News about - Govt May Offer Guarantee Under NPS To Allay Fears- Courtesy TOI Delhi edition 9.7.2024 page 21.
This has been the demand of Bharat Pensioners Samaj
as a compromise formula
BPS 67th AGM resolution passed unanimously and sent to Govt.
23. NPS pensioners: Almost 2lac Govt. employees (from C. G; States and PSU etc) retire every year. This forms a huge bunch of people who suddenly come face to face with enormous risks after retirement. A Democratic Govt. in the name of social welfare and old age security must consider some minimum income i.e. 50% of the last drawn salary for the sustenance of the employees covered by NPS after retirement, against their own contribution along with employer’s contribution or else NPS Scheme may be rolled back.
NEW DELHI: Govt is looking to assure central govt
employees who are part of the National Pension System of 50% of the last pay
drawn as pension as it seeks to address their concerns over the payout. This is
despite the scheme for those recruited from 2004 currently offering high
returns for those who stay invested for 25-30 years.
A committee headed by finance secretary T V Somanathan
had been set up after an announcement by finance minister Nirmala Sitharaman.
While the Centre has ruled out a return to the Old Pension Scheme (OPS), it
kept the window open to provide a certain level of comfort at a time when
Congress was announcing a reversal of a decision taken by the Manmohan Singh
govt.
OPS is a defined benefit scheme, offering half the last
salary drawn as pension for life and subject to adjustments in line with pay
commission recommendations. In contrast, NPS is a defined contribution scheme
where a govt employee provides 10% of the basic salary as his/her contribution
and the Centre provides 14%.
While the Somanathan committee has looked at the
global experience, as well as the results of the tweak undertaken by the Andhra
Pradesh govt, it has also carried out extensive calculations to gauge the
impact of providing an assured return. Although it is possible for the Centre
to offer 40-45% guarantee, politically, it does not address the concern of
employees who work for 25-30 years. As a result, there is growing
acknowledgement within the govt of offering a 50% guarantee. Which means in
case of a shortfall, the govt will fill the gap.
This means that an annual estimation will also need to be undertaken as several
committee members are of the view that unlike the govt pension system, which is
unfunded as the Centre does not have a retirement fund. It is likely that
the Centre will this time also create a fund that will set aside money, as is
the case with companies that have retiral benefits for their employees.
Officials have maintained that those who stay employed for 25-30 years are
seeing adequate returns to match the pension payment of those under OPS and the
complaints of low payouts was only coming from those who have exited the scheme
so far, having completed 20 years or less.
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