New Pension System may exempt paramilitary forces

In what could be a major dilution of the new pension system, the Centre is considering exempting paramilitary forces from its purview.

In what could be a major dilution of the new pension system NPS, the Centre is considering exempting paramilitary forces from its purview. The NPS, effective from January 1, 2004, marks a shift from the defined benefit regime to a defined contribution system.

The proposal, to be placed before the Cabinet tomorrow by the ministry of home affairs MHA, may be opposed by the finance ministry. Officials of the ministry said that due to the near freeze in government recruitment, almost half the hiring since January 2004 has been by the MHA for paramilitary forces.

The MHA and armed forces are exempt from the belt-tightening measures on fresh recruitment. At present, about 5 lakh employees are part of the new scheme and have contributed Rs 1,700 crore towards their pensions. If the finance ministry8217;s views prevail, it would add substantially to the pension kitty.

The Pension Fund Regulatory and Development Authority has already appointed NSDL as the central record-keeping agency. It is likely to call for expressions of interest EOIs from state-owned financial institutions to set up pension funds.

The MHA8217;s argument, however, is that the central police forces are susceptible to high risk, as they are posted in trouble-prone areas. It has said that exempting them from the NPS would instill confidence in the ranks, since families would get 50 per cent of the last pay in case of early death or retirement.

About 8 lakh personnel from the CRPF, BSF, CISF, SSB and ITBP will benefit if the Cabinet approves the proposal. A government official said, 8220;Under current circumstances, the government is keen to clear the proposal to exempt central police force personnel from the purview of the NPS.8221;

The MHA proposal is based on an assessment, which has revealed that since internal disturbances in the country have increased, the frequency of central forces8217; deployment has also gone up.

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The phenomenon has led to a higher number of casualties among the forces, the government sources informed.