Old Pension Scheme could put severe strain on states’ finances’: RBI

According to an article in the Reserve Bank of India’s September bulletin, states that revert to the Old Pension Scheme (OPS) could face “unsustainable” fiscal stress. The article states that the cumulative fiscal burden of OPS could be 4.5 times higher than that of the National Pension Scheme (NPS), with an additional burden of 0.9% of GDP annually by 2060. The authors highlight that while OPS may be more attractive to employees, it puts a significant financial burden on the government, unlike NPS, which aims to ensure good pensions while reducing the budgetary burden.