Fresh central govt, CPSU hiring at 11-month high, shows NPS data

Fresh formal hiring by the central government and the central public sector undertakings (CPSUs) increased for a second month running in January, rising to an 11-month high, showed the latest New Pension Scheme (NPS) data released by the National Statistics Office (NSO) on Friday.

The number of new monthly subscribers under the central component of the NPS increased by 27.2 per cent to 12,349 in January 2023, from 9,705 subscribers in December 2022.

Earlier, 13,112 new subscribers had joined the NPS in February 2022. 

Since the Centre has mandated NPS for all new government jobs, analysts believe that the monthly subscription figures can be considered as a proxy for new employment generation by the central government and CPSUs. 

Of the total 12,349 new subscribers who joined NPS in January under the central government and CPSUs, the share of young subscribers (18-28 years) rose to nearly 70 per cent, from 63.4 per cent in the preceding month.

Besides, the share of new young women subscribers increased 5 percentage points to 30.9 per cent of new young subscribers, whereas those of new young male subscribers decreased to 69.4 per cent, from 74.04 per cent in the given time frame.

However, Mukesh Anand, assistant professor, National Institute of Public Finance and Policy says that the current spike in the new subscribers is not entirely due to the new hirings.  “Generally, towards the end of the financial year, a number of employees tend to take the benefit of tax rebates and other incentives provided in the tier II account under the NPS, which is a voluntary account. Hence, the current spike can probably be attributed to such subscribers, which shows that the NPS can be made attractive with the right incentives,” he added. 

The spike seen in the new subscribers in January under the NPS comes in the wake of the drop seen under the Employee Provident Fund (EPF) in January. The number of new monthly subscribers under the EPF in January had declined to a 20 month low (777,232) from 840,372 in December 2022. 

Union Finance Minister Nirmala Sitharaman on Friday announced that the Centre would set up a committee to review the NPS under the chairmanship of the finance secretary to come up with a solution on the issue of pensions.

“Representations have been received that the NPS for government employees needs to be improved. I propose to set up a committee under the finance secretary to look into the issue of pensions and evolve an approach which addresses the needs of the employees while maintaining fiscal prudence. The approach will be designed for adoption by both central and state governments,” she said while addressing the Lok Sabha.

A few Opposition-ruled states, including Rajasthan, Chhattisgarh, Himachal Pradesh, Jharkhand, and Punjab, have announced a return to the old pension scheme, thereby abandoning NPS, the exact metric cannot be used to gauge the fresh hiring at state level.

Nevertheless, the new subscribers under the state governments having NPS declined by 4.4 per cent to 35,253 in January from 36,871 subscribers in December, thus reflecting the impact of the decision.

Managed by the Pension Fund Regulatory and Development Authority, the NPS is designed on a defined contribution basis, wherein both the subscriber and the employer contribute an equal amount to his/her account. It was made mandatory for all new central government employees from January 1, 2004, except the armed forces and thus the NPS data can be used as a proxy to gauge the number of new jobs created under the Centre.