Seventh Pay Commission: RBI made a significant announcement over the previous pension plan

 Seventh Pay Commission: RBI made a significant announcement over the previous pension plan

Seventh Pay Commission: RBI made a significant announcement over the previous pension plan

Update on the Old Pension Scheme: Five states in the nation have revealed the results of the assembly elections. The BJP has secured significant victories in three states this year, and as a result, central workers have faith that the previous pension plan would be reinstated. The Reserve Bank of India made a significant announcement recently over the former pension plan. Tell us more about this in the news below.

The politics around the previous pension plan have heated up throughout the nation's election season. For retired state workers, several governments still operate under the outdated pension plan. Under such circumstances, central staff are also exerting pressure on the government to carry out the pension plan.

In the meanwhile, the central government and the states have received another warning from the Reserve Bank on the outdated pension plan. According to RBI, putting this into effect would severely strain state budgets and reduce their ability to spend on development-related expenses. According to the Reserve Bank's research titled "Finances of the States: A Study of the Budget of 2023–24," the supply of products and services, as well as transfers, subsidies, and guarantees that are harmful to society and consumers, would exacerbate their financial situation. will arrive at a crucial state.

It is significant that the decision to adopt the previous pension plan for their workers has been communicated to the Central Government and the Pension Fund Regulatory and Development Authority (PFRDA) by the governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh. The state governments have asked to have the sum of their workers' contributions to the new pension plan refunded, the Finance Ministry recently told Parliament.

will put a strain on state revenue

According to the Central Bank's study, the adoption of the outdated pension plan in some states and the reports of other states following suit would severely impair the state's financial situation and limit its capacity to make investments that will spur economic development. Limited capacity will apply. It said that internal assessments suggested the cumulative budgetary cost might be as much as 4.5 times that of the National Pension System (NPS) if all state governments decided to replace it with the previous pension system.

By 2060, the increased burden will amount to 0.9 percent of GDP annually. According to the research, this would result in an increased pension burden for retirees under the previous pension scheme. It is expected that the last group of these individuals will retire in the early 2040s. They will thus continue to collect their pension under the previous OPS pension until the 2060s.

States shouldn't sacrifice future generations' interests.

According to the RBI assessment, going back to the previous state pension system would be a significant step in the wrong direction. The gains of earlier reforms will be diminished by this action, and the interests of future generations will be jeopardized. According to the research, the average fiscal deficit for all of India is 3.1%, while certain states have planned for deficits that would surpass 4% of GSDP (state gross domestic product) in 2023–2024. Additionally, their debt load exceeds 35% of GSDP.

In contrast, the average for all of India is 27.6%. It said that any further payments for goods and services, transfers, subsidies, and guarantees that are harmful to society will exacerbate their financial situation and undermine the general fiscal stability attained over the previous two years. The state's financial situation will continue to improve in 2022–2023 according to the assessment. For the second year running, the aggregate gross fiscal deficit (GFD) of the states was less than the budget forecast, coming in at 2.8% of the GDP. The decrease in the revenue shortfall was the primary cause of this.

In these states, OPS is in place.

The Old Pension Scheme (OPS) has been implemented by the state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh, the government informed the Lok Sabha. These state governments have notified the Pension Fund Regulatory and Development Authority (PFRDA), a branch of the Central Government, of their decision in this regard.

The removal of payments and perks has been sought by these state governments. Nonetheless, the Punjabi government has also notified the Indian government that it would keep funding the NPS via payments from the government and employees.