06 Feb, 2024 11:34 AM

Kerala to withdraw from contribution pension scheme; will go for AP model

Kerala to withdraw from contribution pension scheme; will go for AP model

In his budget speech, Finance Minister K N Balagopal announced that the government will withdraw from the much-controversial contribution pension scheme. Statutory Pension won’t be restored while the government looks to give shape to a new pension scheme which will align well with the financial condition of Kerala.

A three-member committee has been appointed to further examine the report submitted by the government-appointed committee to study the contribution pension scheme. The new scheme will be made after studying the pension schemes of various states. The minister said that action will be taken to get back the amount paid to the central government as a contribution pension. The contribution pension scheme was implemented in 2013.

Andhra Pradesh has recently decided to abandon the contribution pension scheme and implement an indigenous pension scheme. Kerala looks to emulate this model. In the Andhra Pradesh model, the employees get guaranteed 40-50 per cent of their last drawn basic salary as a pension.

If the contribution pension is less, the remaining amount will be paid by the government. 5% relief will be given twice a year to meet inflation. A family pension of 60% of pension and a minimum pension of Rs 10,000 will also be ensured. Allowance of death-cum-retirement gratuity (generous pension for those with short service) along with the Andhra model and raising the government contribution to the pension fund to 14% would be a huge benefit to the contributing pensioners in Kerala.

The finance minister also confirmed that the state will pay the first instalment of the arrears owed to government employees by May along with the salary of April. An annuity scheme will be brought to ensure monthly income for retired government employees.

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