The Centre has no plans to revert to the non-contributory old pension scheme (OPS) for its staff that joined service from 2004, minister of state for finance Bhagwat Karad told Rajya Sabha on Tuesday.
“Representations have been received from time to time, which include the request for restoration of the old pension scheme. There is no proposal under consideration of the Government of India for restoration of the old pension scheme in respect of Central government employees recruited on or after 01.01.2004,” Karad said.
After several non-BJP governments announced their plan to implement the OPS, it has become a political issue with political parties, including the main opposition party Congress, batting for it.
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The NPS was introduced by the government to replace the defined benefit pension system by the defined contribution pension scheme, in order to provide old-age income security in a fiscally sustainable manner and to channelise the small savings into productive sectors of the economy through prudential investments, Karad said.
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The Centre has taken a number of steps to streamline the NPS for its employees and to protect the interests of subscribers. These include enhancement of the government’s contribution from the earlier 10% of salary to 14%, freedom of choice for selection of pension funds and pattern of investment to subscribers, payment of compensation for non-deposit or delayed deposit of NPS contributions for any period during 2004- 2012, tax exemption under Section 80C of the Income Tax Act, 1961, and increase in tax exemption limit for lump-sum withdrawal on exit from the earlier 40% to 60% of the amount due, making the entire withdrawal exempt from income tax.