Pension scheme currently remains a political issue in the country. Meanwhile, many opposition ruled states have again implemented the old pension scheme. These include Rajasthan, Chhattisgarh, Jharkhand, Himachal Pradesh and Punjab.
The central government can give a big gift to pensioners by the end of this year. According to the news of Livemint, by amending the National Pension Scheme (NPS), the government is considering giving at least 40-45% of the final salary to the pensioners. At present, there is a possibility of amendments in the scheme after the recommendations of a high level panel looking into this matter. If it is implemented, about 8.7 million central and state government employees will benefit from it.
The new market-linked pension scheme, launched in 2004, does not provide guaranteed returns like the old pension scheme. In the old pension scheme, pensioners get monthly benefits of 50 percent of their last salary before retirement.
According to the report of Live Mint, many changes can be seen in the revised new pension scheme to offer higher returns. There is also a possibility of seeing changes in the share of contribution made by the employee and the employer. In this case the employer is the Central and State Government.
Pension scheme has become a political issue – Pension scheme currently remains a political issue in the country. Meanwhile, many opposition ruled states have again implemented the old pension scheme. These include Rajasthan, Chhattisgarh, Jharkhand, Himachal Pradesh and Punjab. Some economists say that this can push state governments towards bankruptcy.
Government is facing criticism – The new scheme is also facing criticism regarding the contribution being made by the employee, because it is not a part of the old pension scheme.
In the old pension scheme, the government itself contributed the entire amount. Under the new pension scheme, employees contribute 10% of their salary while the government contributes 14%. NPS allows pensioners to withdraw 60% of the corpus tax-free at the time of retirement and buy annuity for the remaining 40%. Tax is applicable on annuity.
