Central government employees concerned over the volatile market conditions have demanded that the 8th central pay commission (CPC) assure minimum payout under the National Pension Scheme amid the program’s large exposure to equities, as per an NDTV Profit report.
A number of central government employees will retire in 2033 and representatives of All India NPS Employees Federation (AINPSEF) has submitted a memorandum to the 8th CPC on 10 May asking for assured under NPS, it added.
What is the present allocation under NPS?
For central government employees, 10% of basic pay and DA is allocated towards scheme. Meanwhile, the Centre contributes 14% of basic salary and DA.
What are the demands made?
- Introduction of assured pension mechanism as much as 50% of pensioner’s final salary and (DA).
- It proposes that the government continue to hold its share of NPS contribution and promise fixed minimum pension at retirement.
- AINPSEF pointed to market volatility as a reason for seeking the update. It said the retirement corpus of a large number of has failed to expand due to the market situation, the report added.
- The body further said that returns under NPS has failed to keep up with inflation and could impact pension income in the future as well.
What is the reason for assured pension demand?
As per the report, the body noted that for a Level 7 employee with close to 33 years of service, the combined at time of retirement would be ₹3.13 crore ( ₹1.30 crore employee contribution and ₹1.82 crore government contribution).
Taking pay progression into account, it estimates salary at time of retirement to reach ₹3.32 lakh with DA at 30%. AINPSEF has proposed that the government hold back its ₹1.82 crore contribution and instead offer fixed pension at 50% of last drawn salary, plus DA, as per the report.
The concern is that the government at present cannot recover funds as the current structure is built for long-term outflow of into NPS. It further pointed that for employees on lower pay scale (Levels 1-5) and shorter service periods, or those in irregular positions the pension support under current NPS structure is “minimal” and that this “creates serious insecurity among lower and middle-income employees”.
8th CPC: Consultation meetings ongoing
The 8th CPC held its first meetings with employee representatives last month. As part of the consultation process, it opened formal memorandum submissions held meetings in Delhi in March for stakeholder ; and meetings in April.
The panel has planned meetings with employee representatives in Telangana, Ladakh, Jammu & Kashmir and Delhi in May and June.
Notably, pension updates have been a consistent topic. The Joint Consultative Machinery (NC-JCM) on 28 April among other things, demanded that and the old non-contributory Unified Pension Scheme (UPS) be restored. The reasoning is that staff had previously foregone provident fund benefits to opt for pensions.
There is also a demand on behalf of retirees, which seeks to raise concern over introduction of One Rank One Pension (OROP) for civilian employees. They have demanded periodic revision of pensions, restoration of commuted pension after 11 years, and call for more meetings.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.