Chandigarh, October 21
The cash-starved Bhagwant Mann-led AAP government’s decision to bring back the old pension scheme for employees recruited after 2004 will put further financial strain on the state exchequer. Nearly 1.75 million employees will benefit from this decision.
The annual pension bill touches 11 thousand rupees
- The annual expenses of the state for pension reach 11,000,000 Rrs
- The debt amounts to 2.63 liter crowns during the current FY
- The state’s electricity subsidy bill is likely to exceed 20 thousand rubles
The issue of funding will be decided by the center
Before the implementation of the old pension scheme, the issue of funds under the new pension scheme should be resolved by the state with the Centre. Sources
The old pension scheme was discontinued 19 years ago on 1 April 2004 and replaced by the National Pension Scheme.
Political analysts point out that the old pension scheme was announced keeping in mind the election-bound states of Himachal Pradesh and then Gujarat.
The burden of the pension scheme will not have to be borne by the current government. As it is for employees recruited after 2004, the impact on the state coffers will not be visible until around 2030.
“Prior to the implementation of the old pension scheme, the issue of funds (employees contributing 10 per cent of their salary to pension and the state government contributing 14 per cent) under the new pension scheme deposited in PFRDA should be settled with the state government with the Centre,” sources in the government say.
Annual government expenditure on pension reaches Rs 11,000 crore.
“Although the exact calculations have not been made, the renewal of the scheme will further burden the state.” The state’s debt stands at Rs 2.63 lakh crore during the current financial year and is rising. The state’s electricity subsidy bill is likely to cross Rs 20,000 crore,” sources said.
When asked about the financial implications, Principal Secretary (Finance), AK Sinha said, “Around 1.75 lakh state government employees will benefit from the decision. As far as the workload is concerned, the individual departments have been working on it, but the exact data is not with me at the moment.”
Currently, 1,700 pensioners are drawing pensions under the old scheme. Since NPS is a defined contribution plan, there is no doubt that the guaranteed payout feature in the old scheme is attractive to employees.
Officials in the Finance Department said that under the old pension regime, the pension was 50 percent of the employee’s last paid salary and the entire amount was paid by the government.