All you need to know about Andhra Pradesh’s Guaranteed Pension Scheme

Amid calls to revert to the Old Pension Scheme (OPS) from various states, Andhra Pradesh’s Guaranteed Pension Scheme (GPS) has caught the Centre’s eye. According to a report by the Indian Express (IE), the officials are attracted to the scheme because “it combines the elements of both the OPS and the New Pension Scheme (NPS)”.

The officials believe the scheme “is interesting”, although it needs to be studied in detail.

But what is the Jagananna government’s GPS?

The scheme, proposed for the first time in April 2022, offers a guaranteed pension of 33 per cent of the last drawn basic pay without any deduction to the state government employees. For this, they would need to contribute 10 per cent of their basic salary every month, and the state government will match it.

If the employee is willing to contribute a higher 14 per cent every month, they will receive a guaranteed pension of 40 per cent of their last drawn salary.

According to Buggana Rajendranath, minister for finance, planning, legislative affairs and commercial taxes, the market conditions will not influence the pension under GPS, which is nearly 70 per cent higher than the current pension being offered under CPS, in line with the current interest rates.

The state government also said that the NPS or CPS would give lower returns than the GPS. The Centre has, however, denied this.

The scheme was proposed to replace the Centre’s NPS, which is called the Contributory Pension Scheme (CPS) in the state.

While the state government is looking to implement the scheme, several employees have voiced their opposition to the GPS. According to media reports, they want to shift to the OPS only. Last year, several teachers in the state organised a “Chalo Vijayawada” yatra asking the YS Jagan Mohan Reddy government to bring back the OPS.

The employee unions in the state believe that GPS is no better than CPS. They recalled that a similar plan to guarantee 50 per cent of the pension recommended by the Thakkar Committee during the previous N Chandrababu Naidu-led Telugu Desam Party (TDP) government. That plan was rejected too.

The employee unions have also said that GPS, like CPS, involves payment of 10 per cent of basic pay by both the government and the employee concerned. The government projects GPS as a 65 per cent rise in the pension over the estimated 20 per cent return on their contributions under CPS. This, according to them, “is nothing short of a jugglery of statistics by the government”.

But the state government reportedly believes that shifting to OPS would take its budget outflow on account of pension and salaries to Rs 1,85,172 crore in 2023. Currently, it is expected to touch Rs 76,590 crore.