The committee is notified by the Center of Government employee pension plans.

To arrive at its recommendations, the panel will develop its own process and system, including conferring with the states.

The Center informed the committee led by Finance Secretary TV Somanathan on Thursday to investigate the topic of pensions for public employees in great detail.

This occurs as a number of states switch their employees’ pension plans from the New Pension Plan (NPS) to the previous one.

A note states that the panel would be made up of Somanathan, secretary of the Department of Personnel & Training, Annie Matthew, Deepak Mohanty, chairman of the Pension Fund Regulation and Development Authority, and Radha Chauhan, special secretary in the Finance Ministry’s Spending Department.

The group will discuss whether the National Pension System requires modification and provide recommendations for policies that will increase pension benefits for public employees while maintaining budgetary responsibility for the exchequer. To come up with its suggestions, the panel will create its own process and structure, including speaking with the states.

The OM did not provide a date for the panel’s report submission.

A committee headed by Somanathan would be formed to check into the pension concerns of government employees, according to remarks made last month in the Lok Sabha by Finance Minister Nirmala Sitharaman. With reference to the Finance Bill, Sitharaman said, “I propose to set up a committee under the Finance Secretary to look into the matter of pensions and design a strategy which satisfies the aspirations of employees while maintaining the financial discipline to safeguard ordinary residents.”

According to her, the policy “would be designed for acceptance by both the national and state governments.”

The measure was made in reaction to employee organizations in some other states demanding for the same and to several non-BJP states opting to go back to the Old Pension Plan (OPS), which is linked to dearness payments.

Informing the center of their intention to go back to the Old Pension Plan, the state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have also asked for a return of the NPS corpus that has been collected.

At retirement, the OPS provides set pensions to its members. The pension payment is equal to half of their most recent take-home pay. Meanwhile, NPS is an investment-based pension plan. Investments made with NPS contributions include debt and equity instruments. As a result, it does not provide set incomes but instead offers strong long-term returns that produce a sizeable lump amount and regular income.

States have been given permission by the national government to raise their borrowing caps by an amount equal to the amount they now contribute each year to new NPS accounts for state employees. States that go back to OPS won’t gain a lot more borrowing space.

The Guaranteed Pension Plan (GPS), which includes OPS and NPS components, has been suggested by Andhra Pradesh in the period. The plan immediately put forward in April 2022, provides state government employees with a guaranteed pension equal to 33% of their most recent basic wage without any taxes. They would be required to contribute 10% of their base pay each month toward this, and the state government would match it.

Leave a Comment