What is T.N.’s new hybrid pension model?, Pg8

Key Highlights:

• The Tamil Nadu government will implement the Tamil Nadu Assured Pension Scheme (TAPS), a hybrid pension model, effective January 1, 2026.
• TAPS combines features of the Old Pension Scheme (OPS), Andhra Pradesh Guaranteed Pension Scheme (APGPS), and the Unified Pension Scheme (UPS).
• The scheme involves a one-time expenditure of ₹13,000 crore and annual contributions of approximately ₹11,000 crore by the state government.
• TAPS determines pension based on 50% of the pay drawn in the last month of service, unlike UPS which considers the average of the last 12 months.

Detailed Insights:

• The Old Pension Scheme (OPS), applicable to employees who joined before April 1, 2003, is non-contributory and fully funded by the state government, with upward pension revision every 10 years.
• Employees who joined post-2003 are covered under the Contributory Pension Scheme (CPS), similar to the National Pension System (NPS), requiring a 10% contribution from the employee matched by the government.
• The Comptroller and Auditor General (CAG) has criticized Tamil Nadu for not joining the NPS and investing in lower-yield schemes, with accumulations as of March 31, 2025, standing at about ₹84,507 crore.
• States like Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have reverted to the OPS, raising concerns about the financial burden on future generations.
• The Andhra Pradesh Guaranteed Pension Scheme (APGPS) guarantees pensioners 50% of their last drawn basic salary, while the Unified Pension Scheme (UPS) assures 50% of the average basic pay over the last 12 months with a minimum of 25 years of service.
• TAPS includes a death-cum-retirement gratuity (DCRG) of up to ₹25 lakh and a special compassionate pension for CPS beneficiaries who retired before its implementation.

Key Concepts Involved:

• Old Pension Scheme (OPS): A non-contributory pension system fully funded by the government, providing fixed pensions and periodic revisions.
• Contributory Pension Scheme (CPS): A pension system where employees contribute a portion of their salary, matched by the government, for post-retirement benefits.
• National Pension System (NPS): A defined contribution-based pension scheme with market-linked returns, applicable to Union government employees who joined service on or after January 1, 2004.