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NEW DELHI: The Centre on Thursday set up a four-member committee to review the National Pension System, also referred to as the new pension scheme, and suggest if changes are required to the defined contribution mechanism that was put in place for all recruits in government from 2004.
The panel has also been tasked to suggest modifications, if required, to improve the pensionary benefits of government employees, while bearing the implications and impact on overall budgetary space, so that fiscal prudence is maintained to protect citizens.
Recently, finance minister Nirmala Sitharaman had announced a review of the NPS by a panel headed by finance secretary T V Somanathan. In addition, secretary (personnel and training), Pension Fund Regulatory and Development Authority chairman and special secretary in the expenditure department will be the members of the committee. No timeframe has been provided for the review to be completed.
The Centre’s decision follows the decision of opposition-governed Chhattisgarh, Rajasthan, Himachal Pradesh, Jharkhand and Punjab to revert to the old pension scheme, which is a defined benefit scheme — offering 50% of the last pay drawn adjusted to inflation, and without any contribution by the employees. NPS depends on 10% contribution by the employee with a matching or higher contribution by the employer.
Employees in several states, as well as some unions at the Centre, such as the railways, have backed the demand to revert to OPS as they see an increase in their take-home salary without having to pay for their pension.
Government officials and experts have argued that OPS is unsustainable and those reverting to the old regime are putting the fiscal situation of the states at risk in the future for short-term gains as these states do not have to make any contribution.
Currently, there are close to 85 lakh subscribers, of whom over 60 lakh are from the states, and the assets under management add up to more than Rs 6.8 lakh crore. Since inception, the return for central government employees works out to over 9.2%, while for state government employees it is over 9.1%.
The panel has also been tasked to suggest modifications, if required, to improve the pensionary benefits of government employees, while bearing the implications and impact on overall budgetary space, so that fiscal prudence is maintained to protect citizens.
Recently, finance minister Nirmala Sitharaman had announced a review of the NPS by a panel headed by finance secretary T V Somanathan. In addition, secretary (personnel and training), Pension Fund Regulatory and Development Authority chairman and special secretary in the expenditure department will be the members of the committee. No timeframe has been provided for the review to be completed.
The Centre’s decision follows the decision of opposition-governed Chhattisgarh, Rajasthan, Himachal Pradesh, Jharkhand and Punjab to revert to the old pension scheme, which is a defined benefit scheme — offering 50% of the last pay drawn adjusted to inflation, and without any contribution by the employees. NPS depends on 10% contribution by the employee with a matching or higher contribution by the employer.
Employees in several states, as well as some unions at the Centre, such as the railways, have backed the demand to revert to OPS as they see an increase in their take-home salary without having to pay for their pension.
Government officials and experts have argued that OPS is unsustainable and those reverting to the old regime are putting the fiscal situation of the states at risk in the future for short-term gains as these states do not have to make any contribution.
Currently, there are close to 85 lakh subscribers, of whom over 60 lakh are from the states, and the assets under management add up to more than Rs 6.8 lakh crore. Since inception, the return for central government employees works out to over 9.2%, while for state government employees it is over 9.1%.
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