C Rangarajan, former Governor of the Reserve Bank of India and former Chairman of the Prime Minister’s Economic Advisory Council, has warned against returning to the old pension system with the same formula. Speaking at a virtual event, Rangarajan said that the government should not return to the old pension system without making necessary changes to the formula.
Rangarajan’s comments come in the wake of reports that the government is considering a proposal to revert to the old pension system for government employees. The old system, which was in place before 2004, was replaced by the National Pension System (NPS), which is a defined contribution scheme.
The old pension system was a defined benefit scheme, which means that the pension amount was fixed based on the employee’s salary and the number of years of service. In contrast, the NPS is a defined contribution scheme, which means that the pension amount depends on the contributions made by the employee and the returns generated by the investments.
Rangarajan said that while the old pension system was beneficial for government employees, it was not sustainable in the long run. He said that the government should consider making changes to the formula to ensure the sustainability of the system.
Rangarajan also said that the government should consider increasing the retirement age for government employees to reduce the burden on the pension system. He said that the retirement age should be linked to life expectancy, which has been increasing in India.
In conclusion, C Rangarajan has warned against returning to the old pension system without making necessary changes to the formula. He said that the government should consider increasing the retirement age and making other changes to ensure the sustainability of the pension system.
