Andhra Pradesh Guaranteed Pension Scheme (APGPS) 2023-2024 Ordinance / Act Published

Andhra Pradesh government publishes ordinance on Guaranteed Pension Scheme 2023-2024 for employees. The new AP Jagananna GPS scheme aims at ensuring financial security to and welfare of the government employees who have subscribed to the National Pension System. It comes amid calls to revert to old pension scheme (OPS). 

The central govt. officials are attracted to AP Guaranteed Pension Scheme (GPS) because "it combines the elements of both the OPS and the New Pension Scheme (NPS)". Read this article till the end to know complete details of Guaranteed Pension Scheme in Andhra Pradesh.

Guaranteed Pension Scheme in AP Budget 2024-25

On 7th February 2024, Finance Minister presented AP Budget 2024-25. While presenting the Andhra Pradesh Budget, FM said "For addressing post-retirement concerns of the employees under the New Pension Scheme, our government has pioneered the implementation of the AP Guaranteed Pension System, as a more beneficial & sustainable alternative. By this, Andhra Pradesh, has yet again delivered a solution being adopted by other states & Government of India".

Ordinance on AP Guaranteed Pension System (APGPS) 2023-2024

The government of Andhra Pradesh published an Ordinance, the Andhra Pradesh Guaranteed Pension System Act, 2023, on 20 October 2023. It was aimed at ensuring financial security to and welfare of the government employees who had subscribed to the National Pension System (NPS) by implementing a Guaranteed Pension System (GPS), while also ensuring fiscal sustainability and inter- generational equity, and for matters connected with that.

The Act was applicable to the employees who had been recruited on or after September 1, 2004, and whose pay and allowances were drawn from the Consolidated Fund of the State, including all the Tiers of all Rural and Urban Local Bodies and Universities, and opted to subscribe to the GPS.

Benefits under AP Guaranteed Pension Scheme Act

The APGPS subscriber would be guaranteed certain benefits under the Act, subject to the provisions of sub-section (4) of Section 6 of the Act, and they included:- 

• Top-up amount to ensure a monthly guaranteed pension at the rate of 50% of the last drawn basic pay, in case of a shortfall in the annuity received by the retired APGPS subscriber. 
• Top-up amount to ensure a monthly spouse pension at the rate of 60% of the guaranteed pension, in case of a shortfall in the annuity received by the spouse of the deceased APGPS subscriber. 
• Cost of Living Adjustment on the last drawn basic pay as per inflation adjusted Dearness Relief, as per the rules notified under the Act. 
• Top-up amount to ensure a monthly minimum guaranteed pension of ₹10,000 in case of shortfall in the annuity received by the APGPS subscriber. 
• Providing a healthcare scheme for the retired APGPS subscribers.

The existing NPS subscribers should exercise the option to subscribe to APGPS within the period as prescribed in the Act.

About Guaranteed Pension Scheme (GPS) in Andhra Pradesh

Guaranteed pension scheme was proposed for first time in April 2022. It offers a guaranteed pension of 33% of the last drawn basic pay without any deduction to the state government employees. For this, they would need to contribute 10% of their basic salary every month, and the state government will provide matching contribution.

In case employee is willing to contribute a higher 14% every month, they will receive a guaranteed pension of 40% of their last drawn salary. Also market conditions will not influence the pension under GPS, which is nearly 70% higher than the current pension being offered under NPS or CPS, in line with the current interest rates.

Jagananna GPS to offer Higher Pension than NPS or CPS

AP state government mentioned that the NPS or CPS would give lower returns than the GPS, but the central govt. denied it. The guaranteed pension scheme was proposed to replace the Centre's national pension system (NPS), which is also called the contributory pension scheme (CPS) in Andhra Pradesh state.

Employee Unions Protest for Old Pension Scheme (OPS) Implementation in AP

While the state government is looking to implement the Jagananna GPS scheme, several employees have voiced their opposition to the guaranteed pension scheme in Andhra Pradesh. As per media reports, employees want to shift to the old pension scheme (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.

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

The employee unions have also mentioned that GPS, like CPS, involves payment of 10% of basic pay by both the government and the employee concerned. The government projects GPS as a 65% rise in the pension over the estimated 20% 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 2023-24. Currently, it is expected to touch Rs. 76,590 crore.

Data is a reworked version of article published in The Hindu article on GPS - https://www.thehindu.com/news/national/andhra-pradesh/andhra-pradesh-government-publishes-ordinance-on-guaranteed-pension-scheme-for-employees/article67445908.ece