VIJAYAWADA: The State government approved the proposal to implement the Guarantee Pension Scheme (GPS) by replacing the Contributory Pension Scheme (CPS) for government employees.The Cabinet meeting, chaired by Chief Minister Y S Jagan Mohan Reddy at the Secretariat on Wednesday, cleared the draft GPS Bill.
Under the GPS, pensioners would receive 50% of their last drawn salary as pension as against 20.3% of their basic salary under the CPS. The decision was taken to ensure government employees get better benefits post their retirement. The new bill has been drafted in a way to gradually increase the Dearness Allowance (DA) for government employees without reducing the 50% post-retirement pension.
Among other major policy decisions, the Cabinet approved regularisation of 10,117 contract employees, working in various departments, who had completed five years in service by June 2, 2014.
Though officials had recommended that the cut off date for regularisation of service be fixed as 10 years (by June 2, 2014), the Chief Minister took a decision to slash it to five years.
The Council of Ministers decided to constitute the 12th Pay Revision Commission by increasing House Rent Allowance (HRA) from 12% to 16% for government employees working in district headquarters and increasing the Dearness Allowance (DA) by 2.73%.
Explaining the difference between CPS and GPS, Information and Public Relations Minister Ch Srinivasa Gopala Krishna told the reporters that the government introduced the new pension scheme considering the future of the State and the welfare of employees.
GPS will be a role model for other States: Min
Stating that there is no comparison between GPS and CPS, he explained that the new scheme will ensure security for retired employees. “The scheme, which is beneficial to both the government and the employees, will emerge as a role model for other States,” he opined.
The Cabinet expressed that restoration of OPS will become an unbearable burden and there will be no other option except scrapping the scheme and introducing a new pension policy, the minister said. “It is estimated that Rs 1,33,506 crore will have to be paid towards GPS by 2070, out of which the State government should bear Rs 1,19,520 crore. If OPS is implemented, the government will have to spend Rs 65,234 crore by 2041. If loans and payment are included, the expenditure will account for 220% of the State revenue, meaning approximately Rs 3.73 lakh crore by 2070,” he further elaborated.
According to the existing CPS policy, which is applicable for those who joined services after September 1, 2004, employees and government will pay 10 per cent each towards the monthly contribution to the pension fund.
The employee can withdraw 60% of the corpus post their retirement and the remaining 40% will be invested in the annuity pension scheme. Stating that the CPS will be linked to the market, Krishna said that there will be no guarantee for pension and it is expected that only 20.3% of the basic salary will be paid as pension depending on the interest rates.
Elaborating on the GPS, the minister explained, “In case an employee receives a basic salary of Rs 1 lakh in his last month of service (at 62 years), he will get Rs 50,000 as pension along with two DRs per year, the amount will be increased year-by-year, resulting in the pensioners getting Rs 1.10 lakh at the age of 82 years.”
The Cabinet has also ratified the proposal to felicitate meritorious Class 10 students with ‘Jagananna Animuthyalu’ awards every year. The Cabinet believes the YSRC government has fulfilled 99.5% of its promises through these key decisions.