The Andhra Pradesh cabinet presided over by chief minister, YS Jagan Mohan Reddy, on Wednesday decided to provide the government employees an assured pension of 50% of their last drawn salary under the Guaranteed Pension Scheme (GPS), a government statement said. The Guaranteed Pension Scheme is similar to the restoration of Old Pension Scheme, announced by several Congress ruled states such as Rajasthan, Chhattisgarh and Himachal Pradesh.
Approving the Guaranteed Pension Scheme (GPS) to employees, 6,840 new government jobs and regularisation of nearly 10,000 contract employees are some of the key decisions taken by the Andhra Pradesh Cabinet presided by Chief Minister Y S Jagan Mohan Reddy on Wednesday.Under the GPS scheme, eligible employees will receive 50 per cent of the last drawn salary as pension, including receiving dearness relief (DR) on the lines of the Central Government declaring dearness allowance and DR twice a year.
“Keeping the future of the state and the welfare of employees in mind, GPS has been amended,” said a press note shared by the state government on Wednesday.
GPS pension scheme
The new GPS will replace the Contributory Pension Scheme (CPS), against which, the state government employees were protesting for a long time. The employees were demanding GPS over CPS as the latter doesn’t assure a minimum pension. Jagan Mohan Reddy had promised to replace CPS with GPS before the 2019 state assembly elections.
The new pension scheme would ensure gradual growth of the dearness allowance (DA) for the government employees, that would ensure payment of 50% pension after retirement, said a government statement. A bill in this regard was approved by the cabinet.
Guaranteed Pension Scheme
In a significant policy decision, the Andhra Pradesh Cabinet announced on June 7 its approval to replace the Contributory Pension Scheme (CPS) with the Guaranteed Pension Scheme (GPS) for government employees. This move aims to provide enhanced financial security and benefits to pensioners.
Under the GPS, pensioners will now receive 50% of their last drawn salary as pension, a substantial increase compared to the 20.3% they received under the CPS. This transition is a positive step towards prioritizing the welfare of retired government employees and acknowledging their dedicated service.
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Guaranteed Pension Scheme Features
- Employees who pay a monthly contribution of 10% of their basic income and the state government’s matching 10% can receive a guaranteed pension under GPS equal to 33% of their last received wage.
- And if they are willing to contribute a greater 14% of their monthly wage, which will be matched by a 14% government contribution, they can receive a guaranteed pension of 40% of their last drawn salary.
- It includes aspects of both the New Pension Scheme and the Old Pension System (defined benefit) (defined contribution). In doing so, it provides two alternatives for “defined benefit” and requests a monthly “defined contribution” from the employees.
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Objectives of AP Guaranteed Pension Scheme
- The amount of the pension will increase due to the addition of dearness relief (DR) which will occur twice a year.
- For instance, if an employee retires at age 62 and receives a monthly pension of ₹50,000 under the GPS, he would receive close to ₹1.20 lakh when he turned 82.
- Examining the viability of the so-called “Andhra model” of the guaranteed pension plan (GPS), which was put forth in April 2022, is one of the areas of interest for this committee.
Eligibility Criteria for Andra Pradesh Guaranteed Pension Scheme
Following are the eligibility criteria for AP Guaranteed Pension Scheme.
- All State government employees will be eligible for a guaranteed monthly pension equal to 50% of their most recent basic wage under the new plan.
Andhra Pradesh Guaranteed Pension Scheme
The government has also made provisions under the GPS to adjust for inflation. Although the specific details of this provision were not mentioned in the available information, it indicates a conscious effort to protect pensioners’ financial well-being by considering the impact of inflation on their livelihoods.
Government employees, including teachers, had been persistently demanding the restoration of the Old Pension Scheme (OPS) and the discontinuation of the CPS. This decision by the Andhra Pradesh Cabinet is a response to those demands, indicating a willingness to address the concerns and aspirations of the employees.
Under the CPS, employees who joined service after September 1, 2004, contributed 10% of their basic salary towards the pension, with the government matching the amount. After retirement, employees were able to withdraw 60% of the pension corpus, while the remaining 40% was annuity investment subject to market fluctuations.
In contrast, under the GPS, pensioners will receive 50% of their basic salary in the last drawn salary as pension, with the same 10% contribution rate. The Dearness Relief (DR) announced by the Union government every six months will be extended to GPS pensioners, further enhancing their financial security.
Application Process for AP Guaranteed Pension Scheme
As of now, the Andra Pradesh government has not notified the official website yet. Once the official website is open, eligible applicants for the scheme can go to the website and register themselves there. After that, they would be able to apply for the AP Guaranteed Pension Scheme.
What is the GPS pension scheme in AP?
Under the GPS, the pensioners would receive 50% of their last drawn salary as pension as against 20.3% of their basic salary under the CPS. Also, the government made certain provisions to adjust the impact of inflation under the GPS
What is guaranteed pension scheme?
Under the GPS scheme, eligible employees will receive 50 per cent of the last drawn salary as pension, including receiving dearness relief (DR) on the lines of the Central Government declaring dearness allowance and DR twice a year.
Who will get pension in Andhra Pradesh?
As per the new scheme, all State government employees will be eligible for a guaranteed monthly pension of 50 per cent of their last drawn basic salary. Andhra Pradesh government will be implementing a new Guaranteed Pension Scheme (GPS) for its employees.