Finance Minister Nirmala Sitharaman Talks About Pension System Review in Budget Speech
New Delhi [India], July 23: Finance Minister Nirmala Sitharaman announced that the committee reviewing the pension system has made significant progress. She praised the constructive approach of the Staff Side of the National Council of the Joint Consultative Machinery for Central Government Employees. The committee, led by Finance Secretary TV Somanathan, is evaluating the National Pension System (NPS) and considering changes.
Some states, including Punjab, Rajasthan, Himachal Pradesh, and Jharkhand, have reverted to the Old Pension Scheme (OPS) due to demands from government employees. The OPS provides a monthly pension after retirement, typically half of the last drawn salary, while the NPS involves employee contributions and offers a lump sum amount upon retirement.
Chief Economic Advisor V Anantha Nageswaran noted that while reverting to OPS may temporarily save cash flows, it could create future financial instability. Last year, the central government stated it had no plans to change the current pension system.
A new plan called NPS Vatsalya was also introduced, allowing parents and guardians to contribute to minors’ pension funds. Upon reaching adulthood, these accounts can be converted into regular NPS accounts.
Doubts Revealed
Finance Minister -: The Finance Minister is a government official in charge of managing the country’s money and economic policies. In India, this role is currently held by Nirmala Sitharaman.
Nirmala Sitharaman -: Nirmala Sitharaman is an Indian politician who is the current Finance Minister of India. She is responsible for the country’s financial and economic matters.
Pension System -: A pension system is a way to save money for when people get old and stop working. It helps them have money to live on after they retire.
Budget Speech -: The Budget Speech is a talk given by the Finance Minister every year to explain how the government plans to spend and save money.
Committee -: A committee is a group of people chosen to do a specific job or study a particular issue. In this case, they are looking at the pension system.
Finance Secretary TV Somanathan -: TV Somanathan is a high-ranking government official who helps the Finance Minister manage the country’s finances. He is leading the committee reviewing the pension system.
National Pension System (NPS) -: The National Pension System (NPS) is a retirement savings plan in India where people can save money for their old age. It is managed by the government.
Old Pension Scheme (OPS) -: The Old Pension Scheme (OPS) is an older way of saving for retirement that some states in India are going back to because employees asked for it.
NPS Vatsalya -: NPS Vatsalya is a new plan where parents and guardians can save money for their children. When the children grow up, this money can be turned into a regular NPS account.