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Even as states ponder over implementing the old pension scheme, overriding the new pension scheme, the Andhra Pradesh government has approved the Guaranteed Pension Scheme, which will benefit retired employees. Andhra Pradesh has introduced a new pension scheme where retirees can receive a pension of of half their last drawn salray along with dearness relief. Let’s find out how.

The purpose of introducing the GPS scheme by the Andhra Pradesh government is to ensure the security of retired employees. The government believes that this scheme will not only benefit the employees but also the government itself. The new pension system is more beneficial compared to the Contributory Pension Scheme (CPS). According to the government’s example, if an employee’s last salary is one lakh rupees, they will receive 50,000 rupees as a pension. They will also receive the benefit of the cost-of-living allowance (DA). Therefore, when the employee reaches the age of 82, his pension will reach 1.10 lakh rupees per month.

Now, let’s understand how CPS works. In Andhra Pradesh, employees who joined the service after September 1, 2004, are eligible for the CPS pension scheme. In this scheme, 10% of the employee’s basic salary is deposited, and the government also contributes the same amount. After retirement, the employee can withdraw 60% of the accumulated amount, while the remaining 40% is used to purchase the annuity for the pension. The amount of pension depends on the performance of the capital market; there is no guarantee of a specific pension amount. In the GPS, it is predetermined that the employee will receive 50% of the final salary as a monthly pension upon retirement. This way, the new scheme proves to be much better.