Government employees may soon get 50% of last pay as pension under NPS: Report

This comes after Finance Minister Nirmala Sitharaman's announcement a committee chaired by Finance Secretary TV Somanathan to explore this initiative.

Central government employees who are covered under the National Pension System (NPS) may soon receive 50 per cent of their last drawn pay as pension as the government seeks to address concerns over payout disparities, The Times of India reported. This comes after Finance Minister Nirmala Sitharaman's announcement a committee chaired by Finance Secretary TV Somanathan to explore this initiative.

The government has ruled out a return to the Old Pension Scheme (OPS) which guaranteed a defined benefit of half of the last salary drawn as lifelong pension. (Representational)

The government has ruled out a return to the Old Pension Scheme (OPS) which guaranteed a defined benefit of half of the last salary drawn as lifelong pension, adjusted with the Pay Commission recommendations, the report added. The NPS is a defined contribution scheme in which employees contribute 10 per cent of their basic salary and this contribution is matched by a 14 percent from the government.

The Somanathan committee reviewed global practices and studied outcomes in changes brought by state governments like Andhra Pradesh, the report claimed. After assessing the impact of offering assured returns, the report said that the government could soon guarantee 50 per cent of the last pay drawn for employees who serve 25-30 years.

Additionally, the report also claimed that the government is planning to create a dedicated fund like corporate retirement benefits to ensure financial sustainability. On this, discussions are ongoing, it added.