Geriatric care

Pension scheme

 Recently five states have moved staff to Old Pension scheme (Rajasthan, Chhattisgarh, Himachal Pradesh, Punjab)
 Old system
o Pension to government employees - fixed at 50 per cent of the last drawn basic pay.
o Inflation indexed - Dearness Relief (DR) twice a year
o Payout is fixed and there was no deduction from the salary
o Government bears the expenditure incurred on the pension
o there was the provision of the General Provident Fund (GPF).
o Withdrawn in 2004
 Major issues with OPS
o No specific corpus
 pension liability remained unfunded
o Unsustainable
 pension liabilities would keep climbing with dearness relief
o Increased life expectancy
 Due to better health services mean extended payouts.
o Burden on centre and states
 Pension payments drew quarter of state’s tax revenues
 20% of the expenditure of states
o Intergenerational equity
 Today’s taxpayers are paying for the ever-increasing pensions of retirees.
o Deficit financing
 Pensions deprive the funding for social infrastructure such as health and education
o Promotes inequality
 Bottom 50% income groups pay the burden of indirect taxes
 Taxpayer’s money is spent for top 4% of househsoldes
 New system
o those joining government services from January 1, 2004. (except armed forces)
o assured or ‘defined’ benefit to the retiree.
o Participatory scheme
 10 percent of the basic salary and dearness allowance by the employee to pension corpus
 matching contribution by the government
 Central Government since 2019 is contributing 14% under NPS for its employees
o At retirement, they can withdraw 60% of the corpus, which is tax-free
o The remaining 40% is invested in annuities for a regular income, which is taxed.
o Implementation
 By PFRDA (Pension Fund Regulatory and Development Authority)
 National Pension System Trust (NPST) established by PFRDA – registered owner of all assets under
NPS
 funds are then invested in earmarked investment schemes through Pension Fund Managers.
o All citizens model of NPS
 All citizens of India (including NRIs) aged between 18 - 70 years can join NPS.
 Problems with new system
o Unlike OPS, the NPS requires employees to deposit 10% of the basic pay, along with the dearness
allowance.
o There is no GPF advantage and the amount of pension is not fixed.
o it is market-linked and return-based. Thus, the payout is uncertain.
o No guaranteed pension
 Only one third of OPS if the rate of return in market is 6%
 Reasons for bring back OPS
o High take home salaries
 Since employees need not pay 10 percent of their basic pay and dearness allowance
 o Short term gains for state governments
 As they will not have to pay matching contributions
o Pension is a state subject
 Thus states can decide on the type of pension
 Reforms in NPS
o Rationalising taxes to augment government’s revenues to fund pensions
o Guaranteed pension like OPS and making it inflation indexed
 If the rate of return is higher, then state can pocket it
 If it is lower than that, state pays for the balance
o Providing greater freedom to employees at the time of exit or retirement. The quantum of lumpsum
payment can be raised to 100% of the corpus instead of the present arrangement of commutation of 60%
o Option can be voluntary and suggested to those who can make investment on their choice
o State governments can increase their contribution from 10%
o Guaranteeing 33$ of the last drawn basic pay as pension instead of 50% as in OPS
 Government has set up a committee to review pension system
o Gov is planning to amend current scheme such that while both government and employees still make
contributions, employees get an assured 40% to 45% of their last drawn salary as pension

Pension system for TN

 If Old Pension System is restored, the salaries and pensions alone will consume a large portion of revenue receipts
 Leaving limited room for implementation of welfare measures
 Even now they constitute 40% of Revenue receipts defined
 TN has not joined the National Pension Scheme for its employees. Instead it follows contributory pension scheme
(DCPS)
 DCPS was launched on April 1 2003; applicable to new entrants after 2003
 Under this system, employees contribute 10% basic pay and dearness allowance which is matched by state
government and both the employers and employee’s contribution are initially transferred to public account
 CAG report
o By not joining NPS and designating a fund manager TN incurred an avoidable additional expenditure
 The expenditure on pension and other retirement benefits in respect of state government employees recruited
after 2003 accounted for 10.33% of the total revenue expenditure

Social Protection Schemes of GoI

 FB
o India’s elderly people (>60 years) will touch 13% by 2030 – NSO Elderly report
 Pradhan Mantri Vaya Vandana Yojana (PMVVY):
o Minimum monthly pension of Rs 1000 for senior citizens
o Minimum entry age: 60 year and above; tenure – 10 years
o By Life Insurance Corporation of India
 Pradhan Mantri Suraksha Bima Yojana
o to people in the age group 18 to 70 years
o risk coverage of ₹2 lakh in case of accidental death or permanent disability
o `1 lakh for partial permanent disability due to accident
o Premium of ₹12 per annum
 Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJY)
o people in the age group of 18 to 50 years
o risk coverage of Rs 2 lakh in case of death, due to any reason
o Premium of Rs 330 per annum
 Pradhan Mantri Shram Yogi Maan-Dhan Yojana
o For Unorganized workers; Entry age - 18 to 40 years
o Monthly income less than ₹15,000 and not a member of other schemes
o voluntary and contributory pension scheme – 55 to 220 per month
o Matching contribution from Central government (50%)
o Minimum monthly pension of ₹3,000 after 60 years
 o On death of the beneficiary, spouse is eligible for 50% monthly pension.
 Pradhan Mantri Kisan Maan-Dhan Yojana
o For Small and Marginal Farmers; Entry age – 18 to 40 years
o voluntary and contributory pension scheme – 55 to 220 per month
o Matching contribution from Central government (50%)
o Minimum monthly pension of ₹3,000 after 60 years
o On death of the beneficiary, spouse is eligible for 50% monthly pension.
 PM Street Vendor’s Atmanirbhar Nidhi Scheme (PM SVANidhi)
o Working capital loans of up to `10,000 with a one-year tenure
o second tranche of loan up to `20,000 with 18 months tenure after timely repayment of the first tranche
o free onboarding of beneficiaries on digital payment platforms
 National Social Assistance Programme 1995
o Umbrella scheme for 5 more schemes
o Old Age pension, Widow Pension, Disability Pension, National Family Benefit Scheme, Anna Poorna Scheme
for old age persons
o Under Rural Development Ministry