{"id":196315,"date":"2022-07-19T18:01:47","date_gmt":"2022-07-19T12:31:47","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=196315"},"modified":"2022-07-20T11:04:43","modified_gmt":"2022-07-20T05:34:43","slug":"fresh-urgency-on-pension-reforms","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/fresh-urgency-on-pension-reforms\/","title":{"rendered":"Fresh urgency on pension reforms"},"content":{"rendered":"\n

Source<\/strong>: The post is based on an article \u201cFresh urgency on pension reforms\u201d published in the Times of India on 19th<\/sup> July 2022.<\/p>\n

Syllabus<\/strong>: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.<\/p>\n

Relevance<\/strong>: New Pension Scheme<\/p>\n

News<\/strong>: In recent periods, various state governments have proposed to shift away from the National pensions Scheme (NPS)<\/strong> to the old pension scheme. They are undoing the reform achieved in the past two decades. However, the Union government has been absolutely steadfast in its support for the NPS.<\/p>\n

Evolution of the Pensions System in India<\/strong><\/h5>\n

Phase-Before the launch of NPS:<\/strong> The Indian pension system covered three categories of people<\/strong>.<\/p>\n

(1) Government employees<\/strong> who received them under the traditional pay-as-you-go defined benefit (DB) system<\/strong>. It was applicable to those recruited up until 2003. In this scheme, the Governments have to pay full pension to individuals.<\/p>\n

(2) Destitute persons<\/strong> were eligible under the National Old Age Pension Scheme, and<\/p>\n

(3) The organised sector workers <\/strong>were covered under the Employees\u2019 Provident Fund Organisation\u2019s pension scheme.<\/p>\n

Criticism of the Defined Benefits (DB) Pension Scheme<\/strong><\/h5>\n

The pension bill of the Union government increased from 0.24% of GDP in 1980-81 to 0.73% of GDP in 1999-2000.<\/p>\n

The pension bill of the Government of India consumed 8% of the revenue receipts<\/strong> in the year 1999-2000 as against 2.9 percent in 1980-81.<\/p>\n

In 1998, a committee was established under\u00a0Surendra Dave to build a new pension system. This was called as the Old Age Social and Income Security (OASIS) Project.<\/strong><\/p>\n

Phase of New Pensions Scheme (NPS)<\/strong><\/h5>\n

Project OASIS helped create and socialise new knowledge on the failure of DB systems<\/strong> worldwide. It proposed newer defined<\/strong> contribution (DC) systems<\/strong> that had been rolled out in many countries at that time.<\/p>\n

Therefore, in February 2002, the union government announced the creation of a DC pension system. <\/strong>Subsequently, Himachal Pradesh<\/strong> became the first state to join NPS in 2003. Later on, other states also joined the scheme.<\/p>\n

About the Direct Contribution (DC) Pensions Plan or NPS<\/a><\/strong><\/p>\n

It is a pension scheme for new recruits<\/strong> to the civil services and the uncovered segment of the population, who were recruited starting from 2004.<\/p>\n

The Pension Fund Regulatory and Development Authority of India (PFRDA)<\/strong> was also created.<\/p>\n

Arguments in favor of the NPS<\/strong><\/h5>\n

The NPS has been able to drive fiscal down costs<\/strong>. It has become the cheapest<\/strong> fund management system<\/strong> in India.<\/p>\n

In the NPS reform, the government evolves from double payment to only paying contributions for the employee. Further, the young are de-risked from fiscal concerns.<\/p>\n

The importance of the NPS will be realized when the persons receiving the DB pension<\/strong> at present would fade away.<\/p>\n

The NPS was formulated based on intellectual<\/strong> and evidence-based consensus<\/strong>, public debate and discussion, and good usage of external domain expertise.<\/p>\n

At present, India is undergoing an accelerated demographic transition.<\/strong> As per recent data, the share of the youth (aged 15-29) in India has dropped to 26.7% in 2021 in the last decade. Further, it is projected to go down to 22.6% by 2036. Therefore, there is a stronger need for the NPS reform.<\/p>\n

What are the causes of the state government\u2019s proposal for the revival of the old pension scheme?<\/strong><\/p>\n

(1) It may be a populist consideration, <\/strong>as there is a demand from a section of employees.<\/p>\n

(2) The decision may be partly to allay immediate fiscal pressures<\/strong> because, in NPS, the government has to contribute its share of NPS.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on an article \u201cFresh urgency on pension reforms\u201d published in the Times of India on 19th July 2022. Syllabus: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation. Relevance: New Pension Scheme News: In recent periods, various state governments have proposed… Continue reading Fresh urgency on pension reforms<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10496],"class_list":["post-196315","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-times-of-india","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1701529052},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/196315","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=196315"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/196315\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=196315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=196315"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=196315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}