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Will the dispute between old and new pensions end up in the budget? You can get this guarantee.

Sagar Patel

By Sagar Patel

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Tension on pensions can be removed in the budget Image credit source: Unsplash

Finance Minister Nirmala Sitharaman will present the full budget for 2024-25 on July 23. In this budget that is being presented after the Lok Sabha elections, the government faces challenges in addressing many issues. These include controlling inflation, increasing demand in the economy, keeping the fiscal deficit under control, focusing on capital expenditure and addressing the dispute between old and new pensions. Perhaps this time too, it will end…

In the Lok Sabha elections, the largest ruling party, the BJP, won fewer seats than the majority. The issue of old pensions (OPS) and new pensions (NPS) has been very hot in the Lok Sabha elections and earlier in the assembly elections in many states. In such a situation, there is every chance that it will be resolved in the budget this time. Finance Minister Nirmala Sitharaman also indicated this during the interim budget.

This guarantee can be found in the budget.

Finance Minister Nirmala Sitharaman had earlier also indicated that the government may consider giving a fixed pension to central employees under the NPS. Now a TOI report has expressed the possibility of the government making a big announcement in the budget on this idea.

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The government is now considering granting a fixed pension of around 50 per cent of their last salary to central employees under the NPS. They will get this amount of guaranteed pension. This will reduce the strain on the pensions of lakhs of government employees. Earlier, even in the old pension system, an employee would get 50 per cent of his last salary as pension for his entire life. In this case, the pension amount was calculated periodically as per the recommendations of the Finance Commission.

On the contrary, NPS works in a completely different format. In this, the employee has to invest 10 percent of his salary in the NPS-related plan, while the government contributes 14 percent. After this, the money in this fund remains invested for 25 to 30 years, and after retirement, a part of the fund is returned to the employee, while the remaining money is received in the form of pension through the retirement plan. The pension is not fixed in this.

Somanathan Committee was formed

To end the tension on pensions, the government had constituted a committee chaired by Finance Secretary TV Somanathan. The government had earlier refused to go back to the Old Pension System (OPS) but maintained an open stance on the issue of guaranteed pensions. The Congress, the main opposition party, has re-implemented the OPS system in many states, thus putting pressure on the central government.

The Somanathan Committee has studied the international agreements in this regard. The amendments of the Andhra Pradesh government are also being considered. On this basis, it has given suggestions. There is also a possibility that the government may provide only 40-45 per cent of the salary as guaranteed pension. But considering the political pressure, this limit may be raised to 50 per cent.

Sagar Patel

Sagar Patel

I am Sagar Patel, specializing in business news reporting. With a keen focus on economic trends, market analysis, and corporate developments,

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