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Richa Mishra

UP offers benefits to existing employees with less than 10 years service

New Delhi , June 21

The subscriber base of the New Pension Scheme (NPS) seems to be expanding with 16 States joining the Centre's new defined contribution pension structure.

According to Mr D. Swarup, Chairman, Pension Fund Regulatory and Development Authority (PFRDA), "We are hopeful that more States would gradually express their willingness to join the new scheme."

While some of the States such as Tamil Nadu adopted the scheme even before the Centre had announced it, the latest to join is Uttaranchal. The other States are Andhra Pradesh, Manipur, Jharkhand, Chhattisgarh, Gujarat, Rajasthan, Madhya Pradesh, Himachal Pradesh, Bihar, Assam, Goa, Orissa, Maharashtra and Uttar Pradesh.

Interestingly, Uttar Pradesh is the only State that has also offered its existing employees who have put in less than 10 years the benefits of the scheme, official sources told Business Line.

While announcing the NPS, the Centre had said the participation would be open to all State Governments that desire to avail themselves of the option.

The new pension structure, available to all, is applicable to all fresh employees of the Central Government joining the service after the January 1, 2004 cut off date (except those in armed forces).

It is estimated that almost 30 million people would be joining the scheme.

West Bengal keen

As regards West Bengal, sources said there were indications that the State Government was interested in adopting the scheme. Asked when other States were likely to join in, sources said, "It seems the States are waiting for the right political climate."

Under the scheme, each employee makes a defined contribution of 10 per cent of salary, and a matching contribution is to be made by the respective State Governments. However, there would be no contribution from the Government for those who are not in its service. Contributions from both the Government and non-Government employees would be placed with pension fund managers. The fund managers, who are to be licensed by the regulator, would be responsible for investing the corpus as per norms laid down.

Meanwhile, the Government proposes to build a political consensus on pension reforms for smooth passage of the legislation for setting up a pension regulator in the monsoon session of Parliament. The Left parties have opposed the PFRDA Bill to set up a regulatory authority, saying it was against the new pension system as it only defined contribution and no assured returns.

Currently, the amount collected under NPS is going to the Centre. It is estimated to be in the tune of Rs 1,200 crore.

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