A MONTH after announcing in the Legislative Assembly that his government had absolutely no intention to revive the old pension scheme (OPS), Maharashtra’s Deputy Chief Minister and Finance Minister Devendra Fadnavis Wednesday said the state government is “not negative” about it.
“Let me be clear that we are not negative about it (OPS). We will discuss it with Finance and other departments. But whatever be the solution, it has to be long term and not short term,” said Fadnavis. Referring to the opposition Congress and Nationalist Congress Party (NCP), he said, “These people only talk (about OPS). But if there is going to be a change in the present pension scheme to old, then only we have the courage to do so. Not these people.”
Fadnavis spoke about the pension scheme in his address at a rally organised for BJP candidate Kiran Patil who is contesting the Legislative Council elections scheduled on January 30 from the Aurangabad division teachers’ constituency. Patil is pitted against NCP’s sitting MLC Vikram Kale who has demanded a shift back to OPS.
His comment comes days after Maharashtra Chief Minister Eknath Shinde assured state employees that his government was positive on this issue. “The government is positive about the old pension scheme for teachers and government employees, non-aided schools, and also for 25 per cent reservation in English medium schools. The education department is studying the old pension scheme,” Shinde had said on January 14 in Thane during an election rally in support of BJP candidate Dyaneshwar Mhatre for the Konkan division teachers’ constituency.
If Maharashtra does revert to the old pension scheme, it will be the first BJP-ruled (in alliance with Shinde’s Sena) state in the country to do so. The party, led by Union Finance Minister Nirmala Sitharaman, had been warning all states against reverting to OPS, given its adverse impact on state finances.
Three Congress states – Rajasthan, Chhattisgarh and Himachal Pradesh, and Aam Aadmi Party-ruled Punjab have already announced or reverted to OPS. OPS is a defined benefit scheme compared with the NPS or the new pension scheme, which is market-linked with both the government and the employee making monthly contributions, to be invested in pension funds.
Congress and the Aam Aadmi Party have been aggressively pursuing the demand to bring back the OPS and promising it in their manifestos ahead of Assembly elections in states. In Himachal Pradesh, which went to polls late last year, the Congress win has been attributed by many party leaders to its promise of reverting to the old pension scheme.
So far, none of the BJP leaders, except Fadnavis, have spoken in favour of the OPS. Maharashtra is the first BJP-ruled (in alliance with Shinde’s Sena) state to publicly express a positive attitude towards bringing OPS back.
Just over a month ago, Fadnavis had ruled out reverting to the old pension scheme. Responding to BJP MLA Ram Satpute’s query in the state Assembly on December 22, Fadnavis had said, “The government will not revive the old pension scheme. Its reinstatement will put an additional burden of Rs 1.10 lakh crore on the state exchequer.” He later told the Assembly that the government will have to keep fiscal health in mind in the larger interest of the state.
Opposition Congress slammed Fadnavis asking him why he didn’t revert to the OPS during the five years he was the Chief Minister of Maharashtra. “Devendra Fadnavis’s thinking seems to have changed due to increasing pressure from government employees and the implementation of old pension schemes by Congress-ruled states. But no matter what happens, the old pension scheme should be implemented,” said Maharashtra Congress spokesperson Atul Londhe.
Under the old pension scheme, employees receive defined benefits equivalent to 50 per cent of their last drawn salary. The new pension scheme — also known as the National Pension System — is a market-linked defined contribution product, with the state and the employee both making contributions which accumulate till retirement. Government employees make a monthly contribution of 10 per cent of their salary, with a matching contribution from the government. For central government employees, the employer’s contribution rate was enhanced to 14 per cent in 2019.