Funds deposited for NPS cannot be transferred to State governments: Centre

The Central government on February 20 again clarified that the funds deposited for National Pension Scheme (NPS) cannot be given to State governments as per the current laws.

Both Finance Minister Nirmala Sitharaman and Finance Secretary Vivek Joshi said that if any State is expecting that the funds deposited for NPS can be returned to them then it is impossible.

Citing the recent crash in Adani group companies’ shares, Rajasthan Chief Minister Ashok Gehlot had earlier said that the employees of the State government cannot be left at the mercy of the share market where National Pension Scheme (NPS) funds are invested.

He had also urged the Centre to give the funds of the State government employees deposited in NPS and said that the State will move to the Supreme Court if the funds are not transferred to the Old Pension Scheme (OPS) being implemented by the state government.

“If one State expects that the funds deposited with the EPFO should be given to the States. If this is the expectation then no. Employees have the entitlement to the money. The deposited money is earning interest and there should be clarity that the money comes into the hand (employees) post-retirement. The money deposited will come into the hands of the government, it is impossible,” Ms. Sitharaman told reporters.

She was here to take part in a post-budget discussion on various stakeholders today.

Finance Secretary Joshi said that it is not a very good trend that some States have adopted the Old Pension Scheme (OPS) and other states are also demanding.

“Regarding this, I would like to say that this trend is not very good and only state governments are ‘postponing’ their liabilities. Employees feel that they are benefited or not, it is also a matter to be seen. As far as it is concerned that state governments are demanding their share back, I would like to say that the law is very clear. The state governments cannot get that money,” Mr. Joshi said.

He said that the money in the new pension scheme is related to the employees and it is in an agreement between the employee and the NPS Trust. If the employee quits before maturity, before reaching retirement age, then there are different rules.

According to this, 80% annuity and 20% lump-sum are available.

“As far as the States are thinking that we will get back, I think it is not possible as per the existing rules,” he said.

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