Old pension scheme: Centre rejects Rajasthan govt's demand to withdraw Rs 39,000 crore accrued since 2004

New Delhi: Bringing a major cheer for its staff, the Rajasthan government announced in February to implement the old pension scheme from next year for employees appointed on or after January 1, 2004. Rajasthan CM Ashok Gehlot made the declaration while presenting the Budget for 2022-23.

However, the state government’s plan to bring back the old pension scheme from this financial year has hit a bump. The state had requested the Centre to withdraw Rs 39,000 crore accrued under the market-driven National Pension System (NPS) since 2004, which has been rejected.

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

CM Gehlot had announced restoration of the old pension scheme from April 1, 2022, in his February 23 Budget speech. For the uninitiated, the old pension plan was swapped with NPS by the Centre from April 1, 2004.

During the budget session in February, the Rajasthan government had also announced that it would take out the funds accrued as contribution since 2004 and shift them under general provident fund.

On April 21, the state government penned a letter to the pension regulatory body informing them about its decision to switch to the old pension scheme. The government also told the body that no contribution had been deducted 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," Economic Times quoted Naresh Kumar Thakral’s, secretary, finance (expenditure) department, Rajasthan government, a letter to the PFRDA.

The decision affected somewhere around 300,000-350,000 Rajasthan government employees.

Around 10 days later on May 2, PFRDA responded with a letter, dismissing the government’s 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".