After Increasing Opposition To NPS, The Central Government May Decide To Give Minimum Pension To Its Employees

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Minimum Pension Assurance: Central government may decide to provide minimum pension to its employees amid increasing demand for old pension scheme. The Central Government can guarantee a minimum pension of 40 to 45 percent of the last drawn pay of the employees. This news has come out citing Reuters.

Amid growing opposition to the National Pension Scheme, which is considering making the NPS attractive in view of the demand for the old pension scheme, the central government announced the formation of a committee headed by the finance secretary. It is believed that the central government may modify the existing market linked pension scheme for employees to reduce the resentment of central employees towards NPS.

Many Congress-ruled states are implementing the old pension scheme by abolishing the NPS in their states, which is also causing friction between the central and state governments. After which the Modi government had to take a decision to review the current pension scheme.

Given the committee’s terms of reference, they are considering whether there is a need to change the structure of the current national pension system. What changes can be made in the National Pension Scheme to improve the pension of government employees if the committee finds the need for changes?

In the current NPS employees have to contribute 10% of basic pay and 14% is contributed by the government. And returns are based on market returns on the total corpus invested in government debt. In the old pension scheme, an employee gets a fixed pension of 50 percent of the last pay before retirement.

Tension is going on between the Center and the states ruled by the opposition parties regarding the National Pension Scheme. These days the state government employees including the central government are protesting against the National Pension Scheme and demanding restoration of the old pension scheme. Controversy is also rising as the old pension scheme has been restored in Congress-ruled states like Himachal Pradesh, Rajasthan, Chhattisgarh. After which pressure increased on the government to review NPS.