The Government of Andhra Pradesh published an Ordinance, the Andhra Pradesh Guaranteed Pension System Act, 2023, on October 20.Courtesy -The HINDU
Andhra Pradesh Guaranteed Pension Scheme GPS
Andhra Pradesh Government publishes Ordinance on
Guaranteed Pension System for employees
It aims at ensuring financial security to and welfare of
the government employees who have subscribed to the National Pension System
October 21, 2023 07:47
pm | Updated 07:47 pm IST - GUNTUR
The
Government of Andhra Pradesh published an Ordinance, the Andhra Pradesh
Guaranteed Pension System Act, 2023, on October 20.
It was aimed at ensuring financial security to and
welfare of the government employees who had subscribed to the National Pension
System (NPS) by implementing a Guaranteed Pension System (GPS), while also
ensuring fiscal sustainability and inter-generational equity, and for matters
connected with that.
The Act was applicable to the employees who had
been recruited on or after September 1, 2004, and whose pay and allowances were
drawn from the Consolidated Fund of the State, including all the Tiers of all
Rural and Urban Local Bodies and Universities, and opted to subscribe to the GPS.
The APGPS subscriber would be guaranteed certain
benefits under the Act, subject to the provisions of sub-section (4) of Section
6 of the Act, and they included:
1. Top-up amount to ensure a monthly guaranteed
pension at the rate of 50% of the last drawn basic pay, in case of a shortfall
in the annuity received by the retired APGPS subscriber.
2. Top-up amount to ensure a monthly spouse pension
at the rate of 60% of the guaranteed pension, in case of a shortfall in the
annuity received by the spouse of the deceased APGPS subscriber.
3. Cost of Living Adjustment on the last drawn
basic pay as per inflation adjusted Dearness Relief, as per the rules notified
under the Act.
4. Top-up amount to ensure a monthly minimum
guaranteed pension of ₹10,000 in case of shortfall in the annuity received by
the APGPS subscriber.
5. Providing a healthcare scheme for the
retired APGPS subscribers.
The existing NPS subscribers should exercise the
option to subscribe to APGPS within the period as prescribed in the Act.The
Government of Andhra Pradesh published an Ordinance, the Andhra Pradesh
Guaranteed Pension System Act, 2023, on October 20.
It was aimed at ensuring financial security to and
welfare of the government employees who had subscribed to the National Pension System
(NPS) by implementing a Guaranteed Pension System (GPS), while also ensuring
fiscal sustainability and inter- generational equity, and for matters connected
with that.
The Act was applicable to the employees who had
been recruited on or after September 1, 2004, and whose pay and allowances were
drawn from the Consolidated Fund of the State, including all the Tiers of all
Rural and Urban Local Bodies and Universities, and opted to subscribe to the
GPS.
The APGPS subscriber would be guaranteed certain
benefits under the Act, subject to the provisions of sub-section (4) of Section
6 of the Act, and they included:
1. Top-up amount to ensure a monthly guaranteed
pension at the rate of 50% of the last drawn basic pay, in case of a shortfall
in the annuity received by the retired APGPS subscriber.
2. Top-up
amount to ensure a monthly spouse pension at the rate of 60% of the guaranteed
pension, in case of a shortfall in the annuity received by the spouse of the
deceased APGPS subscriber.
3. Cost of Living Adjustment on the last drawn
basic pay as per inflation adjusted Dearness Relief, as per the rules notified
under the Act.
4. Top-up amount to ensure a monthly minimum
guaranteed pension of ₹10,000 in case of shortfall in the annuity received by
the APGPS subscriber.
5. Providing a healthcare scheme for the retired
APGPS subscribers. The existing NPS subscribers should exercise the
option to subscribe to APGPS within the period as prescribed in the Act.
THE ANDHRA PRADESH GAZETTE
PART IV-B EXTRAORDINARY
PUBLISHED BY AUTHORITY
No. 31] AMARAVATI, FRIDAY, 20th OCTOBER
2023.
ANDHRA PRADESH Acts, ordinances and regulations etc
The following Act of the Andhra Pradesh legislature
received the assent of the governor on18th October 2023 and the said assent ishereby
first published on 20th of Octobe2023 in the Andhra Pradesh Gazette
for general information
Act No31 of 2023
AN ACT TO ENSURE FINANCIAL SECURITY AND WELFARE OF THE
GOVERNMENT EMPLOYEES SUBSCRIBED TO THE NATIONAL
PENSION SYSTEM BY IMPLEMENTING A GUARANTEED PENSION
SYSTEM, WHILE ALSO ENSURING FISCAL SUSTAINABILITY AND
INTER- GENERATIONAL EQUITY AND FOR MATTERS CONNECTED
THEREWITH OR INCIDENTAL THERETO.
Be it enacted by the Legislature of the State of Andhra
Pradesh in the
Seventy-fourth year of the Republic of India as follows:-
CHAPTER- I
PRELIMINARY
(1) This Act may be called the Andhra Pradesh Guaranteed
Pension System Act, 2023.
(2) It shall extend to all the employees, who are
recruited on or
after 1-9-2004 and whose pay and allowances are drawn
from
the Consolidated Fund of the State, including all the
tiers of all the Rural &urban Local bodies,universaties etc; and have opted
to subscribe to the Andhra Pradesh Guarateed pensionsystem
.
ANDHRA PRADESH ACTS, ORDINANCES AND
REGULATIONS Etc.,
The following Act of the Andhra Pradesh Legislature
received
the assent of the Governor on the 18th October,
2023 and the said assent
is hereby first published on the 20th October,
2023 in the Andhra Pradesh
Gazette for general information :
ACT No. 31 of 2023.
CHAPTER I
(PRELIMINARY)
Section1.
1.This Act may be called the Andhra Pradesh Guaranteed Pension
System Act 2023
2 It shall extend to all the employees who are recruited
on or after 01.09.2004 and whose pay &allowances are drawn from the
consolidated Fund of the State including all tiers of all
Rural and Urban
Local Bodies, Universities etc., and have opted to subscribe to the Andhra
Pradesh Guaranteed Pension System.
(3) It shall come into force on such date as the State
Government may, by notification, appoint.
Definitions
2. In this Act, unless the context
otherwise requires.,
(1) “Andhra Pradesh Guaranteed Pension System (APGPS) means
the pension system that offers the benefits referred to in Chapter-II of this
Act;
(2) “Accumulated Pension Corpus” means the monetary value
of the pension investments accumulated in the individual pension account of a
subscriber under the National Pension System;
(3) “Annuity Service Provider (ASP)” means an IRDA
registered insurance company empanelled by PFRDA for providing annuity services
to NPS subscribers upon their exit from the system;
(4) “Annuity Component” means the amount of monthly
annuity payable under NPS by the Annuity Service Provider, to the APGPS
subscriber upon retirement;
(5) “Annuity Plan” means the annuity product purchased by
theAPGPS subscriber upon retirement as specified in the rulesframed under this
Act;
(6) “APGPS Subscriber” means the employee, who registers
to avail the benefits defined under the Andhra Pradesh Guaranteed Pension
System;
(7) “Health Care Scheme” means the scheme implemented by the
Government of Andhra Pradesh as defined in the relevant orders for retired
APGPS subscribers;
(8) “Government” means the Government of Andhra Pradesh;
(9) “Guaranteed Pension” means the amount of total
monthly pension receivable by the APGPS subscriber upon retirement and which
comprises of the Annuity Component and the Top-up Component as specified under
this Act;
(10) “Individual Pension Account” means the account of an
NPS subscriber, executed by a contract setting out the terms and conditions
under the National Pension System;
(11) “Last Pay Drawn” means the monthly basic pay drawn
by the employee at the time of retirement from service;
(12) “Medical Invalidation” means the physical or mental
infirmity due to which a Government employee is declared by a competent
authority as permanently incapacitated for continuing in public service, as
defined in the relevant orders;
(13) “Minimum Pension” means the minimum monthly pension amount
specified under this Act;
(14) “National Pension System (NPS)” means the contributory
pension system referred to in section 20 of the Pension Fund Regulatory and
Development Authority Act, 2013, whereby contributions from a subscriber are
collected and accumulated in an individual pension account using a system of
points of presence, a Central Recordkeeping Agency and pension funds as may be
specified by regulations by Pension Fund
Regulatory and Development Authority;
(15) “NPS Subscriber” means the employee who joins
service with the Government on or after 1-9- 2004 and who subscribes to a
scheme of a Pension fund under National Pension System;
(16) “Pension Fund Regulatory and Development Authority (PFRDA)”
means the Pension Fund Regulatory and Development Authority established under
the Pension Fund Regulatory and Development Authority Act, 2013;
(17) “Prescribed” means prescribed by the rules made by
the Government under this Act;
(18) “Qualifying Service” means the service rendered by
an employee, which commences from the date he/she takes charge of the post to which
he/she is first appointed substantively and which concludes upon his/her
retirement, subject to conditions prescribed in this Act and the rules to be framed
from time to time;
(19) “Spouse” means the husband or wife of the APGPS
subscriber mentioned in the service register, surviving as on the date of retirement
and mentioned as spouse in the annuity plan purchased by the APGPS subscriber;
(20) “Spouse Pension” means the Guaranteed Pension
receivable by the Spouse of the retired APGPS subscriber upon his/her demise,
as per the rules notified under this Act;
(21) “Superannuation” means the retirement on attaining
the age of superannuation as notified by the Government from time to time;
(22) “Top-up Component” means the amount receivable by
the APGPS subscriber under the Guaranteed Pension System, so that the APGPS
subscriber receives Guaranteed Pension as specified under this Act;
(23) “Withdrawal” means the permissible withdrawal from accumulated
pension corpus as per the applicable provisions of relevant Rules.
CHAPTER- II
THE ANDHRA PRADESH GUARANTEED PENSION SYSTEM (APGPS)
3. The APGPS subscriber shall be
guaranteed the following benefits under this Act, subject to the provisions of
sub-section (4) of section 6.
(1) Top-up
amount to ensure a monthly Guaranteed Pension at the rate of fifty percent
(50%) of the last drawn basic pay, in case of a shortfall in the annuity
received by the retired APGPS subscriber.
(2) Top-up amount to ensure a monthly spouse pension at
the rate of sixty percent (60%) of the Guaranteed Pension, in case of a
shortfall in
the annuity received by the spouse of the deceased APGPS subscriber.
(3)Cost of Living Adjustment on the last drawn basic pay
as per inflation adjusted dearness relief, as per the rules notified under this
Act.
Benefits
of APGPS.
(4) Top-up amount to ensure a monthly minimum Guaranteed Pension
of Rs. 10,000/- (Rupes ten thousand only) in case of shortfall in the annuity
received by the APGPS subscriber.
(5)
Providing a health care scheme for the retired APGPS subscribers.
Conditions of Eligibility for Availing Benefits under
APGPS.Registration into APGPS.
4. (1) The APGPS subscriber shall
become eligible to receive the benefits under the Guaranteed Pension System
subject to sub-section (3) of section 6 and the following conditions:
(a) Rendering of a minimum of ten (10) years of
qualifying service, if retiring on superannuation;
(b) Rendering of a minimum of twenty (20) years of qualifying
service, if retiring from service on voluntary retirement;
(c) Rendering of a minimum of thirty three (33) years of qualifying
service, if retired by the Government in the public interest;
(d) Rendering of a minimum of ten (10) years of
qualifying service, if retiring from service on Medical Invalidation.
(2) The APGPS subscriber shall not be entitled to the
benefits of APGPS in the following situations.
(a) Retired
from service due to resignation;
(b) Dismissal from service, removal from service and compulsory
retirement arising from Disciplinary action.
(3) If there are any Disciplinary or Judicial proceedings
pending against the APGPS subscriber at the time of retirement, the benefits
specified under Section 3 shall become payable only after conclusion of the
Disciplinary / Judicial proceedings, as
per the
rules notified under this Act.
(4) In case the APGPS subscriber dies while in service,
the conferment of benefits shall be as prescribed under the rules.
5. (1) The
existing NPS subscribers shall exercise the option to subscribe to APGPS within
the period as prescribed under the
rules.
(2) Employees, who join service after notification of
this Act shall exercise the option to subscribe to the APGPS at the time of joining
the service.
(3) The detailed process and procedure for APGPS
Registration shall be detailed in the Rules notified under this Act.
(4) Subscribing to APGPS shall not affect in any way, the
monthly contributions made to the NPS by the employees and the employer as per
the relevant Rules and executive instructions in force.
Amount of Guaranteed pension :
6. (1) Upon the retirement of the
employee, the purchase of the annuity plan from an Annuity Service Provider
shall be made in accordance with the rules notified under this Act, duly
utilizing the accumulated pension corpus in the individual pension account.
(2) The Guaranteed Pension shall consist of the Annuity Component
and the Top-up Component as specified below:
(a) The Annuity Component is the annuity receivable by
the APGPS subscriber based on the annuity plan selected as per subsection
(1) of section 6 above.
(b) Top-up Component is the amount receivable by the APGPS
subscriber, if any, so that the Subscriber receives Guaranteed Pension as
specified under this Act.
(3) Calculation of Guaranteed Pension and the Top- up Component
shall be as prescribed in the rules notified under this Act.
(4) The part withdrawals and the final withdrawal made by
the APGPS subscriber shall result in a proportional reduction in the Guaranteed
Pension as prescribed in the rules notified under this Act.
(5) It shall be competent for the Government to withhold
or withdraw the Top Up component or a part therefrom, in accordance with the
prescribed rules.
7. (1) In the case of death of the
retired APGPS subscriber, the spouse shall receive Spouse Pension at the rate
of sixty percent (60%) of the Guaranteed Pension, consisting of the Annuity
Component and the Top- up Component as specified below:
(a) The Annuity Component is the annuity receivable by
the spouse based on the annuity plan selected by the APGPS subscriber as per
sub-section (1) of section 6 above.
(b) Top-up Component is the amount receivable by the spouse,
so that he/she receives the Spouse Pension as specified under this Act.
(2) The process, procedure and conditions for
determination, processing, sanction, authorization and disbursal of the Spouse
Pension shall be governed by the prescribed rules.
8. (1) The authorities concerned
with registration, processing, sanction, authorizing and disbursement of the
benefits to the APGPS subscribers under this Act shall be prescribed under the
rules.
(2) The Government shall designate an office to perform
the functions of recordkeeping, accounting, administration and grievance
redress for APGPS subscribers. The detailed
processes and procedures in this regard shall be
prescribed in the Rules.
CHAPTER - III
MISCELLANEOUS
Powers to make Rules :
9. (1) Subject to the provisions of
this Act, the Government may, by notification in the official Gazette, make
Rules detailing the operationalization of APGPS and to achieve the purpose
of this Act.
(2) In
particular and without prejudice to the generality of the foregoing power, such
rules may provide for all or any of and not limited to the following matters,
with reference to APGPS, namely,-
(3)
Power to make Rules.
Amount of Guaranteed Pension.
Spouse Pension upon death of
the retired APGPS subscriber.
(a)
Conditions pertaining to reckoning of qualifying service;
(b) Conditions governing various retirement situations,
including death, and the entitlements thereof;
(c)
Conditions governing the purchase of annuity plan;
(d)
Cessation of the Top-up Component;
(e)
Employment after retirement;
(f) Top-up
Component subject to future good conduct;
(g)
Withholding or withdrawing Top-up Component;
(h)
Grievance redress mechanism for APGPS subscribers.
Power
to remove difficulties.
10. (1) If any difficulty arises in giving effect to the
provisions of this Act, the Government of Andhra Pradesh may, by order published
in the official Gazette, make such provisions, not inconsistent with the
provisions of this Act, as appear to it to be necessary or expedient for
removing the difficulty:Provided that no order shall be made under this section
after the expiry
of three (3)
years from the commencement of this Act.
(2) Every
order made under this section shall be laid, as soon as may
be after it
is made, before the State Legislature.
G. SATYA PRABHAKARA RAO,
Secretary to Government,
Legal and Legislative Affairs & Justice,
Law Department.
www.apteachers.in
G. SATYA PRABHAKARA RAO,
Secretary to Government,
Legal and Legislative Affairs & Justice,
Law Department.
The
new Guaranteed Pension Scheme (GPS) for the Andhra Pradesh government
employees is a hybrid model between the present ontributory Pension Scheme
(CPS) and the Old Pension Scheme (OPS), according to its Finance Minister
Buggana Rajendranath.
The
GPS was being introduced in view of the long-standing demand from the
employees for review of CCS. However, as reversal to the non-contributory OPS
was not financially feasible, the guaranteed pension system is a middle path,
he said. The gains from the investment portion of CPS were only below
20 per cent and the new systems will be ‘beneficial’ as it has a guaranteed
pension component, the Minister said.
Under
the GPS, all State government employees will be eligible for a guaranteed
monthly pension of 50 percent of their last drawn basic salary. There will
be an addition of dearness relief (DR) twice a year, which will increase the
quantum of pension. “Those who have 10 years of service, will also get a
minimum of ₹10,000 as pension. In case of the death of a pensioner, 60 percent
of the sum will be given to the spouse. There will be other benefits like
coverage under the State government health scheme,’‘ the Minister said before
the GPS bill was passed in the State Assembly.
Explaining
the rationale behind not implementing the OPS as demanded by the employee
associations, Rajendranath said the fiscal deficit, which should be not higher
than 3 per cent, will reach 8 percent by 2050 in the event of reversal to the
old pension scheme.
Huge burden
As per
the State government data, the expenditure on pension to those who are
currently under OPS is ₹20,400 crore which will go up to ₹33,546 crore if all
those under CPS migrate to the old system. There will be many retirements in
2045 which will become a huge burden on the State Exchequer if all those are
brought under OPS, the minister added.
After
the scrapping of the OPS in 2004 and the introduction of the New Pension Scheme
(NPS), the CPS was brought in by State governments. There have been demands in
many States for the reintroduction of OPS. Some States, including Chhattisgarh,
Rajasthan, Himachal Pradesh Punjab and Delhi, are mulling reverting to OPS.
However,
in view of the ‘impossibility’ of going back to OPS, the new guaranteed pension
system model can be picked by the other States in future, he added.
The Andhra Pradesh
government’s recent decision to introduce a guaranteed pension
scheme (GPS) appears to be a viable
middle path between the current Contributory Pension Scheme (CPS) and the Old
Pension Scheme (OPS).
After the scrapping of the OPS
in 2004 and the introduction of the New Pension Scheme (NPS), the CPS was
brought in by State governments. There have been demands in many states for the
reintroduction of OPS. Some states, including Chhattisgarh, Rajasthan, Himachal
Pradesh Punjab and Delhi, have even announced a rethink on reverting to OPS.
It is in this context that the
YSR CP government in Andhra Pradesh has come out with its new GPS, under which
all State government employees will be eligible for a guaranteed monthly
pension of 50 per cent of their last drawn basic salary.
There will be an addition of
dearness relief (DR) twice a year, which will increase the quantum
of pension.
An analysis of the new system
brings out its merits over CPS in certain areas. First, a pensioner under CPS
is uncertain about his/her annuity. As per calculation, the pension is lower
than the 50 per cent of the last drawn salary. It is market-linked and hence
one has to factor in market vagaries. In a regime of declining interest rates,
there could be a dip in the corpus growth of pension contributions, thereby
lowering the pension annuity payouts.
Also read: EPFO’s higher pension scheme: What’s in it for you?
It would also be wise to compare
the percentage of the basic pay that a new employee would get as pension at
retirement down the line and the amount promised under the new GPS.
As per estimates, there is no
guarantee that a new employee would get even 20 per cent of his/her
basic pay as pension at retirement under CPS, while GPS would ensure 50 per
cent of the last drawn pay.
Further, it will guarantee an
inflation-adjusted pension of 50 per cent of last drawn basic pay containing an
inflation-adjusted DR. Compared to CPS, which will not factor in the
inflationary impact, GPS will protect the pensioner’s salary at the date
of retirement in real terms.
For example, a pensioner
retiring with a basic pay of Rs 20,000 will get a pension of Rs 10,000
(at 50 per cent of basic pay), which will increase every year at the rate
of Rs 500 for a DR of 5 per cent.
Similarly, if an employee
retires at 62 with a monthly pension of Rs 50,000 underGPS, he would
draw almost Rs 1.20 lakh pension when he attains 82 years,
The projected cost burden for
the State government under GPS in 2060 is Rs 1.19 lakh crore, excluding the Rs
14,000 crore from the contributory corpus fund.
Also read:National Pension System: From government employees to all
citizens
When compared to OPS, GPS has
the added contribution component and, further, will not have any relation to
the Pay Revision Commission (PRC).
OPS: Fiscally unwise
While GPS appears to be better
than CPS, a complete reversal to OPS is not desirable, warn economists. The
Reserve Bank of India (RBI), too, has been cautioning over the fragile fiscal situation
of state governments.
In the absence of
any employer and employee contributions, the current workers and other
taxpayers would need to finance OPS for the retired. The PRC is another grey
area as the dearness allowance (DA) and fitment would need to be adjusted to
create a new base for pension calculation with every PRC.
For example, consider a
25-year post-retirement life. Assuming a DA of 4 per cent, the
pension doubles without compounding and rises by 148 per cent if the
DA is readjusted every five years.
However, if the base is
revised with 4 per cent DA and fitment of 10 per cent, then the pension
rises by 243 per cent; and with 5 per cent and 15 per cent, the rise will be
411 per cent, as per estimates.
Thus, while a reversal to OPS
is not feasible, a viable middle path is the new GPS. Given the current
modalities of the CPS, the new system is a win-win for all
stakeholders. The feedback from a majority of employee associations is
positive and there is a view that it’s almost like OPS.
As many other states are
currently examining pension system reforms, AP’s new system can provide leads.
New Pension Scheme Govt. of India, Ministry of Finance, Deptt. Of Expenditure vide their OM No.F.No.1)T)(2)/2003/TA/19 dt.14.1.2004 & 4.2.04 have introduced a New Defined Contribution Pension Scheme replacing the existing System of Defined benefit Pension System. The New Pension Scheme comes into operation w.e.f. 1.1.2004 and is applicable to all new entrants to Central Govt. service except to Armed Forces joining Govt. service on or after 1.1.2004. Features
Procedure for allotment of Permanent Pension Account Number (PPAN)
Audit / Accounting checks to be exercised for New Pension Scheme
1. 00/016/02 – Individual Contribution 2. 00/016/03 – Govt. matching Contribution as Plus receipts with corresponding/respective charge head i.e. Service heads and New RDR heads. 14. Finally schedules are detached and sent to EDP for punching. |
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