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Informist, Monday, Jul 15, 2024

 

NEW DELHI – The finance ministry has called for an urgent meeting today for the committee set to review the National Pension System, a ministry circular said. The committee, under the chairmanship of Finance Secretary T.V. Somanathan, will meet Shiv Gopal Mishra, secretary of staff side, National Council, the circular said. The meeting is scheduled at 1500 IST in the ministry. 

 

The National Council, a joint consultative machinery, looks into pay and allowances, weekly working hours and leave policies of central government services. On behalf of central government employees, the National Council will put forth its views to the pension committee under Somanathan. 

 

In her Budget speech in 2023, Finance Minister Sitharaman had announced setting up of the committee to review the pension system. The committee will come up with a solution to the issue of pensions, Sitharaman had said. The committee was set to study whether changes are required in the existing framework of the National Pension System and to suggest ways to improve pension benefits for central government employees while ensuring fiscal prudence. The panel was also set to hold consultations with states before making its final recommendations. The pension authority's Chairman Deepak Mohanty is also on the panel.

 

Multiple meetings have already been held within the committee since November and there were chances that Sitharaman would have discussed the report in the Interim Budget for 2024-25 (Apr-Mar). However, that did not happen.

 

According to media reports earlier this year, the panel has considered some tweaks and guarantees in the discussions that have been held, but it is not in favour of adding to the fiscal burden or going back to the old pension scheme. The Centre may seek public consultation before taking any action.
 

The government introduced the defined-contribution National Pension System on Jan 1, 2004, replacing the defined benefit pension scheme. All states, except Tamil Nadu and West Bengal, joined the new plan.

 

Under the old pension scheme, government employees who have completed at least 10 years of service receive a monthly guaranteed pension based on their last drawn basic salary and the years of service. Under this, the employees do not need to make a contribution.

 

The National Pension System is a market-linked annuity scheme where individuals can invest a regular amount during employment and receive an annuity when they retire. Under the National Pension System, state government employees make a monthly contribution at the rate of 14% of their salary to the pension fund, and a matching contribution is paid by the state government.

 

The system is administered and regulated by the Pension Fund Regulatory and Development Authority. The pension system is mandatory for central government employees, while others can join it voluntarily. 

 

End

 

Reported by Priyasmita Dutta

Edited by Namrata Rao

 

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