The Finance Ministry on Thursday constituted a committee to review the pension system for government employees.
The committee will suggest whether in the light of the existing structure and composition of the National Pension System (NPS) applicable to government employees, any changes are necessary in the same.
As per its terms of reference, the committee will suggest measures to modify it with a view to improving the pensionary benefits of government employees covered under NPS, keeping in view the fiscal implications and impact on the overall budgetary space, so that fiscal prudence is available to the common citizens. has been kept for safety.
The committee, headed by Somanathan, will have secretary in the Department of Personnel and Training (DoPT), special secretary in the Department of Expenditure and chairman of the Pension Fund Regulatory and Development Authority (PFRDA) as members.
Last month, Finance Minister Nirmala Sitharaman said a committee headed by the finance secretary would look into the issue of pension under NPS for government employees and evolve an approach that would meet the needs of employees while maintaining fiscal prudence.
The announcement comes in the backdrop of several non-BJP states deciding to withdraw the old pension scheme (OPS) linked to DA and employee organizations in some other states demanding the same.
The state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh have informed the Center about their decision to reintroduce the old pension scheme and have requested for refund of funds accumulated under NPS.
Last month, the finance ministry informed Parliament that it was not considering any proposal to restore OPS in respect of central government employees recruited after January 1, 2004.
Under OPS, retired government employees receive 50 per cent of their last drawn pay as monthly pension. The amount keeps on increasing with the increase in DA rates. OPS is not fiscally sustainable as it is not contributory and the burden on the exchequer keeps on increasing.
NPS is applicable to all government employees, except those in the armed forces, who join the central government on or after January 1, 2004. Most of the State/UT Governments have also notified NPS for their new employees.
According to PFRDA (Pension Fund Regulatory and Development Authority), 26 state governments except Tamil Nadu and West Bengal have notified and implemented NPS for their employees.
The Office Memorandum issued by the Ministry regarding setting up of the Committee does not provide any time limit for finalization of the report.
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