In Budget 2024, according to the report, there are chances of increase in assured pension for Central government employees.
Central government employees covered under the National Pension System (NPS) may soon be assured by the government of 50 percent of their last drawn pay as pension. The government is working towards addressing concerns over payout disparities.
After the Finance Minister Nirmala Sitharaman’s announcement a committee was formed which was chaired by Finance Secretary TV Somanathan to explore this initiative. The government is planning to provide more comfort to pensioners when the opposition parties demand to reverse the earlier decision.
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Difference Between Old & New Pension Scheme
In OPS there was a guarantee of a defined benefit of half of the last salary drawn as lifelong pension. In contrast, the NPS is a defined contribution scheme where employees contribute 10 percent of their basic salary, In contrast, NPS is a defined contribution scheme where government employees provide 10% of basic salary as their contribution and central government provides 14%.
The Somanathan committee reviewed global practices and also studied results of such adjustments made by state governments like Andhra Pradesh. According to the TOI report, there is a growing momentum within the government to guarantee 50 percent of the last pay drawn for employees who serve 25-30 years, bridging potential shortfalls with government funding.
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According to the report, Officials claim employees who invested for 25-30 years constantly are receiving satisfactory returns as compared to OPS pensioners. Whereas low payouts are being received mainly by those who have exited the scheme before completing 20 years.
