7th Pay Commission: Good news for 20 lakh NPS subscribers? Big Bonanza likely in Budget 2019
The central government will further hike the amount of NPS withdrawals from 40% in Tier 2 cities to 60%. The Centre has already given a nod on monthly pension of over 50% of the last drawn salary of central government employees.
7th Pay Commission: The NDA government led by Prime Minister Narendra Modi is facing the acid test of general elections 2019. These will be held between April and May. However, first, the ruling BJP and its allies will have to impress all sectors and sections of of India with its achievements. While the previous actions are there for all to see, Finance Minister Arun Jaitley, who will be presenting Budget FY19 on February 01, 2019, will have a another chance to make big announcements. So, guess what? This new buzz has hit the town, which is seen as a massive good news for a particular section of the population. Namely, these are the National Pension Scheme (NPS) subscribers. It is expected that changes are expected to be announced in regards to NPS as per 7th Pay Commission system by next week and some clarity on it is most likely to be seen in Budget 2019.
The central government has agreed to making some credible changes to the new pension scheme, according to ABP News report that quoted VP Mishra, President, Indian Public Service Employees Federation. As per the report, it may come to pass that the central government will further hike the amount of NPS withdrawals from 40% in Tier 2 cities to 60%. The Centre has already given a nod on monthly pension of over 50% of the last drawn salary of central government employees.
Apart from this, there are education expenses which need huge funds in order to meet the rising demand in this sector. Whereas, marriages and buying a home hits the pocket of a salaried employee at major levels, hence new benefits are expected here too.
Mishra reportedly mentioned that, the government will announce these changes for the new pension scheme (NPS) by third week of January, 2019 as confirmed by Indian Public Service Employees Federation.
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However, Mishra also reiterated that, in case the government fails to act on its promise then the federation will launch countrywide representations by the end of the month.
Going forward, there are also many other issues that needs to be addressed by Modi government under 7th Pay Commission. According to National Pension System Trust, there are a total 1,962,291 central government employees with Rs 74,259.60 crore contribution towards NPS. A total of 48 lakh central government employees are living in hope for some clarity on their minimum pay scale and fitment factor.
These employees are demanding a 7th pay Commission based fitment factor hike to 3.68 times with minimum pay scale of Rs 26,000. This is after the Union Cabinet revised their minimum pay to Rs 18,000 from previous Rs 7,000 per month, along with fitment factor of 2.57 times in June 2016 leading to a major hike in all central government employees salaries.
However, there has been much talk over the recent weeks that the government may hike minimum pay to Rs 21,000 and fitment factor to 3.00 times, but there is absolutely no certainty about this course of action. However, it is an option that can be explored by the NDA government if it wants to limit the funds outgo on 7th Pay Commission.
This would be Modi government's first interim budget ahead of elections. An interim budget can also be called a temporary budget as the full Budget is left to the new government, of whichever party wins, which will rule next. This is done because both the governments might have different fiscal plans. So, the old government budget is cut short and a new budget is created. It also helps in the smooth transition between the two governments.
Thereby, one can hope for some reforms to come for government employees connected to the 7th Pay Commission in the Budget 2019.