“There is no provision under Pension Fund Regulatory and Development Authority Act, 2013 … vide which the accumulated corpus of the subscribers viz Government contribution, Employees’ contribution towards NPS along with accruals, can be refunded and deposited back to the State Government,” Minister of State for Finance Bhagwat Karad said in a written reply in the Rajya Sabha.
The minister further said that the central government is not considering any proposal to restore the OPS in respect of the central government employees recruited after January 1, 2004.
The NPS was introduced by the central government in December 2003 to replace the defined benefit pension system with defined contribution pension scheme in order to provide old age income security in a fiscally sustainable manner and also to channelise small savings into productive sectors of the economy through prudential investments.
It was made mandatory for all new recruits to the Government service (except armed forces) with effect from January 1, 2004, and has also been rolled out for all citizens with effect from May 1,2009, on voluntary basis.
According to the PFRDA, 26 State Governments with the exception of Tamil Nadu and West Bengal, have notified and implemented NPS for their employees, the Minister said, adding “as such liability under OPS- a defined benefit pension system- is an unfunded liability of State Government, which will be met from their future revenues.”
Replying to another question on OPS, Karad quoted Reserve Bank‘s report on ‘State Finances: A Study of Budgets of 2022-23’, to say that by reverting to OPS “States risk the accumulation of unfunded pension liabilities in the coming years.”