There is no financial impact for the payment committee in the fiscal year 26: the spending secretary

Manuj Goville, Secretary of the Ministry of Finance at the Ministry of Finance, says the Federation’s budget 2025-26 provided 7000 rupees to implement the unified pension plan as of April 1. In an interview with BT, Govil expressed his hope that once the scheme stabilizes, his collection will be sufficient for pension payments. He also said that the process of establishing the payment committee had started. Excerpts edited:

The government recently announced the establishment of the eighth wage committee. Can you explain the following steps in its formation?

The decision was taken to start the constitution of the eighth wage committee, and we wrote to the ministries of defense, internal affairs, employee management and training on their views and suggestions on the terms of the reference. We have also written to various state governments although the recommendations of the Wage Committee do not apply to state governments, but they are only applicable and are intended for the central government only. But many state governments adopt these recommendations. Once we receive their views, we will have the terms of the reference and the government will need to take a decision on the committee formation. Then the official notification will be issued to the terms of the reference and the constitution of the committee, after which the committee will start work. In the past, the commissions took more than 12 months to provide recommendations, so based on what the reference conditions are, and when the committee makes its recommendation, the government will address these recommendations and a decision will be taken on them.

So the financial impact will not be perceived in the 26th fiscal year?

No, we do not expect any impact on the recommendation of the payment committee in the fiscal year 2025-26, but there will be an implicit for the year after that.

When does the sixteenth financial committee report expect?

I think it is expected to present it by October. These recommendations will be applied as of April 1, 2026. It has nothing to do with the next financial year 2025-26.

What kind of influence will the UPS pensions (UPS) on government finances?

UPS will be activated from April 1, 2025. The committee chaired by the former finance minister has entered this case in detail, and according to its accounts, the financial impact of an additional 4.5 % gives it the government of India according to this, UPS is likely to be about 6,250 rupees. Regardless, about 800 rupees are the estimated responsibility of the arrears of people who have already retired but may choose UPS. Therefore, the total effect will be about 7,000 rupees and this amount has been provided in the budget. This will go to the combined group and will be invested in the specified way.

Do you expect most central government employees to move to UPS now?

The national pension system (NPS) will continue with each of the options and the central government employees will have an option if they want to stay in NPS without UPS or NPS with UPS. Once you practice the option, we will know the number of people who choose UPS. Some UPS elements are very attractive including guaranteed payment, family pensions, relief, minimum pensions of 10,000 rupees and amounts of blocks. We hope that a large number of UPS employees will choose.

In the past, there were fears that moving to a guaranteed pension could add to the government’s obligations. Have you taken care of this?

Based on the assumptions made and the contribution of the government of India by 4.5 %, UPS must be able to bear all the obligations due to the included installments and other benefits of the body itself. We also need to check the way the scheme works after three years and see whether the assumptions are in the right direction, whether the formation of the group is, the expected return rate on investments occurs. But hope is that once UPS stabilizes, its collection must be sufficient to provide these payments, and the government may not need to pay from its unified box in India, so that the burden is not on future generations.