CM unveils contributory pension plan for state govt staff

MUMBAI: Maharashtra has supported the Manmohan Singh government���s initiative to reform the pension sector by bringing in its own contributory pension scheme. At the chief ministers��� meet held to discuss the sensitive issue of pension reforms in Delhi on Monday, chief minister Vilasrao Deshmukh unveiled the new contributory pension scheme for state government employees recruited on or after November 1, 2005.

Christened ���Defined Contribution Pension Scheme���, it replaces Maharashtra civil services rules and the existing General Provident Fund Scheme from the stipulated date.

The two-tier system is based on defined contribution by employees. Under the Tier I option, a government employee will have to make a monthly contribution of 10% of his wages, including basic salary and dearness allowance. This amount will be deducted from the employees��� salary every month and the state government will make a matching contribution. The second option allows employees to create a voluntary withdrawal account, along with the Tier I option, which will be maintained separately. This will not receive any contribution from the state government.

The most significant aspect of the scheme that it���s mandatory for an employee to invest 40% of the total accumulated pension to purchase an annuity from the LIC at the time of retirement. The remaining amount will be given to the employee lump-sum at the time of retirement. ���By bringing these two schemes the government has lessened the burden on the state exchequer,��� the chief minister said.