Sikkim govt forms committee to review restoration of Old Pension Scheme; employees rally likely today

Sikkim government employees under the banner of All Sikkim Government Employees Association will be holding a rally in support of their demand today.

In a decisive move, the Sikkim government has decided to form a committee to examine and study all aspects of the Old Pension Scheme as compared to the New National Pension scheme. As per inputs, the committee will submit it’s report within 3 months.

Meanwhile, Chief Minister Prem Singh Tamang chaired a crucial meeting with concerned officials to discuss on the demands of the Sikkim government employees to restore the Old Pension Scheme in place of the New Pension Scheme. It was in this meeting where Chief Minister Tamang issued necessary directives to set up a committee for finding a lasting solution to the issue.

The committee will be headed by the Secretary (DoP) Rinzing Chewang, Controller of Accounts cum Secretary Finance Department MCP Pradhan as a Member, and Additional Director (Pension Division of the Finance Department) Punita Alley as Member Secretary.

Meanwhile, Sikkim government employees under the banner of All Sikkim Government Employees Association will be holding a rally in support of their demand today.

Many of the employees covered under the new contribution-based pension system are receiving as little as Rs 700-800 as monthly pension while the minimum guaranteed amount in the old defined benefit scheme is Rs 9,000. They are now required to pay 10% of their monthly wages which is matched by the government and invested in equity shares. Retirement pensions are dependent on the returns on that accumulated investment.

In the old system, the entire pension amount was borne by the government while fixed returns were guaranteed for employee contribution to the General Provident Fund (GPF). The government pays 50% of the last drawn salary plus dearness allowance (DA) as pension to employees after retiring, and to their dependent family members in case of death.

What is the new pension scheme and how is it different from the old one?
The National Pension System (NPS) is a defined contribution scheme mandatory for all new recruits to the Central government (except armed forces) joining on or after January 1, 2004. All state governments, except West Bengal, have also made it mandatory.

In 2009, the scheme was extended to all Indian citizens from 18-60 years of age, however, the 10% government contribution is only for government employees. An independent Pension Fund Regulatory and Development Authority (PFRDA), set up in 2013, regulates the NPS.

The NPS has two tiers – Tier 1 is mandatory for all government employees and has a fixed lock-in period. Subscribers can only withdraw the accumulated wealth after they retire, i.e., are 60 years old. A recent amendment allows them to withdraw 25% of the employee contribution in case of emergencies.

Even at the time of retirement, subscribers can withdraw only 60% of the total amount, which is taxable, and it’s mandatory to invest the rest 40% to buy a lifelong annuity scheme through an IRDA-regulated insurance company. If they leave the scheme or retire before attaining the age of 60, 80% of the pension wealth has to be invested in the annuity scheme.

Tier 2 is a voluntary account, more of a substitute for the GPF where one can withdraw any amount at any time. The government does not contribute anything in the tier 2 account.

Unlike the pension and GPF in the old scheme, the NPS does not guarantee any fixed returns as it is market-linked.

SOURCE-THE WIRE

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