In a statement delivered in both Houses of the Maharashtra Legislature, Chief Minister Eknath Shinde announced the implementation of a revised National Pension System (NPS) for state government employees who joined service on November 1, 2005. Under the revised scheme, employees who opt for it will receive 50 percent of their last drawn salary as pension and dearness allowance. Of this, 60 percent will be allocated as a family pension and dearness allowance. The NPS scheme will apply to 8.27 lakh staffers out of Maharashtra’s 13.45 lakh employees.
This decision follows the establishment of a committee by the state government in March 2023 to study the old pension scheme in comparison to the NPS. The committee was tasked with recommending ways to provide sustainable financial relief to employees who joined service on or after November 1, 2005.
The National Pension System (NPS) was launched by the central government in 2004 as a small savings scheme for retirement. Initially, it was available only to government employees before being extended to all Indians in 2009. The NPS offers a lump sum withdrawal and annuity benefits after the age of 60. Both Indian and non-resident Indians (NRIs) can apply for the NPS scheme, which invests in equity, government and corporate bonds, and alternative investment avenues to provide investors with a better risk-adjusted return. The NPS offers Tier 1 and Tier 2 accounts, and a subscriber can open a Tier 2 account only if they have a Tier 1 account.
The NPS has undergone various changes to make it more flexible and accessible to the public. Investors can now choose fund managers for different investment categories and make deposits up to the age of 70. They can also withdraw funds in a lump sum of up to 60 percent or through the systematic withdrawal plan (SWP). Contributions can be made in both offline and online modes. For annuity, subscribers reinvest the remaining 40 percent of their capital in annuity schemes provided by selected annuity service providers (ASPs) or life insurance companies registered with the Insurance Regulatory and Development Authority of India (IRDAI) and empanelled by the Pension Fund Regulatory Development Authority (PFRDA) for NPS. The annuity payments begin immediately after approval, depending on the annuitant’s allocated funds. Subscribers must contact the point-of-presence (POP) for fund withdrawals, generating exit claim IDs, and reporting deaths.