States with old pension plan may not get extra borrowing | India News

NEW DELHI: States reintroducing the old pension scheme will be discouraged from making additional loans in the 2023-24 financial year, under a rule previously changed by the Center.
In the state borrowing scheme, any amount paid by the state government and workers to PFRDA allowed as an additional loan term, known as pension fund adjustment (PFA). So the states are still part of National pension system, can borrow an additional amount exceeding the allowable limit of 3% of GDPP. The PFA factor in both employer and employee contributions, that is, state and worker contributions. While government employees give 10% of their salary as their share NPSmost states, with the exception of those like Rajasthan, have increased the employer’s share to 14% of workers’ wages.
Rajasthan , Chhattisgarh , Himachal Pradesh , Jharkhand and Punjab ruled by the opposition have opted out of the NPS and reverted to the old defined benefit pension scheme — providing 50% of the final salary is withdrawn under as a post-retirement monthly payment — will be denied additional loan authorization for the period 2023-24.
A reduced loan will be of particular concern for countries like Punjab, one of the most financially challenged along with Rajasthan. In fact, Punjab asked for the help of the Center to tune several thousand cores, arguing that it was a border country.
“We have disabled the employer’s engine. Governments in the NPS will have more fiscal space. An official said Adjustment of the Pension Fund is provided because it reduces the future liability of the state, including the worker component, as the old pension scheme did not have any contributions. workers,” said an official.
Restarting the old pension scheme is of great concern to policymakers and economists because of the mounting pension liability. It reduces the ability of countries to allocate enough resources to critical areas, such as health and education, or to build infrastructure.
Although the Manmohan Singh government asked the states to implement the NPS in 2005, it is surprising that Congress is now backtracking, with its policy of reverting to the old pension scheme that has drawn criticism even from former people. Planning Committee President Montek Singh Ahluwalia.
States that have opted out will be further bound because the pensions regulator has refused to refund government employee contributions and them, arguing that the law does not provide for that.


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