Assured Pension for State and Central Government Employees under NPS by this rear-end

"Revamping India's Pension Landscape: The Centre Adopting Andhra Model Revolution"

The Finance Ministry is gearing up for a significant transformation in the National Pension Scheme (NPS) tailored for State and Central Government Employees. In an endeavour to enhance pension benefits, the Centre is evaluating the adoption of the Andhra Pradesh model, ensuring pensioners receive 40-50% of their last drawn basic salary. This prospective scheme will be linked to market performance, with government intervention to cover any pension fund shortfalls, marking a paradigm shift in the existing setup. While employees will maintain their customary contributions, the government's share is set to increase, promising a sweeter retirement for government staff.

This anticipated reform is expected to be officially unveiled before the year-end, with a dedicated committee ironing out the specifics, predominantly influenced by the Andhra Pradesh model. This revamp aims to replicate the success of the Andhra guaranteed pension scheme, which not only provides 50% of the last basic salary but also factors in inflation-linked dearness allowance (DA).

Presently, employees allocate 10% of their basic salary towards NPS, with the government contributing 14% to their NPS accounts. The potential adoption of an inflation-linked scheme, akin to the Andhra model, remains uncertain and is on the agenda for discussion during the upcoming committee meeting.

Political dynamics are also at play in the NPS landscape, with BJP-governed states pushing for changes in the National Pension System to revert to a scheme reminiscent of the old pension system. This move is strategically aimed at appealing to voters ahead of elections. Several non-BJP-ruled states, such as Himachal Pradesh, Rajasthan, Chhattisgarh, Punjab, and Jharkhand, have already made the switch to the old pension system, shifting a greater pension burden onto the states.

Data from the Pension Fund Regulatory and Development Authority (PFRDA), the regulator overseeing the NPS, reveals that state and central government employees represent a substantial 79% of the Rs 9 lakh crore assets under NPS management. As of March 31, 2023, the NPS boasted a subscriber base of 6.3 crore, with state government employees comprising 60.72 lakh and central government employees amounting to 23.86 lakh. The NPS continues to be a cornerstone in securing the financial future of government personnel.

In summary, the proposal to emulate the Andhra Model within the NPS system signifies a noteworthy transformation that could significantly benefit government employees' post-retirement financial security.