Tamil Nadu’s latest pension scheme seeks to fill inter-generational gap

The Tamil Nadu Assured Pension Scheme (TAPS) seeks to achieve inter-generational equity, according to a perusal of features of the scheme.

In respect of the Old Pension Scheme, where the government absorbs the entire burden of pension which, inherently, allows a considerable portion of the burden - if not substantial -  to be passed on to future generations as there is no mandatory contribution from the employees. But, under the TAPS, a government employee will bear a portion of the pension that they will get on retirement and after.

The principle of contribution, as a component of any pension scheme, is nothing new, as this element is there in the Contributory Pension Scheme (CPS), which covers nearly six lakh employees of the State government, as also in the National Pension System (NPS) and the Unified Pension Scheme (UPS).

But, beneficiaries of the CPS are given a one-time settlement and it is up to them to invest their money for annuity schemes, offered by insurance companies. Technically, not every CPS beneficiary will get a pension. But, the key feature of the TAPS is the arrangement for the payment of pension. Only when operational guidelines are issued, a complete picture will emerge with finer details of the scheme.

However, the concept of inter-generational equity assumes greater importance in a State such as Tamil Nadu, which, according to demographers, is trailing behind Kerala with respect to the old age dependency ratio. This means that the strength of elders per 100 working age persons is on the rise. The share of senior citizens is projected  to be around 18% of the State’s overall population in 2031 against little less than 11% in 2011. In other words, with about 72% growth, Tamil Nadu is witnessing the fastest rate of ageing among all the States.

The subject of the growing population of elders in the country was raised by Cabinet Secretary T.V. Somanathan in September 2023. while delivering the S. A. Hariharan memorial lecture in Chennai.  At that time, he was the Finance Secretary at the Union government.  Pointing out that India’s population growth was tapering off, he said “what is not very well known is that there are fewer children in schools than ten years ago. Certain levels of population are declining.” He went on to say that many schools would have to be closed down. Though there was no direct reference in his words to Tamil Nadu, the message was quite clear and obvious for the State.