Centre Mulling To Reintroduce Old Pension System Instead Of NPS

PFRDA: NPS Functionalities released by CRAs in FY 2019-20

A top finance ministry official said that the government would consider reintroducing old pension system and to scrap the NPS.

“The government is looking into the matter. It is difficult to re-implement the old pension system instead of NPS due to financial constraints but the government must prevent discrimination between the employees covered old pension and the employees, who are covered NPS,” he said on Tuesday.

“The larger federations and associations of central government employees advocate scrapping the NPS on the ground that it discriminates between two sets of government employees,” he added.

“The central government employees associations have complained that after death of an employee, is not ensured in the NPS. More, if an employee dies at an early age, the family would suffer, since annuity from the contribution would be grossly inadequate,” he revealed.

However, Minister of State for Personnel Jitendra Singh said in the Lok Sabha on March 28, 2017, “there is no proposal to replace the NPS with the old pension scheme in respect of central government employees recruited on or after April 1, 2004.”

The central government has replaced old pension system with New Pension Scheme since 1st April 2004. Under the provisions of new pension scheme, 10 per cent of an employee’s salary will be deducted every month and an equal amount of that 10 percent will be given by government to create a head of the pension. The final sum of money (of employees and government) will be handled by national securities depository limited (NSDL) which invests this money in the share market to obtain monetary benefits.

Old pension system is provided to retired central government employees to ensure a regular income minimum Rs. 9000 per month to maximum Rs. 1,25,000 per month and a secure future. This provision also gives the employees to feel an independence and a decent standard of life with their gratuity and general provident fund (GPF).

Accordingly, the old pension system is well for the employees but the NPS is good for the government.

Source: TST