A decision to this effect was taken at the state Cabinet meeting held on Wednesday, considering the mounting expenditure on salaries and pension for government employees in Punjab, which accounts for more than 50% of total revenue receipts in the state.
The scheme will be introduced with retrospective effect from January 1, 2004 and will cover all employees who had joined the service after this date.
The SBI Pension Funds, the National Securities and Depository Limited (NSDL), UTI Retirement Solutions Limited, LIC Pension Fund Limited, Bank of India and New Pension System Trust are being engaged as service providers for this purpose. The Cabinet, which met on December 3, under chief minister Parkash Singh Badal, gave its approval to this proposal.
The scheme is exactly on the lines of the Pension Fund Regulatory Development Authority (PFRDA) of Central government. Principal secretary finance has been designated as authorised signatory to sign the agreement on behalf of Punjab and also director treasuries and accounts in the department of finance (FD) as Designated Authority under the New-Restructured Defined Pension Contribution Scheme (NPS), which would be introduced to all the employees of the Punjab government who had entered service on or after January 1, 2004.
Sources in the Punjab finance department told that the new defined contribution pension scheme would replace the existing system of defined benefit pension system. The scheme would be mandatory for all government servants joining service on or after January 1, 2004 and the employees will have to make a contribution of 10% of the basic pay, DP and DA, which will be deducted from the salary, every month. The government will make an equal matching contribution. The existing provisions of defined benefit pension and PF will not be available to the government servants, joining service on or after January 1, 2004.
An independent Pension Fund Regulatory and Development and Authority (PFRDA) will regulate and develop the pension market. A government servant will be required to provide particulars such as his name, designation, scale of pay, date of birth, nominee(s) for the fund, relationship of the nominee in the prescribed form, immediate after joining the service. Thereafter, employees will be allotted unique 16 digits permanent pension account numbers, confirming their entry into the new pension scheme.