The Maharashtra government has announced that the New Pension Scheme (NPS) will be optional for its employees, reverting to the Old Pension Scheme (OPS) as the default. This decision applies to state government employees appointed on or after January 1, 2006.
Previously, all state government employees appointed after January 1, 2006, were automatically enrolled in the NPS. The new order allows these employees to opt out of NPS and join the OPS. Existing NPS subscribers also have the option to return to the OPS.
The government resolution (GR) issued by the Finance Department clarifies the process for opting out. Employees desiring to switch to OPS must submit an application to their respective department heads. The department heads will then forward these applications to the Finance Department for final approval.
A key condition for switching is that employees must submit an affidavit stating they understand the implications of opting for the OPS, including the potential financial benefits and drawbacks compared to the NPS.
The decision fulfills a long-standing demand from state government employees who have been advocating for the restoration of the OPS, which guarantees a defined pension benefit based on the last drawn salary. The NPS, a contributory pension scheme, offers market-linked returns and is considered less financially secure in retirement by many employees.
The government estimates that approximately 2.5 lakh employees will be eligible to switch to the OPS. The financial implications of this shift are significant, with the government anticipating an increased burden on the state exchequer. However, officials believe the move will boost employee morale and address concerns about retirement security.
The GR also addresses the treatment of NPS contributions already made by employees. These contributions, along with the accrued returns, will be transferred to the employee’s GPF (General Provident Fund) account. The government has assured that the accumulated funds will not be lost and will continue to grow with interest.
This move aligns Maharashtra with other states like Rajasthan, Chhattisgarh, Himachal Pradesh, and Punjab, which have already reverted to the OPS for their employees.
