In a bid to lure the Maharashtra government employees demanding reinstatement of the old pension scheme (OPS), Chief Minister Eknath Shinde, on the last day of the budget session on Friday in the state assembly, announced the amended National Pension Scheme (NPS) whereby the government will bear market-linked risks in the NPS.
Also Read: Explosion At Bengaluruās Rameshwaram Cafe; Four Injured
In a new scheme, employees will also have the option to get a pension of 50% of their last drawn salary and a Dearness Allowance (DA) based on that. Also, the family pension will be 60% of the retirement and DA. This will apply to the state government employees who joined the service after November 1, 2005.
Today’s announcement will be optional for those presently under NPS. This will be a one-time option, and they will have to select their option in the next six months as to whether to remain within the NPS or join the amended NPS.
Currently, the government has 13.45 lakh employees, of which 8.27 lakh come under the NPS. Under the Old Pension Scheme (OPS), the state government spends up to Rs 52,689 crore annually, while the state government’s share in the NPS is Rs 7686 crore. Total expenditure on the salary is Rs 1.27 lakh crore annually. In Maharashtra, NPS was implemented on April 1, 2015.
CM Shinde’s announcement is based on the report submitted to the government by a committee led by former BMC Commissioner Subodh Kumar. The committee had indicated that reinstating the old pension scheme (OPS) could significantly drain the state exchequer. However, the committee, which included retired IAS officers KP Bakshi and Sudhir Srivastav and Director (accounts and treasury), had recommended benefits equal to OPS to the retired government employees by making some three to four changes in the present system. The committee, formed in March 2023 amid solid demand by the state government employees unions, submitted its report to Deputy Chief Minister Ajit Pawar, who holds finance and planning departments, last year in November.
As per the committee’s report, the retired government employees were to get benefits equal to 50% of the last drawn salary, which was given as a pension in the OPS. However, after the scrapping of OPS, retired government employees under the New Pension Scheme (NPS) get a 60% lump sum after retirement, and 40% is invested in annuities as a pension. In OPS, the government employees do not contribute any amount, but in NPS, the government employees contribute 10% of their salary (basic + dearness allowance), while the government’s contribution is 14%. In October last year, the employees’ unions organised a strike across Maharashtra, demanding the restoration of OPS.
Deputy Chief Minister Devendra Fadnavis, during the budget session held in March last year, had said that the state government was not entirely pessimistic about OPS, adding that the government would have to decide in this regard only after considering the state finances. He said that even if the state government starts OPS, it will not be affected as its absolute liability will come in 2030. Incidentally, during the winter session held in December 2022, Fadnavis had told the state assembly that the government would need Rs 1.10 lakh crore to implement the OPS, potentially bankrupting the state.
As an independent media platform, we do not take advertisements from governments and corporate houses. It is you, our readers, who have supported us on our journey to do honest and unbiased journalism. Please contribute, so that we can continue to do the same in future.
