Old vs new pension: Link benefits to 50% of last drawn salary, says panel

MUMBAI: Even as state government employees threaten another stir to demand a return to the Old Pension Scheme (OPS), sources say the committee set up by the state has not recommended this. However, it has suggested retaining one key aspect of the OPS—that the benefits of the retired employee should be linked to 50% of the last drawn salary.

The 3-member committee led by former finance secretary Subodh Kumar is yet to submit its report to the state government.

Sources say the panel has suggested retaining the other aspects of the New Pension Scheme (NPS)—that 10% of the employee’s salary should be deducted along with the state’s contribution and that a portion of the funds should be invested in the market. Members of the committee declined to comment.

“Once the report is submitted, it will have to be discussed by the cabinet and it will take a view on it,” said a senior official.

However, it is possible that the state may want to wait for the Centre to take a view on the issue before taking a decision.

Meanwhile, state government employees are set to strike work for the second time this year on their demand to return to the OPS. They plan to go on strike from December 12.

Seventeen lakh state government employees struck work in March for an entire week. The strike had impacted a range of public services including hospitals and government schools. The 3-member committee was set up to review the OPS and NPS for the state.

“We had called off the strike because we were told that the social and economic benefits of the OPS would be retained. The committee’s report has not yet been submitted. The government should consult us before making any decisions on this,” said Vishwas Katkar, convenor of the striking unions.

The NPS was introduced by the Vilasrao Deshmukh government in 2005, in view of the state’s financial burden. The state has 10 lakh employees under OPS and 6.8 lakh under NPS.

Protests regarding the NPS across the country have led to several Opposition ruled states opting to return to the OPS.

The main concern of employee unions is that since the NPS is linked to the market, their pension fund carries the risk of speculation. Also, the OPS does not deduct anything from the employee while the NPS has a 10% employee contribution.

In the winter session of the state legislature in December 2022, deputy chief minister Fadnavis said returning to the OPS was not an option because it would place a burden of Rs 1.1 lakh crore on the state.

In February, the ruling parties lost a series of legislative council polls in the state. The Opposition made OPS an election issue.