The central government said on Tuesday there is no provision in the PFRDA law for a refund of accumulated NPS corpus, which is being sought by the five non-BJP states that plan to restart the old pension system.
The state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh have informed the center of their decision to return to the OPS and requested a refund of the corpus accumulated under the National Pension System (NPS).
“There is no provision in the Pension Funds Regulatory and Development Authority Act 2013 … vide whereby the subscribers’ accumulated inventory, namely the government contribution, the employees’ contribution to the NPS together with accruals, may be refunded and repaid to the state government, ‘ Minister of State for Finance Bhagwat Karad said in a written response in the Rajya Sabha.
The minister further said that the central government is not considering any proposal to restore the OPS in relation to central government staff hired after January 1, 2004.
The NPS was introduced by the central government in December 2003 to replace the defined benefit pension system with a defined contribution system in order to provide income security in old age in a fiscally sustainable manner and to direct even small savings into productive sectors of the economy through oversight investment.
It became mandatory for all new hires in the civil service (excluding the armed forces) effective January 1, 2004, and was also introduced on a voluntary basis for all citizens effective May 1, 2009.
According to the PFRDA, 26 state governments except Tamil Nadu and West Bengal have reported and implemented NPS for their employees, the minister said, adding: “As such a liability under OPS – a defined benefit pension scheme – it is an unfunded liability of state government which will be covered by their future revenues.” In response to another question about OPS, Karad cited the Reserve Bank’s report on “State Finances: A Study of Budgets of 2022-23” to say that by returning to OPS, states “Risk the accumulation of unfunded pension liabilities in the coming years.”
(Except for the headline, this story was not edited by NDTV staff and was published by a syndicated feed.)