New Delhi:
The central government said on Tuesday that there is no provision in the PFRDA law for a refund of the accrued NPS corpus sought by the five non-BJP states seeking to restart the old pension scheme.
The state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh have informed the center of their decision to return to the OPS and have requested repayment of the accrued corpus under the National Pension System (NPS).
“There is no provision under the Pension Fund Regulatory and Development Authority Act, 2013… vide that the accumulated corpus of the subscribers i.e. government contribution, employee contribution to NPS along with accruals may be reimbursed and remitted to the state government ,” State Finance Minister Bhagwat Karad said in a written response in the Rajya Sabha.
The minister further said that the national government is not considering a proposal to restore the OPS for government employees who were recruited after January 1, 2004.
The NPS was introduced by the central government in December 2003 to replace the defined benefit pension system with defined contribution pension plans to provide income security for the elderly in a fiscally sustainable manner and also to channel small savings through prudential policies to productive sectors of the economy channel investments.
It was made mandatory for all new recruits in the civil service (except the armed forces) from January 1, 2004, and was also introduced on a voluntary basis for all citizens from May 1, 2009.
According to the PFRDA, 26 state governments, excluding Tamil Nadu and West Bengal, have notified and implemented NPS for their employees, the minister said, adding “as such, liability under OPS – a defined benefit pension scheme – is an unfunded liability of state government, which will be paid from their future revenues.” In response to another question about OPS, Karad quoted the Reserve Bank’s report on “State Finances: A Study of Budgets of 2022-23” as saying that by returning to OPS, “States will see the accumulation of risk unfunded pension obligations.”
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