2023-11-07 22:31:01
Participatory pension is a hotly debated topic among government employees. Last day, the information in the review committee’s report that the government employees in Kerala have not benefited much from the participation pension came out last day. Why is that?
Majority of government employees in the state want not to continue the participatory pension scheme. The state government also has a stand on it. However, administrative, technical, legal and financial constraints hamper the government to take a final decision. Rita is looking for a solution to this. Judge S. Satish Chandrababu Chairman and P. Marapandian, Prof. D. Narayana and appointed the committee.
The committee submitted a 116-page report in 2021, without giving a definitive answer to the question of whether to continue or withdraw the participation pension scheme, pointing out its pros and cons, enumerating the things that can be done and codifying the opinions of employees. Although eight references were given to the committee, it is clear that the committee sought answers to two concerns of the government.
of the committee
The answer is
If the participation pension scheme implemented in the state in 2013 is regarding to be withdrawn following ten years, the state government has two types of concern. The Revision Committee’s answers to that are as follows:
1. Issue of law
The state government has included the employees of the state in this by agreeing and signing the provisions of the partnership pension scheme. Since then, the share has been paid. The first concern is whether there will be a legal problem if the contract is withdrawn. But the answer of the committee is no need to worry.
The central government’s circular issued in September 2020 states that the state government has the power to withdraw the participatory pension scheme. The government can withdraw from the agreement signed with NPS Trust and NSDL. The amount paid so far, including interest and profit, can be transferred to the General Provident Fund of the employees. The share paid by the government can also be recovered by the government. In the agreement signed by the state government with NPS Trust and NSDL, there is no provision for withdrawing from the scheme. Therefore, the committee clarifies that it cannot prevent withdrawal from the agreement.
2. Financial problem
A second concern of the government is whether withdrawing from the contributory pension scheme will lead to a financial crisis. There is a fact in it and the committee is warning in no uncertain terms that the state will face a huge financial loss in the future. Implementation of the Participatory Pension Scheme will not reduce government expenditure now or in the near future. Pension costs will decrease by 2040.
At present, regarding 20 percent of the government’s revenue is spent on pension purposes. This cost will come down to 4.2 percent in the future if the Participatory Pension Scheme is implemented. But if the project is withdrawn, the cost is likely to increase by more than 50%. Although it costs the government more now through the participatory pension scheme, it can make huge financial gains in the future.
Current statutory pension in Kerala to continue till 2039. After that no one will retire from government service for five years. This is because, as per statutory pension, the retirement age is 56 years, while participating pensioners retire at the age of 60. There will be no retirement from 2039 to 2044. During that period, the government will not incur a single rupee as retirement benefit.
Currently, there is a problem that the government’s pension expenditure is increasing every year as it has to pay contributions to the contributory pension scheme in addition to the statutory pension. This will continue for 25 years. Today, the government spends half of the salary on pension, but following 25 years, it will be enough to spend only 10% of the salary.
If the pension fund grows well, the pension will be higher than the final salary. With that, those with more service will be able to get a larger amount of pension. With that, the complaint of the employees that the pension will be reduced will also be avoided.
of the committee
Recommendations
1. Steps should be taken to make contributory pension attractive.
31 years is the average age of government employees in Kerala. However, under the central government it is 27 years. A person who joins government service at the age of 36 will get only 25 years of service. Retirement age for participating pensioners is 60 years.
Even if the government contribution to the pension fund is increased from the current 10 percent to 14 percent, an employee with a monthly salary of Rs 10,000 will get a pension of Rs 5,422. About 30 percent of state government employees enter service at the age of 36. Keeping this in mind, measures should be taken to make the participation pension attractive. For this, the deficiency allowance can be made 14%, gratuity etc. can be considered.
2. Government share should be increased to 14%
When the Central Government implemented the Participatory Pension Scheme in 2004, the government contribution to the fund was 10%. The central government contribution has been increased to 14 percent of basic pay and dearness allowance with effect from April 1, 2019. Employee share was kept at 10 percent. After this, Maharashtra, Bihar, Karnataka, UP and many other states made the share 14 percent. Kerala should also make it 14 percent.
3.Exgratia pension to be paid
In Kerala, the government provides ex-gratia pension to those who are in the statutory pension system if they do not have 10 years of service. They are not entitled to gratuity. 10,600 as the highest ex-gratia pension. This should also be applicable to contributory pensioners with less than 10 years of service.
4. Application time should also be included in the cut off date
If they have appeared in the PSC examination, appeared in the interview or published the rank list before 1st April 2013 when the participation pension was implemented, they should be given an opportunity to join the old pension scheme.
Difference
What?
According to the participation pension, ten percent of the employee’s salary and the same amount will be paid from the fund created by the government. The pension is proportional to the return on this investment. There is no minimum pension.
Meanwhile, in the statutory pension system, the pension will be paid in full by the government. It is guaranteed that you will get half of the salary taken just before retirement as pension. Minimum pension is Rs.5000. The age of retirement in Kerala is 56 for those with sautuary pension. Retirement at the age of 60 is sufficient under the Participatory Pension Scheme.
But under contributory pension, the retirees now get a nominal amount as pension. It is not beneficial for those who have no more than twenty years of service. The central government is giving Rs 20 lakhs to those who retire following thirty years of service. Retirement benefit is the amount withdrawn from the Participatory Pension Fund in Kerala. At the same time, the saturary pensioners get a minimum of Rs 17 lakhs. Minimum pension of Rs.5000.
Rajasthan Chhattisgarh to abandon Participatory Pension Scheme and return to Old Pension Scheme
States like Tamil Nadu, Jharkhand, Punjab and Himachal Pradesh have decided.
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