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Report on Old Pension Scheme by Somnath Committee Expected by January End

Government Employees Await Somnath Committee's Verdict on Old Pension Scheme

Mumbai | January 10, 2024: A significant development unfolds for government employees as the Somnath Committee, appointed by the Central Government, nears the submission of its report on the fate of the Old Pension Scheme (OPS). The eagerly anticipated report, expected by the end of January, holds the key to the future of lakhs of government employees, sparking widespread interest and attention.

New Pension Scheme (NPS) vs. Old Pension Scheme (OPS)

Post-2005, the government introduced the New Pension Scheme (NPS) for its employees, a departure from the traditional Old Pension Scheme. Under NPS, employees contribute to their pensions directly from their salaries, determining the pension amount based on their savings. Crucially, these contributions are invested in the stock market, aligning with the employee’s preferences. Unlike the old system, neither the central nor state governments bear the financial burden of employee pensions. Over the past four years, government employees nationwide have voiced their dissatisfaction with NPS, advocating for a return to the Old Pension Scheme. Maharashtra witnessed employee strikes, and recently, the state government granted employees the option to revert to the old system. Against this backdrop, the Somnath Committee’s report gains paramount importance.

Somnath Committee’s Recommendations on Pension Schemes

As per the Economic Times report, the Somnath Committee is poised to recommend consigning the Old Pension Scheme to history. The committee advocates for introducing predetermined returns within the New Pension Scheme, a move aimed at safeguarding the interests of employees. Finance Minister Nirmala Sitharaman is expected to unveil these proposed changes in the interim budget on February 1. The Somnath Committee, after thorough analysis, suggests that reverting to the old system could impede India’s future economic progress. Consequently, the committee proposes alterations to the current pension scheme, aiming for a more balanced approach.

Warning from the Reserve Bank Raises Concerns

In a cautionary note, the Reserve Bank had previously warned against reinstating the Old Pension Scheme, citing potential setbacks for the economy. Recent reports suggest the Somnath Committee echoes this sentiment. This alignment with the Reserve Bank’s stance raises questions about the future of the Old Pension Scheme, which might now be consigned to history. Notably, the Himachal Pradesh government has already implemented the old pension scheme for its employees.

As the report’s submission draws near, government employees await eagerly for the outcome, keenly aware that the Somnath Committee’s recommendations could reshape the pension landscape for generations to come.

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