No Plans Of Reverting To Old Pension Scheme: Centre – News18

Curated By: Business Desk

Last Updated: December 13, 2023, 17:12 IST

The Centre shared it in a written statement in the Lok Sabha.

This is the first time the Centre has officially ruled out going back to the previous regime of pension.

The Central Government has no plan to shift back to the old pension scheme (OPS), which five states have already opted for. This was shared by them in a written statement in Lok Sabha on Monday. The Centre also underlined that accumulated contributions of the subscribers cannot be used by states to revert to the earlier programme under the law. This is the first time the Centre has officially ruled out going back to the previous regime of pension. They also clarified whether past contributions from subscribers can be utilised to revert to OPS. “There is no proposal under consideration of the Government of India for the restoration of the old pension scheme in respect of Central Government employees recruited on or after 01.01.2004,” Minister of State in the Finance Ministry, Pankaj Chaudhary, said in a written reply in Lok Sabha. He, however, also agreed that the representations have been received from time to time, including the request to restore the old pension scheme.

Pankaj Chaudhary also mentioned that a committee has been set up under the leadership of Finance Secretary TV Somanathan to look into the issue of pensions under the National Pension System (NPS) given by the government employees and among other things, also to examine the existing framework and the structure of NPS.

He responded to a query by lawmakers Naba Kumar Sarania (Independent), Deepak Baji (Congress) and Krupal Balaji Tumanu (Shiv Sena), who wanted to know if the union government has any plans on switching back to the OPS.

Pensions for the government staffers are a politically polarising issue, with several Opposition-ruled stats switching to OPS. The OPS offered pensioners monthly benefits of 50 percent of their last drawn salary. The new NPS in force is a market-linked pension plan launched in 2004 and offers no guaranteed base amount.

At various points over the last two years, state governments including Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh have reverted to OPS for the staffers on the states’ payroll by informing the Centre and the Pension Fund Regulatory and Development Authority (PFRDA).

If we speak about the new National Pension Scheme, nearly 8.7 million centre and state-government employees contribute 10 percent of their basic salary, while the government pays 14 percent to a pension fund. The final payout depends on returns on those funds. It is mostly invested in government debt instruments.