A day following the Union Cabinet's endorsement of the Unified Pension Scheme (UPS) for Central government employees, Maharashtra's Cabinet, led by Chief Minister Eknath Shinde, approved a revamped National Pension Scheme (NPS) for state government employees on Sunday. This new scheme will mirror the central government's initiative.
Starting March 1, 2024, the revised National Pension Scheme will be introduced for employees currently under the National Pension System. Maharashtra has a workforce of 13.45 lakh state government employees, including those from local self-governments, with 8.27 lakh already participating in the NPS.
The Cabinet's decision was based on a report by a high-level committee chaired by retired IAS officer Suresh Kumar, which recommended that the state assume the investment risk in the NPS.
Under the updated scheme, employees will receive a pension equivalent to 50% of their final salary plus dearness allowance, and 60% of the family pension. Unlike the UPS, which calculates pensions based on the average of the last 12 months' salary, the revised NPS will use 50% of the last salary.
Details remain unclear regarding whether full pension benefits will be granted after 25 or 30 years of service and whether a minimum pension for 10 years of service will be provided.
For those who retired before March 1, 2024, and had purchased an annuity under the National Pension Scheme, the existing annuity benefits will continue until February 29, 2024.
Pensioners opting for the revised NPS will have their pensions based on actual contributions made during their service. Service periods where no contributions were made will not count towards pension calculations, although any unpaid contributions with interest will be counted if paid subsequently.
Any withdrawals from the National Pension System funds before the revised scheme's commencement will incur a 10% interest penalty. Employees who retired before or after March 1, 2024, will have the option to choose between the NPS and the revised NPS, provided they settle any outstanding contributions and return 60% of any accumulated funds to the government.
The pension will be granted after the government receives 40% of the annuity return from the Annuity Service Provider. Specific terms and procedures will be outlined following PFRDA approval.
This scheme will also apply to employees of recognized and grant-aided educational institutions, non-agricultural universities, affiliated non-government colleges, agricultural universities, and Zilla Parishad employees who meet the specified conditions.
