As thousands of government employees under the National Pension System (NPS) move closer to retirement, an employee body has asked the to consider a major change in how pensions are paid. The demand comes amid concerns that market-linked returns may not provide enough financial security after retirement.
The All India NPS Employees Federation (AINPSEF) has proposed an assured pension system for NPS subscribers, arguing that many employees could struggle with low retirement income if the current structure continues, reported The Economic Times.
In a to the , AINPSEF has asked for a minimum guaranteed pension equal to 50% of the last drawn salary along with dearness allowance (DA). The employee body has also proposed a family pension of around 60% of the pension amount after the pensioner’s death.
The federation says the issue has become more urgent as many NPS subscribers are expected to retire from 2033 onwards. Since NPS returns depend on market performance, employees fear that inflation and market fluctuations could affect their retirement savings and monthly pension.
According to AINPSEF, the current NPS structure works better for employees who complete 30 to 35 years of service. However, those with shorter service periods or lower salaries may end up receiving very small pensions.
Under the current NPS system, employees contribute 10% of their basic salary and DA to Tier-I accounts, while the government contributes 14%.
AINPSEF has suggested that the government should retain its own contribution made to employees’ NPS accounts and, in return, provide an assured monthly pension to retirees. The federation believes this model could offer better financial certainty to pensioners without fully returning to the Old Pension Scheme (OPS).
The employee body says the proposal could create a balanced system between OPS and the present NPS framework, while improving social security for retired employees.
AINPSEF says lower-paid employees are likely to face greater difficulties under the present pension system. It has highlighted teachers, Railway staff, contractual workers and daily wage employees as groups that may be more vulnerable.
The federation argues that many such workers spend years in temporary or non-regular service before becoming permanent employees, reducing the time available to build a strong pension corpus. In some cases, it claims pension amounts remain as low as Rs 300 to Rs 3,000 per month.
For now, the proposal remains a recommendation before the 8th Pay Commission, and there is no official confirmation on whether such an assured pension system will be adopted.