NPS : Government likely to revise National Pension Scheme rules?

The finance ministry issued a clarification on Thursday, contradicting media claims that the central government is set to guarantee its employees a minimum pension of 40–45% of their last-drawn income under NPS. It stated that a committee is currently deliberating and has not yet come to any sort of findings.

The finance ministry tweeted, “This news report is false,” in reply to publications that claimed to provide information about a precise percentage of pension that the government was proposing for those working under the National Pension System (NPS).

“The Committee set up under the chairmanship of the Finance Secretary in pursuance of an announcement made by the Union Finance Minister in the Lok Sabha in the last Budget Session, is at present in the midst of its deliberations and is in the process of consulting stakeholders. The Committee has not yet reached any conclusions whatsoever,? the finance ministry tweeted.

According to Reuters, the government expected to change the NPS so that employees receive an assured pension equal to 40–45% of their last-drawn income while both employees and the government continue to make contributions.

As per its terms of reference, the committee would suggest measures to modify the same with a view to improving upon the pensionary benefits of government employees covered under the NPS, keeping in view the fiscal implications and impact on overall budgetary space, so that fiscal prudence is maintained to protect the common citizens.

The committee, chaired by Somanathan, has a Secretary in the Department of Personnel and Training (DoPT), a Special Secretary in the Department of Expenditure and a Chairman of Pension Fund Regulatory and Development Authority (PFRDA) as members.

Several non-BJP-ruled states decided to revert to the DA-linked Old Pension Scheme (OPS) and also employee organisations in some other states have raised demand for the same.

The state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh have informed the Centre about their decision to revert to the old pension scheme and have requested a refund of the corpus accumulated under the NPS.

The Finance Ministry had informed Parliament that it is not considering any proposal to restore the OPS in respect of the central government employees recruited after January 1, 2004.

Under the OPS, retired government employees received 50 per cent of their last drawn salary as monthly pensions. The amount keeps increasing with the hike in the DA rates. OPS is not fiscally sustainable as it is not contributory and the burden on the exchequer keeps on mounting.

NPS has been implemented for all government employees except those in the armed forces joining the central government on or after January 1, 2004. Most of the state/ Union Territory governments have also notified the NPS of their new employees.

According to the PFRDA (Pension Fund Regulatory and Development Authority), 26 state governments, with the exception of Tamil Nadu and West Bengal, have notified and implemented NPS for their employees.