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There is no provision in the Pension Fund Regulatory and Development Authority Act, 2013 under which the accumulated New Pension Scheme (NPS) corpus can be refunded to the state governments that have reverted to the old pension scheme (OPS), the minister of state for finance Bhagwat Karad informed the Lok Sabha on Monday.
“There is no provision under PFRDA Act, read along with PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, and other relevant Regulations, vide which the accumulated corpus of the subscribers viz Government contribution, Employees’ contribution towards NPS along with accruals, can be refunded and deposited back to the State Government,” Karad said in a written reply.
“The State Governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have informed the Central Government/Pension Fund Regulatory and Development Authority (PFRDA) about their decision to restart the Old Pension Scheme (OPS) for their State Government employees,” Karad added.
Besides, referring to the Reserve Bank of India (RBI) report titled ‘State Finances: A Study of Budget of 2022-23’ on state finances, the minister also said that the annual saving in fiscal resources that reversion to the OPS will entail for the states will be shortlived.
“By postponing the current expenses to the future, states risk the accumulation of unfunded pension liabilities in the coming years,” RBI had noted last month.
Under the OPS, which is an unfunded pension scheme where current revenues fund pension benefits, retired government employees received 50 per cent of their last drawn salary as monthly pension. The amount keeps increasing with hikes in the DA rates.
NPS, on the other hand, is a defined contribution pension scheme under which an individual has to plan his retirement while in employment. With systematic savings and investments, NPS facilitates the accumulation of a pension corpus during the working life. It was made mandatory for central government staff joining services on or after January 1, 2004, and almost all state governments adopted it for their employees.
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