Maharashtra government employees can opt out of the National Pension System (NPS) and shift to the state’s revised version (RNPS), which promises assured pension and has different rules on corpus withdrawal and annuity adjustment.
According to a government circular dated May 6, employees have until December 31 to shift to RNPS. The circular listed rules on who is eligible, how pension will be calculated, and what happens to the retirement corpus accumulated under NPS.
In RNPS, employees completing at least 20 years of qualifying service will receive 50 per cent of their last drawn salary as pension, along with dearness relief (DR). That’s lucrative because the standard NPS is a market-linked retirement system where pension income depends on accumulated corpus and annuity returns.
Maharashtra’s model attempts to provide predictability similar to the old pension system, while retaining the NPS framework.
Who can opt for the revised scheme?
The revised pension scheme will apply to Maharashtra government employees already covered under NPS. The circular also extends the benefit to employees of:
-
aided educational institutions, -
agricultural universities, -
affiliated aided non-government colleges, -
Zilla Parishads, and -
Panchayat Samitis.
Employees wanting to switch to RNPS must submit their option forms before December 31, 2026.
How much pension will employees get?
The pension structure depends on years of service.
According to the circular:
-
Employees completing 20 years or more of service will receive 50 per cent of their last drawn salary as pension. -
Those completing between 10 and 20 years of service will receive proportionate pension benefits. -
Employees with less than 10 years of service will not receive pension benefits under RNPS.
The state government has also introduced a minimum pension guarantee.
“Employees having minimum qualifying service of 10 years shall be eligible for minimum pension of Rs 7,500 per month,” said the circular.
In addition to the basic pension, pensioners will receive dearness relief applicable from time to time.
Family pension rules
The circular also provides for family pension benefits.
It states that family pension will be fixed at 60 per cent of the admissible pension amount. Dearness relief will also be payable on the family pension.
This provision is likely to offer greater income certainty to families compared to the regular NPS structure, where post-retirement income largely depends on annuity products purchased through retirement corpus.
What happens to the NPS corpus?
One of the most important conditions under RNPS relates to the accumulated retirement corpus.
Employees opting for the revised scheme will have to deposit 60 per cent of the lump sum amount withdrawn from their NPS corpus with the Maharashtra government at the time of retirement.
The circular says this amount must be deposited through the Drawing and Disbursing Officer (DDO) into the state government account.
This condition will also apply to employees who retired between March 1, 2024, and the date of the circular, if they later choose to opt for RNPS.
The remaining 40 per cent of the corpus will continue under the annuity arrangement prescribed under NPS rules.
However, the assured pension payable by the state government will be reduced by the annuity amount received by the retiree.
In effect, the state-backed pension will work as a top-up mechanism rather than an entirely separate pension stream.
Rule on premature withdrawals
The circular has also addressed cases where employees may have partially withdrawn money earlier from their NPS accounts.
It states that if any amount was withdrawn previously from the accumulated corpus, the employee will have to repay that amount with 10 per cent interest.
If the repayment is not made, pension under RNPS will be reduced proportionately.
This provision is important because NPS subscribers are allowed partial withdrawals under specified conditions such as housing, education or medical treatment.
No pension for employees who resign
The revised scheme does not extend pension benefits to employees who resign from service before retirement.
The circular clearly states that such employees will only receive regular NPS benefits and will not be eligible for pension under RNPS.
Why this matters
The Maharashtra model reflects a growing demand among government employees for assured post-retirement income, especially amid concerns over market-linked pension volatility under NPS.
At the same time, the state has attempted to balance its fiscal burden by requiring employees to return a large part of the NPS withdrawal corpus and by adjusting pension against annuity income.
The detailed pension disbursement process under RNPS will be notified separately by the Maharashtra government.
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