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Raghuram Rajan on revival of old pension scheme




'Heavy compulsion...': Raghuram Rajan on revival of old pension scheme

Raghuram Rajan said that there may be less expensive ways of addressing the concerns. (file)

New Delhi:

Former RBI governor Raghuram Rajan has expressed concern over the decision of some states to revive the old pension scheme and suggested that some less expensive way should be found to meet the demands of government pensioners.

Raghuram Rajan further said that the old pension scheme involves a large future outlay as the pension is linked to the current salary.

“It’s a huge liability, not necessarily in the short term, but in the long run,” he said, adding that clearly, state governments have to think about the long-term implications for government finances, and whether civil servants have the most The constituencies they deal with need help.

Raghuram Rajan, currently the Catherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business, said that as he understands it, it may not be technically or legally possible to go back to the old pension plan Is.

“If so, there may be less costly ways to address the concerns that such steps are taking,” Raghuram Rajan told PTI in an email interview.

In a major move, a select group of central government employees have been given a one-time option to opt for the old pension scheme.

Employees joining Central Government Services against posts advertised or notified prior to December 22, 2003, the date on which the National Pension System (NPS) was notified Old Pension Scheme under the Central Civil Services (Pension) Rules, 1972 are eligible to join. now 2021).

Employees get a fixed pension under the Old Pension Scheme (OPS). An employee is entitled to receive 50 per cent of the last drawn pay as pension.

OPS was closed by the NDA government in 2003 with effect from 1 April 2004.

Under the New Pension Scheme (NPS), employees contribute 10 per cent of their basic salary towards pension, while the government contributes 14 per cent.

The Governments of Rajasthan, Chhattisgarh and Jharkhand have informed the Central Government/Pension Fund Regulatory and Development Authority (PFRDA) about their decision to reintroduce OPS for their employees.

The Punjab government issued a notification regarding the implementation of OPS for state government employees covered under NPS on November 18, 2022. Jharkhand has also decided to return to OPS.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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