Answer the question in maximum 200 words. This question carries 11 marks. [MPPSC 2023] Explain the rights that customers have under the 1986 Consumer Protection Act.
Model Answer 1. Nature of the Scheme NPS: A defined contribution pension scheme where both employees and employers contribute to the fund, and the returns are market-linked. OPS: A defined benefit pension system where government employees receive a fixed pension based on their last drawn salary, aloRead more
Model Answer
1. Nature of the Scheme
- NPS: A defined contribution pension scheme where both employees and employers contribute to the fund, and the returns are market-linked.
- OPS: A defined benefit pension system where government employees receive a fixed pension based on their last drawn salary, along with dearness relief adjustments twice a year.
2. Eligibility and Risk
- NPS: Open to all Indian citizens between the ages of 18 and 65. The pension amount depends on market performance, so it involves a degree of investment risk.
- OPS: Exclusively available to government employees. It guarantees a fixed pension, with no associated risk.
3. Tax Benefits
- NPS: Contributions of up to ₹1.5 lakh annually are tax-deductible under Section 80C, with an additional ₹50,000 under Section 80CCD(1B).
- OPS: No specific tax benefits are applicable to OPS subscribers.
4. Pension Amount
- NPS: 60% of the pension corpus can be withdrawn as a lump sum at retirement (with 60% being tax-free), while the remainder must be invested in annuities.
- OPS: Provides a fixed pension amount of 50% of the last drawn salary, along with regular dearness relief adjustments.
Rationale Behind the Introduction of NPS
The New Pension Scheme (NPS) was introduced in 2004 to address the growing financial strain caused by the Old Pension Scheme. Several key factors led to this shift:
- Increasing Pension Liabilities: The government’s pension obligations were escalating rapidly, especially due to rising life expectancy and improved healthcare. By 2020-21, the central government’s pension bill had increased by 58 times compared to 1991ustainable Nature of OPS:** OPS posed a financial burden, with pension liabilities threatening the fiscal health of state governments. For example, Himachal Pradesh‘s pension bill accounted for nearly 80% of the state’s own tax revenues .
- Poand Flexibility: NPS introduced a system of portability, allowing employees to carry their pension across different jobs and locations, unlike OPS. This was designed to encourage retirement savings and provide a more sustainable financial solution .
The Consumer Protection Act, 1986, was a landmark piece of legislation in India designed to safeguard the rights of consumers and ensure fair trade practices. Here are the key rights provided to consumers under the Act: Right to Safety: Consumers have the right to be protected against the marketingRead more
The Consumer Protection Act, 1986, was a landmark piece of legislation in India designed to safeguard the rights of consumers and ensure fair trade practices. Here are the key rights provided to consumers under the Act:
The Act also empowers consumers to take legal action against unfair trade practices, defective goods, and deficient services. It established a three-tier system of consumer redressal forums to address disputes and provide justice. Over time, the Consumer Protection Act has evolved, including significant updates in the Consumer Protection Act, 2019, which introduced additional provisions and mechanisms for consumer protection.
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