Jagan Announces Guaranteed Pension Scheme for Employees
Public Relations minister Ch. Venugopala Krishna (Image: Wikimedia)
Vijayawada: The Y.S. Jagan Mohan Reddy-led government on Wednesday announced slew of sops to employees including what it described as path-breaking Guaranteed Pension Scheme.
Other benefits included regularisation of services of 10,000 employees, setting up 12th Pay Revision Commission, enhancement of HRA by four per cent in district headquarters and payment of 2.73 per cent dearness allowance (DA) with arrears from January 1, 2022.
The Cabinet which met here approved the AP Guaranteed Pension Bill 2023 replacing the Contributory Pension Scheme. While the YSRC made an electoral promise of dispensing with the CPS and employees organisations demanded for restoring Old Pension Scheme (OPS) the government came up with a pension scheme of its own which guarantees 50 per cent of the basic of last drawn pay as pension and a Dearness Relief.
This is against about 20 per cent of the basic as pension under CPS in which no DR is given.
The CPS was for the first time introduced by the Centre in 2003 and all the states except one or two adopted it keeping in view the ever growing financial burden to meet pension needs of OPS. While 60 per cent of the amount accrued through contribution will be given to employees at the time of retirement, the remaining amount used to be invested in mutual funds and due to market conditions the monthly returns would never cross 20 per cent of the basic pay. “In GPS, the government will bear balance amount and will guarantee 50 per cent,” said Information and Public Relations minister Ch. Venugopala Krishna.
Under GPS, the employees, however, will have to continue to contribute 10 per cent of their basic and government will contribute equal amount. Employees will not get 60 per cent of the accrued amount as lumsum at the time of retirement.
Minister Venugopala Krishna said that a situation may arise when the pensions to be given exceed the salaries of the entire employees and reach an unsustainable level. He explained, “If we implement the OPS Rs 1.33 lakh crore will have to be paid in the form of pensions by 2040 and Rs 3.73 lakh crore by 2070. At some stage, the government would not be able to bear this burden and may have to discontinue OPS again,” the minister pointed out.
