Maha govt announces revised NPS
Mumbai state govt. announces revised NPS similar to OPS for employees joining after Nov 2005. Pension of 50% last salary + DA, 60% family pension.
Mumbai: The state government on Friday announced a revised version of the National Pension Scheme (NPS) for those who joined service on or after November 1, 2005, which contains several provisions similar to the old pension scheme (OPS). Beneficiaries of the NPS will be entitled to a pension amounting to 50% of the last drawn basic salary plus the dearness allowance, while 60% of this amount can be drawn as family pension. The government will also bear the losses for market-linked investments in the NPS.
Chief minister Eknath Shinde unveiled the revised version of NPS on the concluding day of the interim budget session at the state legislature on Friday, saying it would benefit 8.27 lakh out of 13.45 lakh government and semi-government employees.
“The state government has been very sensitive about the issue as it is the important for a dignified retirement life. By announcing the revised NPS, we have kept our word given to the employees,” said Shinde. Government employees in the state had gone on strike during the budget session last year demanding reinstatement of the OPS and their strike was suspended following assurances from authorities.
The latest revisions in the NPS are based on the recommendations of a committee of experts led by retired IAS officer KP Bakshi. In February this year, the state government had issued an order awarding OPS to 26,000 government employees who joined service before November 2005. Employees who joined on or after November 1, 2005 will have to choose whether to migrate to the revised NPS or stay with the current NPS within the next six months.
State government employees who had been demanding reinstatement of the OPS expressed satisfaction with the revision. “In the old pension scheme, we would get 40% of the amount as annuity at the time of retirement while the remaining amount would be disbursed in the form of monthly pension. The NPS too has a provision of 60% annuity and the remaining as monthly pension, but this is based on the accumulated amount and not an assured pension amount like in the OPS. The revised version announced today resolves the anomaly,” said an official from the finance department.
Beneficiaries of the NPS were thus far short-charged as their pension was linked with market returns, the official added. As an example, he related the case of a woman employee who retired recently and was entitled to a pension of ₹2,517 per month under the NPS, while her entitlement under the OPS was ₹25,000. “We had brought this to the notice of the chief minister while pressing on our demand for reinstating the OPS,” he noted. To address these concerns, the government has decided to bear losses emerging out of marked-linked risks in the NPS. It has also decided to appoint a committee of experts to manage investments along the lines of fund managers appointed by private investment firms.
While deputy chief minister Devendra Fadnavis had claimed in December 2022 that ₹1.10 lakh crore would be required to implement the OPS, which could potentially bankrupt the state, finance department officials said the revised provisions are unlikely to cast a big burden on the state exchequer.
“First of all, the burden would the applicable 2034 onwards as the employees covered under the NPS will start retiring then. If funds are managed well with good returns, the burden will be just a few hundred crore,” said an official. Currently, the govenrment spends up to ₹52,689 crore per year on the OPS and ₹7,686 crore per year on the NPS.