Andhra Pradesh’s Guaranteed Pension Scheme (GPS)

June 8, 2023

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.

The Transition to GPS: Ensuring Higher Pension

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.

Addressing Inflation and Ensuring Stability

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.

Employee Demands and Government’s Response

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.

Comparison of CPS and GPS

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.

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