Responding to the demands of certain government employee groups, the Mizoram government has established a five-member Study Committee tasked with exploring the feasibility of returning to the old pension scheme.
Notification for formation of the Study Committee was issued late Thursday afternoon with the terms of references and the committee is tasked to submit its recommendations within six months from the date of the formation.
According to the notification, Additional Secretary of the state Finance department Lalhmingmawia Sailo was appointed as chairman and Director of Accounts and Treasuries department Malsawmdawngliani as member secretary committee.
Two other officials and a representative of the Mizoram Movement for Old Pension Scheme are appointed as members of the committee.
The notification said that the committee will undertake a study on pension and retirement benefits of the state government employees and the pros and cons of subscription of the New Pension Scheme, 2010.
State Chief Minister Zoramthanga had announced his decision to constitute a Study Committee on Wednesday after government employees subscribing new pension scheme congregated near the Chief Minister’s Office and holding talks with representatives of the ‘Mizoram Movement for Old Pension Scheme’ (MIMOPS).
The protest rally dispersed after the Chief Minister informed leaders of the MIMOPS that a Study team will be formed to study the demands of the employees.
All the government employees recruited since January 1, 2004 were deprived off the Old Pension Scheme. They were later compelled to subscribe to the NPS, 2020 by contributing from their monthly salaries.
People participating in the rally were shouting slogans demanding that there should be parity and only one pension scheme for all the government employees and that the implementation of two pension schemes amongst the government employees amounted to discrimination.
Meanwhile, the opposition Congress party has made electoral promise to reintroduce the Old Pension Scheme if elected to power in the upcoming state assembly elections.
Old Pension Scheme
The central government ended the old pension scheme on January 1, 2004, and introduced the new pension scheme, National Pension System (NPS).
Within a year of bringing NPS, almost all the big states implemented it at their level. Till February 28 2022, more than 50 lakh employees of state governments were under NPS, while more than 22 lakh central employees are its beneficiaries. Implementation of old pensions will also increase the challenges for the states.
Here are key highlights of the old pension scheme:
The General Provident Fund facility is available in Old Pension Scheme.
No deduction will be made from a salary for pension.
A fixed pension is given after retirement, i.e. 50% of the last salary is received as a pension.
The entire amount of the pension is given by the government.
If a government employee dies while in service, then the family dependent will be entitled to the pension.
What is not be available under the NPS Scheme?
Additionally, No General Provident Fund (GPF) facility is available under NPS. A certain amount is deducted every month from the salary. No guarantee of fixed pension after retirement
The amount of pension for the employee will depend on the stock market return. A pension insurance company will give in NPS after buying an annuity. The benefit of inflation and pay commission will not be available in NPS.
Challenges related to old pension scheme
There will be a big impact on the state budget.
The burden on the state governments will increase. From where will the money be reimbursed.
However, there is no clarity on what will happen to the money deposited in NPS till now, and the governments may take back this money.