A nonagenarian professor of physics, who retired on the age of 58 from a main aided college in Chennai in 1985 with a month-to-month pension of round ₹800, now attracts a pension of ₹1.3 lakh. Equally, an loyal within the Public Works Division, on reaching the age of superannuation in 1998, obtained a pension of ₹6,000. Presently time, he is getting ₹35,000.
All these retirees and of us that joined the Negate executive provider or executive-aided tutorial institutions sooner than April 1, 2003 are lined below the Damaged-down Pension Intention (OPS). The OPS is non-contributory and fully funded by the Negate executive. Upward pension revision, or pension reset, is allowed with the implementation of each and each Pay Fee’s suggestions, as soon as in every 10 years. In addition, Dearness Allowance (DA) is given at par with the serving workers. Approximately two lakh workers are lined below the OPS.
But, submit-2003 recruits come below the Contributory Pension Intention (CPS), which is much just like the National Pension Procedure (NPS). In this arrangement, each and each employee is required to make a contribution 10% of fashioned pay plus DA with an identical contribution from the Negate executive. At the time of retirement, workers are paid a one-time settlement and discontinuance no longer obtain any inflation-listed magnify or pension reset. To place it merely, they discontinuance no longer automatically rep any pension on retirement, unless they invest their savings in annuity or retirement schemes of insurance coverage firms.
Because the Tamil Nadu executive did no longer join the NPS and had no longer designated a fund supervisor according to the Pension Fund Regulatory and Constructing Authority Act, the returns obtained by the manager group had been about two percentage factors lower than those lined below the NPS, says a executive loyal. Acceptable to Union executive workers who joined provider on or after January 1, 2004, the NPS is a outlined contribution-primarily primarily based mostly arrangement with market linked returns for submit-retirement advantages. In the end of fashioned exit, subscribers can put as a minimal 40% of their accumulations in annuity.
DMK’s promise
Within the bustle-as much as the 2021 Meeting election, the Dravida Munnetra Kazhagam (DMK), which became as soon as then within the Opposition, had committed to the restoration of OPS.
But, as early as 25 years ago, the authorities had realised that the pension liability became as soon as becoming too heavy to comprise, the principle reason being the pension reset. Additionally, driven by greater properly being parameters, lifestyles expectancy became as soon as on the upward thrust. In his Funds speech in 2001, the then Finance Minister and AIADMK chief C. Ponnaiyan acknowledged that “the pension liabilities of the manager had been showing a median annual magnify of 30 per cent, which is unsustainable.” Karnataka’s passe Chief Secretary B. Okay. Bhattacharya and his group, in their well-liked document of October 2003 to the RBI chanced on that pension cost as a percentage of total earnings receipts in Tamil Nadu rose from 3.8% for the length of 1980-90 to 6.6% for the length of 1990-95 and 10.8% for the length of 1995-2000. It hovered round 16% in 2001 and 2002. Furthermore, according to the White Paper on the Negate executive’s funds, as produced by the recent DMK regime in August 2021, the twelve months-on-twelve months bellow fee of pensions and other retirement advantages in 15 years (2006-07 to 2020-21) became as soon as in two digits in eight years and in single digit in six years, other than being within the detrimental for the length of 2020-21, which became as soon as no longer handiest the pandemic twelve months but also the length where executive elevated the retirement age.
As antagonistic to it being practically not probably to return to the OPS, the Negate executive will be grappling with the realm of deploying accumulations of its group, who joined after 2003, in greater investments. As on March 31, 2025, accumulations stood at about ₹84,507 crore. The set of enterprise of Comptroller and Auditor Identical outdated (CAG), which had rapped Tamil Nadu various conditions for no longer joining the NPS, acknowledged, in its document tabled within the Meeting three months ago on the Negate’s funds for 2023-24, that the Negate executive had, for long, invested in Treasury Bills and Lifestyles Insurance Corporation (LIC)’s schemes such because the New Crew Superannuation Intention with Money Accumulation Belief, both of which yielded lower passion than the Identical outdated Provident Fund (GPF) fee. At recent, the investments are in LIC schemes, carrying 7.1% aligned with the GPF’s fee.
OPS’s comeback
Within the meantime, the group of the Union executive and various Negate governments bask in started stressful the OPS’s restoration. Rajasthan grew to change into the first in February 2022 to teach its return to the OPS. A month later, Chhattisgarh adopted suit. One need to unruffled no longer gloss over the indisputable truth that both States, ruled by the Congress then, went to Meeting polls in slack 2023.
In the end of such inclinations, the RBI, in its bulletin of June 2022, noticed that “because the recent Negate executive retirees are primarily the beneficiaries of the aged pension arrangement, the rapid monetary force is perchance no longer felt if the States resolve to revert to the aged pension arrangement. Alternatively, when Negate executive workers who joined after 2004-05 below the NPS initiate to retire from 2034 onwards, the associated rate of any such pass will change into obvious. In other words, the adoption of the aged pension arrangement is vulnerable to serve the recent generation on the expense of future generations.”
Whatever the RBI’s warning, Jharkhand, in September 2022, opted for the OPS. Two months later, Punjab and in 2023, Himachal Pradesh also joined the OPS. Damaged-down governor of the RBI D. Subbarao called the OPS restoration “a regressive pass” and felt that this may maybe maybe give extra privilege to executive servants on the associated rate of the elevated public, majority of whom had no social safety earn.
Alternatively, southern States seem to bask in approached the topic in a various potential.
South’s response
In June 2023, the Yuvajana Sramika Rythu Congress Event executive in Andhra Pradesh, headed by Y.S. Jagan Mohan Reddy, unveiled a pension arrangement called the Andhra Pradesh Guaranteed Pension Intention (APGPS). One of the important crucial factors of the APGPS encompass that pensioners would rep 50% of the significant salary of the finest drawn salary as pension, whereas their contribution may maybe maybe be the identical at 10% of their fashioned salary. DA, as announced by the Union executive as soon as in six months, may maybe maybe be extended to them too. In August 2024, the Centre came out with its net variant — the Unified Pension Intention (UPS). As fragment of this arrangement efficient April 1, 2025, an assured payout is allowed on the fee of 50% of the practical fashioned pay drawn over the finest twelve months of provider with a minimal qualifying provider of 25 years.
Because the DMK regime came below political force on the pension area on the starting of 2025, with about one twelve months to head for the Meeting election, it announced the formation of a committee, headed by Extra Chief Secretary (Rural Constructing & Panchayat Raj) Gagandeep Singh Bedi, which submitted its final document in December 2025. And on January 3, Chief Minister M.Okay. Stalin announced that his executive would implement the Tamil Nadu Assured Pension Intention (TAPS), a hybrid model of the OPS, the APGPS and the UPS. As antagonistic to incurring a one time expenditure of ₹13,000 crore, the Negate executive’s annual contributions will be approximately ₹11,000 crore.
Aspects of TAPS
The arrangement came into carry out from January 1, 2026. Apart from the month-to-month particular particular person contribution of 10% along and not utilizing a longer lower than an identical contribution from the manager, there isn’t very any pension reset within the recent arrangement. And never like within the case of UPS where 50% of the practical of the finest twelve months’ fashioned pay is taken to repair the pension, TAPS enables pension determination primarily primarily based mostly on 50% of the pay drawn within the finest month of provider. Within the UPS, a minimal assured payout is made if superannuation is after 10 years or extra of qualifying provider whereas this is also given despite the dimensions of provider below TAPS. Pensioners and family pensioners below the recent arrangement will rep a DA magnify on par with the workers. When a pensioner dies, the month-to-month family pension will be equal to 60% of the pension finest drawn by the pensioner and given to the deceased’s family.
As antagonistic to the offer of a death-cum-retirement gratuity (DCRG) of no longer extra than ₹25 lakh, a particular compassionate pension will be paid to CPS beneficiaries who retired sooner than the TAPS implementation. The executive is confident that the pension burden as a percentage of the Negate’s net tax earnings will be “noteworthy lower than” 21%-22 % within the long bustle, despite the indisputable truth that, for the following seven years or so, this may maybe occasionally probably maybe set the Negate executive’s funds below stress in look of the annual contribution to TAPS beneficiaries and the offer for impress recent retirees below the OPS.
Alternatively, sections of executive workers are no longer delighted with TAPS.
It stays to be viewed whether TAPS will meet the fate of the UPS, which may maybe maybe rep enhance from about 1.22 lakh workers of the Central executive out of the estimated eligible 23 lakhs. As of now, round six lakh group of the Tamil Nadu executive are lined below CPS.
