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Economy & Business

RBI warns states against reverting to old pension scheme

The Hawk
January17/ 2023

Mumbai: The Reserve Bank has sounded a note of caution on the reversion to the old pension scheme by several states, saying it poses a major risk on the "subnational fiscal horizon" and would result in the accumulation of unfunded liabilities in the future years for them.

The observations in the RBI's report titled 'State Finances: A Study of Budgets for 2022-23' were made in light of Congress-ruled Himachal Pradesh becoming the most recent state to announce a return to the Dearness Allowance (DA)-linked Old Pension Scheme (OPS).

Prior to this, the governments of Rajasthan, Chhattisgarh, and Jharkhand alerted the national government and the Pension Fund Regulatory and Development Authority (PFRDA) of their decision to restart the OPS for their employees.—Inputs from Agencies