Rajasthan News: Rajasthan’s move to shift to old pension hits PFRDA hurdle

The Rajasthan government’s move to restore the old pension scheme from this financial year to provide assured income to employees after retirement has run into rough weather, with the Centre rejecting the state’s request to withdraw ₹39,000 crore accrued under the market-driven National Pension System (NPS) since 2004.

The Pension Fund Regulatory and Development Authority (PFRDA) has rejected the Congress government’s demand to withdraw funds accrued through the Rajasthan government’s and employees’ contributions.

The development comes in the run-up to the assembly election in the state, where chief minister Ashok Gehlot had announced in his February 23 Budget speech that Rajasthan would shift back to the old pension scheme from April 1.

The Centre had scrapped the old pension scheme from April 1, 2004, and replaced it with NPS.

The Rajasthan government had also announced that it would withdraw funds accrued as contribution since 2004 and shift the funds under general provident fund. This would allow government employees to access the funds at the time of retirement.

‘No Provision to Return Funds’

The decision impacted 300,000-350,000 government employees in the state, allowing the Gehlot government to address a section of the electorate ahead of the polls slated for November 2023. On April 21, the Rajasthan government wrote to the PFRDA, conveying its decision to switch to the old pension scheme and that it had not deducted contribution from the salaries of employees in March and April. “Therefore, it is requested that the funds, which have already accrued both in form of government contribution and employees’ contribution along with accruals to be deposited back to the state government as revenue receipt,” Naresh Kumar Thakral, secretary, finance (expenditure) department, Rajasthan government, wrote in a letter to the PFRDA.

The state government received a letter on May 2, rejecting its request. Prodeepto Chatterjee, assistant general manager, PFRDA, wrote that “there is no provision available vide which the funds, which are already deposited both in the form of government contribution and employees contribution towards NPS, along with accruals can be refunded and deposited back to the state government as a revenue receipt”.