Govt likely to sweeten deal in national pension scheme

THE MODIFIED NEW PENSION SCHEME WILL SEE SOME CHANGES IN 'ACTUARIAL CALCULATIONS' TO OFFER HIGHER RETURNS

- Zia Haq

The Union government is likely to amend the national pension scheme (NPS) by the end of the year to ensure employees get at least 40-45% of their last-drawn salary as retirement payout based on recommendations of a high-level panel currently looking into the matter, two people familiar with the developments said.

Pensions are a currently a politically polarising issue, with several Opposition-ruled states switching to the old pension scheme (OPS), which offered pensioners monthly benefits of 50% of their salary drawn at the time of retirement. The current market-linked pension plan, launched in 2004, offers no such guaranteed base amounts. The other point of contention is that NPS is based on an employee contribution of 10% (of their salary), with the government contributing 14%; there is no employee contribution in OPS.