Central civil servant pension payments in India: Issues and concerns

Abstract

The rapid growth in the size of civil servant pension payments has become a subject of serious deliberation all over the world. As a result, several countries of the world have attempted to reform their existing pension practices. India also is experiencing the increasing burden of pension expenditure. This increasing burden is attributed to large employment provided by the government during its planning process and increasing life expectancy at 60 years. The debates relating to the need for the continuation and reforms of the pension system have been strong. The resulting reforms that have been initiated in India pertain to civil servants joining government service after January 2004. The pre-2004 recruits belonging to the civil departments and all defence employees continue with the Old Pension Scheme (OPS). Important issues that have evoked policy interest for the OPS group include the extent of their pension liability in the past, present and future; factors responsible for such growth; and alternative methods of financing the same. This paper presents an analysis of the growth in civil servant pension expenditure of the OPS group over last three decades sector wise. The paper also highlights important issues and concerns regarding civil servant pension payments in India. © 2009 Palgrave Macmillan.