13 Apr, 2023 03:19 PM

Pension system revision, will it go back to the old way?.

Pension system revision, will it go back to the old way?.

The Finance Ministry has appointed a committee to review the pension system of government employees. A committee headed by the Finance Secretary has been constituted to suggest reforms in the NPS which will improve the pension benefits of government employees. Last month, Finance Minister Nirmala Sitharaman had said that she would look into the issue of pension under NPS for government employees and formulate a policy keeping in mind the needs of the employees. This announcement comes in the backdrop of several non-BJP states deciding to return to the DA-linked Old Pension Scheme.

The state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh have informed the Center about their decision to revert to the old pension scheme and requested to return the accumulated corpus under NPS. But the finance ministry had informed Parliament last month that it was not considering any proposal to restore the old pension scheme for central government employees recruited after January 1, 2004.

Under the old pension scheme, retired government employees would get 50 percent of their last salary as monthly pension. As the DA rate increases, so will the pension amount. But the old plan is not financially sustainable for the government. NPS has been implemented for all Government employees, except Armed Forces employees, joining the Central Government on or after January 1, 2004.

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