New Delhi: The Indian government has set up a committee to review the pension systems for government employees, including the National Pension System (NPS) and the Old Pension Scheme (OPS). The committee, led by Finance Secretary T.V. Somanathan, has been tasked with evolving an approach that addresses government employees’ needs while maintaining fiscal prudence to protect the common citizens.
The NPS, which was adopted for government employees hired on or after January 1, 2004, offers no guaranteed pension. The OPS, on the other hand, assured 50 per cent of the last drawn salaries as pension. Some Opposition-ruled States have announced a switchover for employees covered by the NPS to the OPS, while States such as Maharashtra, where the BJP is part of the ruling alliance, are mulling the same.
The Finance Ministry formed the committee in response to representations that the NPS needs to be improved. The four-member committee, which includes the chairman of the Pension Fund Regulatory and Development Authority, has been empowered to co-opt any officer of the Central government and devise its own mechanisms for consultations with States and other stakeholders, to arrive at its recommendations.
The terms of reference of the panel require it to consider the fiscal implications and impact on overall budgetary space. There is no deadline set for the panel, and the approach developed by the committee would apply to the Centre as well as the States. The committee will deliberate on whether any changes are warranted to the NPS structure and suggest ways to improve the pensionary benefits of government employees covered by it.
Overall, the committee’s objective is to find a solution that addresses the concerns of government employees while ensuring that the pension system remains financially sustainable. The review of the NPS and OPS is an important step towards ensuring that the pension systems in India are equitable and fair for all government employees.
