Punjab: 3 years on, govt still to decide modalities for restoration of old pension scheme
The state government announced its intent to bring back the old pension scheme in place of the new pension scheme (NPS) in September 2022
Amid escalating protests, the Bhagwant Mann-led Aam Aadmi Party (AAP) government in Punjab remains undecided on the modalities of restoring the old pension scheme (OPS) for employees in the state even three years after announcing its return.
The state government announced its intent to bring back the old pension scheme in place of the new pension scheme (NPS) in September 2022, and followed it up with a notification two months later, but there has been no further administrative action towards its restoration till date. The finance department has yet to issue the standard operating procedures (SOPs) for implementing the decision. Punjab has two lakh government employees who joined service after the state switched from OPS to NPS in 2004.
“There are serious concerns within the government about the significant financial implications of restoring the old pension scheme. The government is carefully weighing the option of offering the new unified pension scheme (UPS), announced by the central government for the central government employees about a year ago, to the state employees,” according to two people privy to discussions in the government on the matter.
The UPS, approved by the Union cabinet in August 2024, guarantees an assured pension of 50% of the employee’s average basic pay drawn over 12 months preceding superannuation; a minimum assured pension of ₹10,000 per month for those retiring after 10 years of service; a family pension of 60% of the last drawn pension; inflation indexation; and a lump sum payment at superannuation in addition to gratuity.
{{/usCountry}}The UPS, approved by the Union cabinet in August 2024, guarantees an assured pension of 50% of the employee’s average basic pay drawn over 12 months preceding superannuation; a minimum assured pension of ₹10,000 per month for those retiring after 10 years of service; a family pension of 60% of the last drawn pension; inflation indexation; and a lump sum payment at superannuation in addition to gratuity.
{{/usCountry}}A senior government functionary, speaking on condition of anonymity, said the Punjab government was severely constrained by the Centre’s refusal to refund the accumulated NPS corpus of state employees amounting to ₹18,000 crore.
{{/usCountry}}A senior government functionary, speaking on condition of anonymity, said the Punjab government was severely constrained by the Centre’s refusal to refund the accumulated NPS corpus of state employees amounting to ₹18,000 crore.
{{/usCountry}}“We had requested the Pension Fund Regulatory and Development Authority (PFRDA) to release this money, but they said there is no legal provision to refund the accumulated corpus. This has limited our options. The states that have gone ahead with OPS restoration in these circumstances are in a fiscal mess,” he claimed, citing the example of neighbouring Himachal Pradesh. The PFRDA is the regulatory body for overall supervision and regulation of the pension sector in the country.
{{/usCountry}}“We had requested the Pension Fund Regulatory and Development Authority (PFRDA) to release this money, but they said there is no legal provision to refund the accumulated corpus. This has limited our options. The states that have gone ahead with OPS restoration in these circumstances are in a fiscal mess,” he claimed, citing the example of neighbouring Himachal Pradesh. The PFRDA is the regulatory body for overall supervision and regulation of the pension sector in the country.
{{/usCountry}}The Punjab government, according to economists, lacks the financial flexibility to restore the old pension scheme due to its mounting debt, hefty committed liabilities, and spiralling revenue deficit. In the first four months of the current fiscal year, the revenue deficit – which reflects the excess of revenue expenditure over revenue receipts of the government – stands at about ₹10,700 crore.
Meanwhile, the state government employees are growing increasingly agitated over the delay in restoring OPS. Jasvir Talwara, convener of the Old Pension Restoration Struggle Committee, said the restoration of OPS was an election promise of the AAP, but the government is now backing out. “The notification has remained only on paper. They have been asking us and other employee unions about our stance on the unified pension scheme during meetings, which indicates they are pushing it instead. This is not acceptable. We will intensify our protests on this issue,” he said.
At the call of the National Movement for Old Pension Scheme (NMOPS), the Old Pension Restoration Struggle Committee and the CPF Employees’ Union have jointly announced a one-day hunger strike at the district headquarters across the state on September 5 (Teachers’ Day) to press for the restoration of the old pension scheme. “Teachers and other employees participate in the protest. If our demand is ignored, we will march to Delhi on November 25,” he added. Earlier, employees from power and education sectors had also organised protests to press this demand.
The NPS, a contributory, market-linked scheme where retirement benefits depend on returns from financial markets, was introduced in 2003 by the then Atal Behari Vajpayee-led National Democratic Alliance (NDA) government, which urged states to adopt it in place of the traditional scheme to reduce their pension liabilities. After the Punjab government opted for NPS in 2004, all those who joined service thereafter were enrolled under it. They have since been demanding a return to the old pension scheme. In the run-up to the state elections, the AAP had promised to restore OPS, and its government issued the notification for implementation on November 18, 2022.
