Ashok Gehlot’s plan to revert to old pension scheme hits ₹39,000 crore hurdle

The Pension Fund Regulatory and Development Authority (PFRDA) has refused to release the ₹39,000 crore accumulated under the new pension scheme (NPS) in the account of Rajasthan government employees since 2005.

PFRDA said there was no provision in the rules that allow such an exit.

On February 23, chief minister Ashok Gehlot announced the restoration of OPS for employees appointed on or after January 1, 2004. The Atal Bihar Vajpayee-led government notified the new pension scheme in 2003 and nudged states to adopt it to reduce the exchequer’s pensionary liabilities in the long run.

Besides restoration of OPS, Gehlot also announced that the contribution of employees taken since 2004 will be shifted to the general provident fund (GPF).

In April, the state government wrote to PFRDA to exit from NPS and restore OPS. The state finance department said that from April 1, 2022, the OPS was restored and no amount was deducted from employees’ salary.

“We request that the funds, which have already accrued both in form of government and employees’ contribution, along with accruals to be deposited back to the state government as revenue receipts,” the Rajasthan government said in a communication to PFRDA.

But PFRDA said there was no provision to return funds deposited and denied the Rajasthan government’s request to transfer the same.

“The PFRDA Act 2013, PFRDA regulations 2015 (exits and withdrawals under the NPS) and other relevant regulations have no provision vide available under which the funds, which are already deposited both in the form of government and employee contribution towards NPS, along with accruals, can be refunded and deposited back to the state government as a revenue receipt,” the PFRDA said in a letter dated May 2. HT has reviewed the letter.

A senior Rajasthan government official said the PFRDA cannot stop anyone from exiting the NPS.

“The PFRDA can’t stop anyone from exiting the NPS (every individual can leave NPS any time), this is what the Act says. Now the government of Rajasthan wants to exit. Pension is a state subject, so the Centre cannot stop it,” the official said, seeking anonymity.

A second official said the government has been depositing ₹2,000 crore annually in NPS as its share. “Even if the PFRDA does not return the funds, the state employees can be given OPS. However, the government hasn’t issued any notification to implement OPS,” the official said on condition of anonymity.

The state is now exploring legal options and is consulting the advocate general of Rajasthan, the second official said.

The opposition said the state government must use its own resources to provide the pension.

Opposition leaders were quick to hit back at Gehlot. “This is what happens if you do things in haste. The decision of restoring OPS was taken without brainstorming, discussions and consultations with PFRDA,” deputy leader of opposition Rajendra Rathore said.

There is no provision in the law to return the funds to the state, Rathore said. “Now the government should arrange the employees’ share from its own resources,” he added.

Gajendra Singh, president of an employees association Akhil Rajasthan Rajya Karamchari Sanyukt Mahasangh (united) said the state government is yet to issue a notification on restoring OPS. “The state should write to the government of India and PFRDA, and if there aren’t provisions, then it should be brought in the interest of the employees,” he said.