In a statement in both Houses of Maharashtra Legislature on Friday, Chief Minister Eknath Shinde announced the implementation of a revised National Pension System (NPS) for the state government employees who joined service on November 1, 2005.

According to PTI, Shinde said if the employees opt for the revised scheme, they will get 50 per cent of their last drawn salary as pension and dearness allowance, of which 60 per cent will be as a family pension and dearness allowance. Maharashtra adopted the NPS scheme on April 1, 2015. Of the state’s 13.45 lakh employees, the NPS scheme will apply to 8.27 lakh staffers.

The decision comes after the state government set up a committee in March 2023 to study the old pension scheme vis-a-vis the NPS and recommend ways to provide sustainable financial relief for employees joining service on and after November 1, 2005.

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The centre launched the National Pension System (NPS) in 2004 as a small savings scheme for retirement, initially made available only to government employees, before being extended to the rest of the Indians in 2009. NPS offers a lump sum withdrawal and annuity benefits after age 60. Both Indian and non-resident Indians (NRIs) can apply for the NPS scheme, which invests in equity, government and corporate bonds, alternative investment avenues, etc., to provide investors with a better risk-adjusted return. Additionally, NPS offers Tier 1 and Tier 2 accounts; however, a subscriber can only open a Tier 2 account if they have a Tier 1 account.

Of late, NPS has made several changes to make the new pension system more flexible and accessible to the public. For example, investors can choose fund managers for the different investment categories under the NPS framework, make deposits up to 70 years of age, withdraw funds in a lump sum, up to 60 per cent, or through the systematic withdrawal plan (SWP), etc. Additionally, the investors can contribute money in both offline and online modes.

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For annuity, the NPS subscribers reinvest the remaining 40 per cent of their capital in annuity schemes provided by the selected annuity service providers (ASPs) or life insurance companies registered with the Insurance Regulatory and Development Authority of India (IRDAI) and empanelled by the Pension Fund Regulatory Development Authority (PFRDA) for NPS. The annuity starts immediately after the request has been approved, depending on the annuitant’s allocated funds. Subscribers must contact the point-of-presence (POP) for fund withdrawals, generating exit Claim IDs, and reporting death.