This article is from May 10, 2022

Is there a chance to implement old pension scheme? What did PTR say?

The DMK had announced in its election manifesto that the new pension scheme for government employees would be scrapped and the old pension scheme would be implemented. However, Finance Minister PTR Palanivel Thiagarajan has said that there is a problem in implementing the old pension scheme.

What did PTR say?

During the debate on the Finance Department’s subsidy requests in the Tamil Nadu Legislative Assembly, Finance Minister PTR said, “Many states have announced the implementation of the old pension scheme. When the State Government of Rajasthan announced the implementation of the old pension scheme and asked to take the funds after joining the National Pension Scheme (NPS), the PFRDA has sent an explanatory letter stating that it is not entitled and cannot be refunded.

The difference between the pre-2003 pension scheme and the post-2004 pension scheme was, that in the old pre-2003 pension scheme, the entire fund was accounted for by the government. The state has an obligation to execute that amount. This is the government’s money and can hold more or less than the stipulated amount. It can be taken this year or next year as per the requirement. It can be borrowed. All this is government money, the duty of the government.

However, after changing to the contributory pension scheme, all the fund is accounted for as an individual’s money including the individual’s contribution from their salary and the contribution made by the government. This fund is kept separately in the name of each individual.

Apart from Tamil Nadu and West Bengal, the rest of the states have joined NPS and transferred funds. The previous regime had set up a research group in 2016 and received its report in 2018. It says that the law does not allow funds to be withdrawn or converted into the government’s funds after being credited to an individual’s account under the contributory pension scheme. This is to be considered.

Rs 39,500 crore is being spent on pensions this year. Rs 3,250 crore has been allocated for the new pension scheme after 2004. On average, the government allocates its contribution of Rs 50,000 per employee per year. Rs 24,000 crore is being spent on pensions of pre-2003 employees and their families, resulting in an average of Rs 2 lakh per person per year. This is the difference between the old pension scheme and the new pension scheme.

Employees’ retirement have been suspended for the past 2 years. So, the government has to spend Rs 2,150 crore when they retire this year. Government-fund of Rs 5,200 crore is being spent on pensions for retirees from government-aided schools and colleges.

In comparison, Rs 7 crore is to be spent on the pensions of all judges who have retired since independence and Rs 40 crore on the pensions of legislators, upper house members and their families. That is why I say that I am bound by the decision of the Chief Minister following justice. I will implement it. ”

“The finance minister said there were two reasons such as legal crisis and the high cost to bring in the old pension scheme. Thus, the government should not shirk its responsibility in implementing the old pension scheme”, said PMK Founder Ramadas.

Similarly, the State Secretary of the Marxist Communist Party, K.Balakrishnan said, “The old pension scheme is not a burden but the duty of the state. The Tamil Nadu Finance Minister recently said during a debate on the subsidy request that it was not possible to implement the old pension scheme once again. The Hon’ble Chief Minister should ensure that they issue a clear statement to implement the old pension scheme”, in a statement released.

The DMK has stated in its election manifesto that it will bring in the old pension scheme. Since the Finance Minister has stated the problems, a question arises on whether the DMK government will bring back the old pension scheme.

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