Punjab plans legal route to withdraw deposits in PFRDA to revert to old pension scheme

On September 19, Mann had tweeted, “My government is considering reverting to the Old Pension System (OPS). I have asked my Chief Secretary to study the feasibility and modalities of its implementation. We stand committed to the welfare of our employees.”

He had directed the Chief Secretary Vijay Kumar Janjua to study the financial implications of the scheme. Sources said that the government was taking a legal opinion to work out a way that the government is able to claim its money back.

The employees pay 10 per cent of their salary to contributory pension fund, and the government matches it by paying 14 per cent. The amount is then deposited with PFRDA. The amount is about RS 18,000 crore that it would have to withdraw to revert to old pension scheme.

“As the PFRDA has refused to refund the money to Rajasthan and Chhattisgarh governments, we do not want to risk a half baked case and get a negative reply from them,” said a functionary of the government.

He added that for the government to pay Rs 18,000 crore from its pocket and revert to OPS was not possible. It was a huge financial implication. Hence, the government will take a legal recourse to ensure that the money is withdrawn. Chief Secretary Janjua said that a solution was in the offing within a day or two. “We are working on it. Just wait for two days,” he said.

Finance Minister Harpal Cheema said that he is meeting the CM on Thursday and they would be discussing the issue.
Financial experts have been against the reversion to OPS. The experts called it a disaster for the state eventually even though it may fill the coffers for the time being. They had stated that implementing this scheme would not be a cakewalk. The fund is protected by a lock-in period. If it is withdrawn in advance, then authority’s approval is required which may not be easy.

An expert called it a “political decision” stating that it may help AAP politically and financially also as if the authority permits the government to withdraw the fund then it would get a huge sum in the form of its contribution for the employees pension fund. “This could see the government coffers filling but things will worsen after 2034, when the employees, recruited in 2004 and later start retiring. That time the state would require money to pay pensions of 50 per cent of last drawn salary.”

The state government has a pension bill of Rs 11,000 crores and previous government have been hoping that they would get rid of this Bill eventually as the last employees who get the pension retired in 2004 at 60, 19 years ago.