No plans to revert to old pension plan: Govt

No plans to revert to old pension plan: Govt

The Centre on Monday said it has no plans to revert to the old pension scheme for central government pensioners although there are demands from several quarters. File photo

The Centre on Monday said it has no plans to revert to the old pension scheme for central government pensioners although there are demands from several quarters.

Employees have been demanding pre-2004 pension scheme as the pension amount is lower and uncertain under the new scheme (NPS).

However, Minister of State for Finance Anurag Thakur informed parliament that the government has no proposal to go back to the old regime because it will slap an unsustainable pension bill on the exchequer.

“There is no proposal to replace the NPS with old pension scheme in respect of central government employees recruited on or after 01.01.2004,” the minister said in a written reply to a Lok Sabha question.

“Due to rising and unsustainable pension bill, the government had made a conscious move to shift from the defined benefit, pay-as-you-go pension scheme to defined contribution pension scheme now called as National Pension System (NPS),” he said.

The transition helped in freeing the limited resources of the government for more productive and socio-economic sectoral development, Thakur explained.

In the old system, the entire pension amount was borne by the government while fixed returns were guaranteed for an employee contribution to the General Provident Fund.

Under NPS, a defined contribution scheme is mandated for all those who joined central government services after 2004. Subscribers can withdraw only 60% of the total amount at the time of retirement, which is taxable. It is mandatory to invest the rest 40% to buy a lifelong annuity scheme.

In case of an emergency, they can withdraw 25% of the employee contribution. If the employees leave the scheme or retire before attaining the age of 60, 80% of the pension wealth has to be invested in the annuity scheme.