GoI may announce more NPS benefits in interim budget

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The ongoing upheaval regarding the pension system for government employees may come to an end next month. In the interim budget to be presented on February 1, there is a possibility of a status report on the National Pension System (NPS). A committee headed by Finance Secretary T.V. Somanathan is reviewing this scheme, and it is expected that the report will be submitted by the end of this month. According to sources, the report may propose some changes in relation to the concerns raised about NPS among pensioners.

Most government employees have demanded the revival of the old pension scheme (OPS). In this scheme, employees receive 50% of their last drawn salary as a pension. Last year, Rajasthan, Chhattisgarh, and Himachal Pradesh had decided to revive OPS. Meanwhile, Tamil Nadu and West Bengal had already expressed support for OPS. In contrast, in most other states, NPS was implemented for all central government employees from January 1, 2004. The central government argues that OPS puts a heavy burden on the government exchequer, which is why it was discontinued. RBI and several economists have also opposed the revival of OPS, stating that it could disturb the financial condition of the states.

It’s worth mentioning that the central government formed a panel in April last year to look into the issues related to pension under NPS for government employees. The committee was tasked to suggest ways to improve the benefits of NPS, keeping in mind the fiscal considerations. The recommendations of this committee might be presented in the budget. The panel has considered changes in NPS, but it does not favor the reintroduction of the old pension scheme. However, the government may seek public consultation before taking any action.