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After announcing in the Budget this year that Chhattisgarh would revert to the old pension scheme for state government employees, the Cabinet led by Chief Minister Bhupesh Baghel Friday decided employees can shift back to the OPS after making a submission to deposit the contribution made by the state towards the National Pension System (NPS) and the dividend earned thereon.
Under the NPS, a state government employee contributes 10 per cent of her basic salary plus dearness allowance, with the state making a matching contribution. The money is then invested in one of the several pension funds allowed by the Pension Fund Regulatory and Development Authority. The state’s total NPS corpus as of now is Rs 17,000 crore.
After the Cabinet meeting at the CM’s residence on Friday, a state government official told The Indian Express, “The decision has been taken despite the Central government’s refusal to refund the amount of NPS to the officers and employees of the state.” Under the OPS, state government employees will get 50 per cent of their last earned pay (basic salary plus dearness allowance) as pension on retirement.
Central government officials said there will be resistance for any such transfer of funds, adding that it is unlikely to be a smooth process as there has been no precedence of transfer of funds from the NPS account to account of the old pension scheme.
The state government employees will henceforth be considered as the members of the Chhattisgarh General Provident Fund from April 1, 2022. The employee contribution deposited in the NPS account from November 1, 2004, or after to March 31, 2022, and the dividend earned thereon, will be payable to the government employee under the NPS rules, the state said.
Besides creating open-ended liabilities for future governments, reverting to the OPS will face obstacles in the immediate also. The Chhattisgarh Cabinet decision says employees will be allowed to switch only if they return to the state the latter’s contribution towards NPS. Pension fund regulator has already conveyed it will not return the corpus to the state.
But the Central government and the PFRDA have so far maintained it would not be possible to return the money deposited so far in the pension funds back to the state government. “There is no provision in the PFRDA Act or the regulations through which NPS funds can be returned to the state,” said an official, who did not wish to be named. “This has been communicated to the state government,” the official added.
A state government official said, “Employees will be eligible for the old pension scheme, only after depositing the contribution of the state government and the dividend earned thereon. For this, the government employees will have to select the option of either continuing under NPS or receiving the benefit of the old pension scheme in a notarized affidavit. This option will be final and irrevocable.”
“The employees will get the amount deposited in the NPS out of which 50 per cent is state government’s contribution. The employees who are willing to shift to OPS will have to return the state government contribution to the state. After April 1, 2022, there is anyway no contribution to NPS,” the state government official said.
The share deposited by the government in the NPS account from November 1, 2004 to March 31, 2022, and the dividend received thereon will have to be deposited in the government’s account if the government employee opts for the old pension scheme, the state government official explained.
As per Friday’s decision, state government employees appointed on and after April 1, 2022, will compulsorily be members of the old pension scheme. For future employees, it will not be a problem since the state government will not make any contribution to the NPS. “Henceforth, it will be a defined benefit pension system for employees,” another state government official said.
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