The Union government will likely assure its employees a minimum pension of 40%-45% of their last-drawn salary by altering the current market-linked pension scheme to assuage some holdout States, two government officials have said.
The move comes after the government set up a committee in April to review the pension system in a year peppered with State elections, leading up to the national election in 2024, when Prime Minister Narendra Modi will seek a third term. Mr. Modi has been forced to take a re-look at the current pension system, adopted after a significant fiscal reform in 2004, as some States switched back to the older, fiscally straining system of fully funding a guaranteed pension.
The current National Pension Scheme requires employees to contribute 10% of their basic salary and the government 14%. The eventual payout depends on the market returns on that corpus, which is mostly invested in federal debt. In contrast, the Old Pension Scheme guarantees a fixed pension of 50% of an employee’s last drawn salary, without requiring them to contribute anything during their working life. The government is planning to amend the current scheme so that while both employees and the government still make contributions, employees get an assured 40%-45% of their last drawn salary as pension, the officials said.
Govt. likely to pay assured pensions for its employees, say sources
https://epaper.thehindu.com/ccidist-ws/th/th_kochi/issues/40646/OPS/G5SBCUU9K.1+GRTBCVEEK.1.html
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