Home Personal Finance To improve pension benefits for govt employees under NPS, govt notifies panel under Finance Secretary

To improve pension benefits for govt employees under NPS, govt notifies panel under Finance Secretary

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The Finance Ministry on Thursday set up a four-member committee headed by Finance Minister TV Somanathan, following Finance Minister Nirmala Sitharaman’s announcement last month that it would set up a panel to review pension schemes for civil servants. However, no timeline has been specified for the submission of recommendations by the Commission.

The commission’s mandate suggests whether the change is justified in the light of the existing framework and structure of the National Pension System (NPS) as it applies to civil servants.

The Commission also proposed measures to amend the same, with a view to improving pension benefits for civil servants covered under the NPS, taking into account the financial impact and impact on overall budget space. to ensure that fiscal prudence is maintained to protect the public interest. Citizens, said an office memorandum issued by the Department of Appropriations.

The committee chaired by Somanathan also includes the secretary of the Department of Human Resources and Training (DoPT). Special secretary of the Department of Appropriations. He is also a member of the Pension Fund Regulatory and Development Authority (PFRDA).

Last month, Sitharaman announced the creation of a commission to consider improving the pension system for civil servants while speaking in the House of Commons during consideration of the 2023 Finance Bill. States with old pension plans.

The move to establish such a commission comes as the states of Himachal Pradesh, Punjab, Rajasthan, Chhattisgarh and Jharkhand reverted to the old pension schemes (OPS) that provided defined benefits.

Last month, the BJP Sena (Shinde faction) government of Maharashtra also endorsed in principle to extend the financial benefits of OPS to those under NPS, with the state government increasing its share of the new scheme from 14% to 20%. percent. Currently, the employee contribution to the plan is 10%, while the government contribution is 14%.

The NPS, which covers employees who joined after January 2004, defines contributions, but benefits vary by market. In March, the central government notified parliament that it was not considering a proposal to reinstate OPS for personnel hired after January 1, 2004. In December 2003 he had an ad posted on his OPS before NPS notified him. Under OPS, a retired civil servant receives 50% of his last salary as a monthly annuity, an amount that continues to increase with dear benefit rate increases.

The central government introduced the NPS effective 1 January 2004, except for the military. High pension payments increase the burden on the public treasury and affect the public finances. This was also pointed out by the government during a recent Supreme Court hearing related to the One Rank One Pension.

In January, the RBI warned states that returning to OPS would increase their financial burden. “The savings in annual fiscal resources associated with this move will be short-lived. By deferring current spending, the state risks accumulating unfunded pension liabilities in the years to come,” the RBI said in a statement on its report” said.

during February Indian Express reported that Ministry of Finance officials are considering a model combining OPS and NPS elements proposed by the YSRCP Government of Andhra Pradesh.

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