The Maharashtra government has introduced a revamped version of the New Pension Scheme for its state employees.

In an effort to address the demands of state government employees advocating for the reinstatement of the old pension scheme (OPS), Chief Minister Eknath Shinde announced a revised version of the National Pension Scheme (NPS) during the final day of the budget session on Friday in the Maharashtra Assembly. Under this new scheme, the government will bear the market-linked risks associated with the NPS.

According to the revised scheme, employees will have the option to receive a pension amounting to 50% of their last drawn salary along with Dearness Allowance (DA). Additionally, employees can avail a family pension equal to 60% of their pension and DA. This option will be available to state government employees who joined service after November 1, 2005. The announcement made on Friday will be voluntary for those already enrolled in the NPS.

Employees will have a one-time option and must make their decision within the next six months regarding whether they wish to remain under the old NPS or switch to the revised one. In February, the state government issued an order granting OPS to 26,000 government employees selected before November 2005.

Currently, the government employs 13.45 lakh individuals, out of which 8.27 lakh are under the NPS. The state government allocates up to Rs 52,689 crore annually for OPS, while its expenditure under the NPS for the same period is Rs 7,686 crore. The total annual expenditure on salaries in Maharashtra amounts to Rs 1.27 lakh crore. The implementation of NPS in Maharashtra commenced on April 1, 2015.

CM Shinde's announcement on Friday was based on a report submitted to the government by a committee chaired by former BMC commissioner Subodh Kumar. The committee highlighted that reinstating the OPS would significantly strain the state exchequer. However, the committee, which included retired IAS officers KP Bakshi and Sudhir Srivastav, as well as the Director of Accounts and Treasury, recommended providing benefits equivalent to the OPS for retired government employees by making three to four changes in the current system.According to the committee's recommendations, retired government employees were to receive benefits equivalent to 50% of their last drawn salaries, which was provided as a pension under OPS. However, after OPS was discontinued, retired government employees under the NPS received a lump sum equivalent to 60% of their pension upon retirement, with the remaining 40% invested in annuities as pension. Under OPS, government employees did not contribute any amount, while under the NPS, they contributed 10% of their salary (basic salary plus DA), with the government contributing 14%

In October of last year, employee unions organized a strike across Maharashtra demanding the restoration of OPS. During the budget session held last year in March, Deputy Chief Minister Devendra Fadnavis stated that the state government was not entirely opposed to OPS and emphasized the need to consider state finances before making a decision in this regard. He further added that even if the state government reinstated OPS, its true financial impact would not be felt until 2030. Fadnavis also mentioned during the winter session held in December 2022 that the government would require Rs 1.10 lakh crore to implement OPS, potentially leading the state toward bankruptcy.