Pension panel to reform NPS looking at rough waters

Officials also hinted at exploring ways to make good for the increase in payout as it is under OPS

The Centre on Friday decided to set up a committee under the finance secretary T V Somanathan to improve the New Pension System (NPS) so as to hear out the concerns of employees while maintaining fiscal prudence.

The decision came in the backdrop of several non-BJP states deciding to revert to the DA-linked old pension scheme (OPS) and also employee organisations in some other states raising demand for the same. The review is being planned ahead of the Lok Sabha polls coming up in 2024.

According to a report in The Indian Express, the committee may not recommend where the gains made over two decades are reversed.

The panel is prodding two options. One is the raising of government contribution to the pension scheme of employees from the current 14 per cent such that the employee can expect around 50 per cent of her last drawn basic pay as pension upon retirement.

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It is learnt that the Andhra Pradesh government proposal which ensures that its employees receive 50 per cent of the last drawn salary as pension is one of the models being looked at to perfect the reformation process.

The officials also hinted at exploring ways to make good for the increase in payout as it is under the old pension scheme.

NPS has been implemented for all government employees except those in the armed forces joining the central government on or after January 1, 2004. The NDA lost elections that year but Congress carried the scheme forward. When the Modi government came to power, it consolidated the gains and the NDA government hiked government contribution before the polls in 2019. It raised the employer’s contribution to NPS to 14 per cent of the employee’s basic pay every month from 10 per cent earlier. This came into effect on April 1, 2019.

“There was no question of any looking back when the BJP under the leadership of Narendra Modi returned to power. His political conviction in pension reforms and fiscal conservatism meant the NPS was there to stay,” an official was quoted as saying by the publication.

NPS has been made available to every Indian citizen from May 1, 2009, on a voluntary basis. The Congress-led UPA government implemented the NPS and also brought forth a Bill to develop and regulate the pension sector. Now with only a year to go before the Lok Sabha polls coming up in 2024, BJP has to crusade through the rough waters of an altered social and economic landscape.

The effects of Covid-19 on jobs and income of people, dents in financial resources due to high medical expenditure and high inflation highlight the necessity of a stronger safety net for the country’s people. Several government employees are demanding a return of the old pension scheme against this backdrop. The recently elected Congress government in Himachal with its promise of restoring OPS is putting the BJP in a tough spot. Strong protests in Maharashtra with demands for the restoration of OPS have led to the setting up of a committee by its finance minister Devendra Fadnavis to address issues in certain areas of the NPS.

(With input from agencies)