Central Government Pension Update: No Revival of Old Scheme, But 50% Minimum Pension Possible Under NPS

The central government has delivered positive news for employees regarding pension schemes. While the old pension scheme for central employees will not be reinstated, those under the National Pension Scheme (NPS) may receive 50% of their last salary as pension. This decision follows demands from central employees to restore the old pension scheme, with the government assuring that NPS participants will receive 50% of their last salary as pension.

The National Pension Scheme (NPS), implemented for employees recruited since 2004, is showing promising returns for long-term investors. People who have invested in the scheme for 25-30 years are experiencing higher returns.

Following Finance Minister Nirmala Sitharaman's announcement, a committee led by Finance Secretary TV Somanathan has been established. Despite the government's decision against reverting to the old pension scheme (OPS), it has introduced certain alleviative measures. Under OPS, retirees received half of their last salary as a lifelong pension, supplemented by periodic increases based on Pay Commission recommendations. In contrast, the National Pension Scheme (NPS) operates as a contribution-based system. Government employees contribute 10% of their basic salary, matched by a 14% contribution from the central government.

The Somnathan Committee has taken into account both global factors and the effects of recent changes implemented by the Andhra Pradesh government. They have conducted thorough calculations to evaluate the feasibility of providing assured returns. While the Committee suggests that it is feasible to provide a 40-45% Minimum Support Price (MSP) for the Centre, concerns among employees persist politically. There is speculation that the Congress party may reinstate the OPS if elected, keeping these concerns alive. Therefore, the government may consider offering a 50% MSP to bridge any potential shortfall in returns.