Government may offer guarantee under NPS to allay fears

Central government employees covered under the National Pension System (NPS) may soon be assured by the government of 50 percent of their last drawn pay as pension. The government is working towards addressing concerns over payout disparities, according to a report by The Times of India.

After the Finance Minister Nirmala Sitharaman’s announcement a committee was formed which was chaired by Finance Secretary TV Somanathan to explore this initiative. The government is planning to provide more comfort to pensioners when the opposition parties demand to reverse the earlier decision.

In OPS there was a guarantee of a defined benefit of half of the last salary drawn as lifelong pension. In contrast, the NPS is a defined contribution scheme where employees contribute 10 percent of their basic salary, In contrast, NPS is a defined contribution scheme where government employees provide 10% of basic salary as their contribution and central government provides 14%.