📷 Image Credits: Mint
As the Finance Ministry gears up for the Budget 2024 presentation, the National Democratic Alliance (NDA) government is contemplating providing central government employees with 50% of the last salary drawn as pension under the National Pension System (NPS). This move comes despite the attractive returns for long-term NPS investors and is aimed at addressing concerns of central government employees regarding their pension benefits.
A panel led by Finance Secretary TV Somanathan has assessed the impact of offering an assured return as part of the pension scheme. The committee has reviewed global practices and adjustments made by the Andhra Pradesh government, with a growing acknowledgment within the government of the need to provide a 50% guarantee. In the event of any shortfall, the government plans to bridge the gap, ensuring financial security for employees.
The current government pension system operates without dedicated funding, leading to uncertainties for retirees. With Budget 2024 on the horizon, the NDA government is expected to establish a retirement fund to secure the future of central government employees. This initiative aims to enhance the existing pension structure and provide significant support to retirees.
The National Pension System (NPS) serves as a voluntary retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Through regular contributions, subscribers build a corpus invested in various financial instruments for future financial security. Tax benefits under Section 80C and 80CCD(1B) further incentivize participation in the NPS.
In light of these developments, the proposal to offer 50% of the last-drawn salary as pension under the NPS marks a significant step towards enhancing pension benefits for central government employees. The NDA government’s emphasis on creating a retirement fund underscores its commitment to ensuring financial stability for retirees. Stay tuned for further updates on the Budget 2024 implications for the NPS and pension reforms in India.
