In many states, the demand to re-implement the old pension scheme is gaining momentum. In Punjab, even the cabinet has approved it. But the pension regulator PFRDA has said that the money deposited by the employees under the National Pension Scheme (NPS) cannot be transferred to them.
New Delhi: The states planning to re-implement the old pension have got a major setback. Pension regulator PFRDA has said that the money deposited by the employees under the National Pension Scheme (NPS) cannot be transferred to the states. States like Rajasthan and Punjab had demanded transfer of NPS deposits of employees to the states. He said that by implementing the old pension scheme, the state will give pension to the employees. But PFRDA says that the employee’s fund cannot be transferred to the employer in this scheme. NPS was made mandatory for central employees from January 1, 2004. Later most of the states also adopted it.
But recently many states have announced to restore the old pension scheme. The Chief Minister of Punjab has asked the Chief Secretary of the state to take legal opinion on transfer of the employees’ funds to the state government. The state cabinet has approved the proposal to implement the old pension and it has also been notified. But it is not yet clear when it will be implemented. Political parties in poll-bound states are promising to restore the old pension in the election campaign. Rajasthan has demanded NPS funds and approached PFRDA in this matter.
The burden of the states may increase
According to sources, PFRDA has told the states after a detailed study of the provisions of NPS that the deposits of the employees cannot be transferred to them. NPS includes certain tax incentives. Under this, the amount deposited includes the contribution of both the employee and the government. According to the provisions, these funds cannot be transferred to anyone. According to a study by RBI in June 2022, returning to the old pension scheme can be fatal for the states.
Presently National Pension Scheme is applicable in 29 states including Delhi and Puducherry. West Bengal refused to implement the NPS scheme. Tamil Nadu has its own scheme. Ahead of elections in Himachal Pradesh and Gujarat, Congress and AAP have promised to implement the old pension system to woo voters if they win. In Madhya Pradesh too, the Congress has promised to implement the old pension system. Assembly elections are due in the state by the end of next year. Demonstrations are also being held in Haryana to implement the old pension system.
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