New Delhi: A top official of the finance ministry told The Sen Times on condition of anonymity that the Centre has a plan to revive old pension scheme and the National Pension Scheme (NPS), 2004 would be reviewed, signaling a retreat from a reform that is needed to balance the government exchequer but which has hurt the government popularity.
National Pension Scheme (NPS), a government-sponsored pension scheme, was launched in January 2004 for government employees. It was opened to all sections in 2009. A subscriber can contribute regularly in a pension account during his or her working life.
The NPS was introduced, primarily for central government employees for whom it became mandatory but was also opened to state governments employees on the same terms.
Barring West Bengal, all other States now adopted NPS for their employees.
At the time of the launch, West Bengal, Kerala and Tripura — all with the Left in power — had opposed it on the ground that the NPS did not offer defined retirement benefits, as was the case with the traditional pension scheme. The Left also objected to pension funds being put in shares. Kerala broke rank after the Congress snatched power there.
Accordingly, Tripura also broke rank after the BJP snatched power there in March, 2018. Tripura government employees, who joined service on or after July 1 this year would be governed by the NPS.
While Mamata Banerjee, who ended the rule of the world’s oldest democratically elected communist government in West Bengal in 2011, is now to continue to shun the National Pension Scheme (NPS) and to give retirement benefits under old pension scheme.
Delhi chief minister Arvind Kejriwal, who recently promised to restore the old pension system (OPS) for its employees.
“So, NPS, 2004 is no final decision for BJP led Modi government, according to present scenario,” he said. “the government will need to hear all opinions and points of view on this issue before any changing.”
Since the government is required to announce the proposed reform, the most exit polls aired by TV networks predicted that the Congress would make gains in the Hindi heartland states of Madhya Pradesh, Rajasthan and Chhattisgarh — all ruled by the BJP now.
It has shown that the Prime Minister Narendra Modi’s popularity rating has been slipping. There have also been protests around the country by the employees from the central government and various state governments against the National Pension Scheme.
The government authorities have been considering ways either to soften the National Pension Scheme or to revive old pension scheme, the sources familiar with the pension scheme told The Sen Times on Friday.
The Union Cabinet on Thursday increased the government’s contribution to 14 per cent of salary from 10 per cent to the National Pension Scheme (NPS), while the contribution of employees will remain unchanged, allowed higher tax-free withdrawal of funds on retirement to 60 per cent of the total funds from 40 per cent at present and provided subscribers the option of allocating higher investments in equity, which will be eligible for tax benefits under section 80C of the Income Tax Act within the Rs 1.5 lakh limit. The changes will benefit central government employees, who have been enrolled for NPS since January 1, 2004.
However, thousands of employees’ bodies from central government and various state governments are not satisfied the government Thursday’s announcement and to press hard for revival of the old pension scheme.
“We are protesting against the government Thursday’s announcement and demanding the withdrawal of the National Pension System (NPS), 2004 as it is completely against our interests,” said a leader of a Central Employees’ Association.
The modified NPS or old pension scheme could be in place from next fiscal,” the official said.