Pension panel may not mimic Andhra model

If there is a shortfall in the corpus, the government will fill the gap and make sure that the pensioners get 40-50% of their last drawn salary.
Pension panel may not mimic Andhra model

NEW DELHI: The Somanathan Committee set up to review the pension scheme for government employees is not copying the Andhra Pradesh Model as has been commonly reported in the media, government sources told TNIE.

The government official, who is closely associated with the workings of the committee, also said that the Somanathan committee is yet to submit its final report.

Another official from the Department of Financial Services (DFS) told this newspaper that the committee has in principle agreed to safeguard the interest of the employees. However, he said that the discussions are still at early stages.

There were news reports that the Somanathan Committee has submitted its report and that they have adopted a model similar to the Andhra Pradesh pension scheme for its government employees.

Under the Andhra Pradesh’s Guaranteed Pension Scheme (GPS), the pensioners get 50% of their last drawn basic salary along with dearness allowance which is linked to inflation.

However, unlike the Old Pension System (OPS), the pension scheme under the Andhra model is a defined contribution plan, where the pensioner has to contribute towards the retirement corpus. If there is a shortfall in the corpus, the government will fill the gap and make sure that the pensioners get 40-50% of their last drawn salary.

The the Department of Financial Services official told this newspaper that no conclusion has been reached on the government contributing to the shortfall in the corpus if the guaranteed pension of 50% of last drawn salary is not achieved.

Meanwhile, the first official quoted above said that the Somanathan Committee has had extensive discussions with state governments on the issue. The committee is of the opinion that it is the lower rung employees in the government who need to be protected from the market-linked nature of the National Pension System (NPS).

Meanwhile, on the issue of pension of armed forces, the government official said that if the Agniveer Scheme is not implemented, the government would face a big financial burden. He said that armed forces not only receive pension under the Old Pension System (OPS) – where bulk of the burden of the pension is borne by the state – they also avail the benefit of One Rank One Policy. The two together have a huge financial burden on the state exchequer.

50% of basic salary, DA under AP model

Under the Andhra Pradesh’s Guaranteed Pension Scheme (GPS), the pensioners get 50% of their last drawn basic salary along with dearness allowance which is linked to inflation. However, unlike the Old Pension System (OPS), the pension scheme under the Andhra model is a defined contribution plan, where the pensioner has to contribute towards the retirement corpus

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