State governments of Rajasthan, Chhattisgarh, and Jharkhand will not get money deposited to date under the National Pension System (NPS), Finance Ministry told Lok Sabha citing PFRDA regulations. The Ministry also made it clear that there is no proposal at the Central level to go back to the old scheme.
“In response to the proposals of the State governments of Rajasthan Chhattisgarh and Jharkhand, PFRDA has informed the respective State governments that there is no provision under Pension Fund Regulatory and Development Authority Act, 2013 read along with PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, and other relevant Regulations, which are already deposited both in the form of government contribution and employees’ contribution towards NPS, along with accruals, can be refunded and deposited back to the State government,” Minister of State in Finance Ministry Bhagwat Karad said in a written reply on Monday.
Earlier this year, Rajasthan was the first State to revert back to Old Pension Scheme (OPS) followed by Chhattisgarh and Jharkhand for their State government employees. Punjab on November 18 issued notification regarding implementation of OPS to the government employees who are presently being covered under the NPS. Now, newly- formed Himachal Pradesh government has announced taking a decision on reverting to OPS soon.
For the government employees, while the OPS is defined one, NPS is a contributory one. In other words, employees need not contribute to OPS and entire pension bill is borne by the government. However, employees need to contribute 10 per cent of their basic (including DA), while up to 14 per cent is deposited by the government.
With the help of these contributions, corpus is created and that is used to pay pension after retirement. NPS is mandatory for government employees who joined service on or after January 1, 2004.
Karad said the Rajasthan, Chhattisgarh and Jharkhand governments have sent proposals to the Centre/PFRDA to return the accumulated corpus of subscribers under NPS to respective State governments. No such proposal has been received from the Punjab government, he added.
The government — Central and States — implemented NPS as pension bill was eating significant chunk of revenue. According to experts, the issue is more political than economic one and going back to OPS is more to do with populism. Since 5 out of 28 States have either gone back or planning to go back to OPS and West Bengal is yet to join NPS, there is pressure on Centre to resume OPS.
However, Karad said: “There is no proposal under consideration of government of India for restoration of old pension scheme.”