In March 2023, the government formed a committee chaired by Finance Secretary T V Somanathan to explore measures to strengthen NPS benefits without returning to the non-contributory and economically unsustainable Old Pension System (OPS). The committee was formed after some states dropped the NPS favourable of the OPS.
According to news sources, the central government intends to increase National Pension System (NPS) payments. The proposed modifications would give an assured pension of up to 50% of the previous basic wage, a departure from the present market-driven pay-outs system. Around 87,00,000 central and state government employees have participated in the NPS since 2004 and can easily withdraw benefits from this.
The proposed programme guarantees a pension of 40-50% of last salary, with modifications determined by periods of service and the amount withdrawn from the pension fund. Any shortage in the pension fund required to satisfy the promised pension amount would be funded by the government’s central budget.
What comes as a challenge then? The main trouble to be faced by the government is adjusting this within its financial year budget. The yearly budget may be heavily impact in the long run. The government might also see problems solving equality and disproportions.
