led NDA government in December 2003. At the same time, the New Pension Scheme was implemented from 1 April 2004.
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