Old pension scheme| HP finance dept directed to issue SOP for implementation; RBI sounds caution

Meanwhile, the Reserve Bank has sounded a note of caution on reversion to the old pension scheme by some states, saying it poses a major risk on the “subnational fiscal horizon” and would result in accumulation of unfunded liabilities in the coming years for them.

The observations in the RBI’s Report titled ‘State Finances: A Study of Budgets of 2022-23’ comes in the backdrop of Himachal Pradesh becoming the latest state announcing reverting to the Dearness Allowance (DA) linked old pension scheme.

Earlier, governments of Rajasthan, Chhattisgarh, and Jharkhand informed the central government and the Pension Fund Regulatory and Development Authority (PFRDA) about their decision to restart the old pension scheme for their employees.

The government of Punjab on November 18, 2022 too had issued a notification regarding implementation of the old pension scheme for the state employees who are presently being covered under the NPS.

Keeping its poll promise to restore the old scheme, the Congress government in Himachal approved restoration of the scheme in its first cabinet meeting.

Cabinet sub committees were also constituted to prepare a road map for disbursement of Rs 1,500 per month to women in the age bracket of 18 to 60 years and explore possibilities for one lakh jobs in one month.

After the cabinet meeting, Chief Minister Sukhvinder Singh Sukhu had maintained that the benefit of the old pension scheme would be given from January 13, 2023, and its implementation would put a burden of Rs 800-900 crore per annum.

Employees who joined government service from January 1, 2004 are covered under New Pension System (NPS).

The new pension scheme is a contributory scheme in which the government and employees contribute 10 per cent and 14 per cent of the salary respectively towards the pension fund while in the old pension scheme employees with 20 years of service used to get 50 per cent of last drawn salary as pension.