In a significant shift in pension policy, the Government of Maharashtra has made its revised National Pension System (NPS) optional for employees already covered under the existing framework, according
to a circular released by the state finance department. The move gives lakhs of state government employees the choice to either continue with the market-linked NPS or opt for a revised pension scheme that offers up to 50 per cent of their last drawn salary as pension after retirement.
The decision, outlined in a fresh finance department circular, lays down the rules, timelines and financial implications for those considering a switch.
Who Will Get 50% Salary As Pension?
Under the new circular dated May 6, 2026, employees retiring with 20 years or more of service will be entitled to a pension equal to 50% of their last drawn salary, along with dearness allowance, a major departure from the uncertain returns of the existing NPS.
For those with 10 to 20 years of service, the pension will be proportionate. The government has also ensured a minimum pension of Rs 7,500 per month, provided the employee has completed at least 10 years of service.
This effectively introduces a quasi-defined benefit structure within the NPS framework, something long demanded by employee unions.
Deadline to Opt: December 31, 2026
The option is not open-ended. Eligible employees must choose whether to shift to the revised scheme by December 31, 2026. The circular makes it clear that only those who exercise the option within the stipulated deadline will be covered. Those who do not opt in will continue under the existing NPS rules.
Corpus Adjustment: The Key Trade-Off
While the revised scheme offers pension certainty, it comes with a financial adjustment mechanism. At retirement, employees opting for the revised structure must deposit 60% of their accumulated NPS corpus (received from the PFRDA) with the government, and use the remaining 40% to purchase an annuity.
The annuity income will then be adjusted against the pension payable by the state government.
This effectively means employees give up a large part of their accumulated corpus in exchange for a guaranteed pension stream.
Past Withdrawals? You May Have to Pay It Back
The circular adds a strict compliance clause. According to the circular, employees who have made partial withdrawals from their NPS corpus must refund the withdrawn amount with 10% interest if they wish to opt for the revised scheme. Failure to do so will result in a reduction in pension entitlement.
Family Pension and Gratuity Benefits
The revised scheme also strengthens post-retirement security. Samily pension will be 60% of the admissible pension, along with dearness relief, while retirement gratuity will continue as per earlier orders issued in March 2023.
These provisions bring the revised NPS closer to traditional pension systems in terms of social security coverage.
Who Is Not Eligible?
The benefits are not universal. Employees who resign from service will not qualify for pension under the revised scheme and will continue under the existing NPS framework.
Those with less than 10 years of service will also not be eligible for pension benefits under the revised structure.
Rules To Extend Beyond Core Govt Staff
The provisions will extend beyond core government staff. With suitable modifications, the scheme will also apply to employees of aided educational institutions, agricultural universities, affiliated non-government colleges, and staff of zilla parishads and panchayat samitis.
