RBI WARNS state for restoring Old Pension Scheme; says THIS

New Delhi: The Reserve Bank of India (RBI) has warned against some states reverting to the old pension plan (OPS), stating that doing so could put pressure on state finances in the future. The likelihood that some states would switch back to the previous pension system is a significant risk that hangs over the subnational fiscal horizon. The annual fiscal resource savings brought about by this action are temporary, according to the RBI's research, "State Finances: A Study of Budgets of 2022–23."

The central bank stated in its report on state finances, which was made public on Monday, that governments run the danger of accruing unfunded pension liabilities in the future by deferring current spending. The central bank stated in its report on state finances, which was made public on Monday, that governments run the danger of accruing unfunded pension liabilities in the future by deferring current spending. (Also Read: Samsung Republic Day Sale 2023: Get BUMPER discounts of up to 61% on THESE devices)

The RBI report's observations were released at the same time as numerous states under their control announced a return to the defined benefit plan. The most recent one is Himachal Pradesh, which is governed by the Congress party and has announced a return to the Dearness Allowance (DA) connected Old Pension Scheme (OPS). (Also Read: THIS Indian company is the latest to join layoffs wave; cuts 70 percent workforce)

The governments of Rajasthan, Chhattisgarh, and Jharkhand had previously notified the federal government and the Pension Fund Regulatory and Development Authority (PFRDA) of their decision to begin the OPS for their workers.

The Aam Aadmi Party-led Punjab had also released a notification on November 18 in 2022 on the implementation of the OPS for the state government employees who are currently covered by the NPS.