Bonanza for Pensioners! Centre May Unveil Pension Guarantee For Employees Ahead Of Polls

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It is possible that the government may offer a pension guarantee of 50% of the last salary drawn, but this would require a significant increase in contributions from both the government and the employees.

Bonanza for Pensioners! Centre May Unveil Pension Guarantee For Employees Ahead Of Polls
Analysts believe that a 35-40% guarantee would be feasible by tweaking the current structure of the National Pension System (NPS) (Representative image: Pixabay)

New Delhi: The government is considering introducing a new pension model for its employees, which would guarantee a decent amount of pension payout. The scheme is likely to be unveiled before the state assembly elections in November. The new model would be jointly funded by the employees and the government, and the guarantee would depend on actuarial analysis, which factors in the longevity of retirees and their contributions, as per a report carried by the Financial Express.

Analysts believe that a 35-40% guarantee would be feasible by tweaking the current structure of the National Pension System (NPS), a nearly two-decade-old scheme that is based on the concept of defined contribution.

Under the NPS, employees contribute a fixed percentage of their salary to a pension fund, and the government also contributes a matching amount. The retirement corpus is then invested in a mix of equity and debt instruments, and the returns on the investments determine the size of the pension payout.

It is possible that the government may offer a pension guarantee of 50% of the last salary drawn, but this would require a significant increase in contributions from both the government and the employees.






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