Central govt employees may get 50% of their last drawn salary as pension under NPS: Report
New Delhi: As the Finance Ministry prepares to present the full fiscal year budget for 2024-25, the National Democratic Alliance (NDA) government is considering offering central government employees a pension equivalent to 50% of their last drawn salary under the National Pension System (NPS), according to a report by the Times of India.
This move by the NDA government aims to address the concerns of central government employees regarding their pensions.
A panel led by Finance Secretary TV Somanathan has evaluated the impact of providing an assured return.
The committee, formed following an announcement by Finance Minister Nirmala Sitharaman, has also reviewed global practices and the adjustments implemented by the Andhra Pradesh government, the report says.
“There is growing acknowledgement within the government of offering a 50 per cent guarantee," and in case of any shortfall, the government will cover the gap, the report added.
The Somanathan panel’s recommendations come amid rising concerns over the pension system for central government employees.
The government pension system currently operates without funding, as the Centre does not maintain a retirement fund.
The Budget 2024 is anticipated to include provisions for the creation of a retirement fund by the NDA government.
The National Pension System is a voluntary, long-term retirement savings scheme designed to provide financial security to individuals during their post-retirement period.
Regulated by the Pension Fund Regulatory and Development Authority (PFRDA), the NPS operates on a defined contribution basis.
Subscribers contribute regularly to their retirement account during their working years, which is then invested in various financial instruments such as equity, corporate bonds, government securities, and alternative assets.
The accumulated corpus is managed by Pension Fund Managers (PFMs) appointed by the PFRDA.
The NPS offers tax benefits under Section 80C of the Income Tax Act and provides an additional deduction under Section 80CCD(1B).
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