Guaranteed pension, mandatory contribution: Decoding Tamil Nadu’s Assured Pension Scheme

The Tamil Nadu government has replaced its 23-year-old Contributory Pension System (CPS) with a new assured pension framework, announcing the Tamil Nadu Assured Pension Scheme (TAPS) for state government employees and teachers. 

Chief Minister M K Stalin said the new scheme restores the core benefits of the Old Pension Scheme (OPS) while retaining employee contributions similar to the National Pension System (NPS). Under TAPS, eligible employees will receive an assured pension equal to 50% of their last-drawn basic pay plus dearness allowance (DA). 

Who will benefit and from when? 

TAPS will apply to Tamil Nadu government employees who retire on or after January 1, 2026, and to all new employees joining state service from that date. However, the scheme will become operational only after the government notifies detailed rules and completes statutory and accounting formalities. 

Key features of TAPS 

• Assured pension: Employees will receive 50% of their last-drawn basic pay and DA as monthly pension. 
• Employee contribution: Employees will contribute 10% of their monthly salary to the pension pool, while the remaining cost will be borne by the state government. 
• DA parity: Pensioners and family pensioners will receive DA hikes every six months, in line with serving government employees. 
• Family pension: In the event of a pensioner’s death, 60% of the pension amount will be paid as family pension. 
• Gratuity benefits: Gratuity will be paid based on qualifying service, subject to a maximum ceiling of ₹25 lakh. 
• Death benefits: If an employee dies while in service or at the time of retirement, death gratuity up to ₹25 lakh will be provided. 
• Minimum pension: Employees retiring without completing the qualifying service period will still be eligible for a minimum pension. 
• Compassionate pension: Employees who joined under CPS and retired without a pension before TAPS implementation will receive a special compassionate pension. 

Mandatory coverage 

TAPS will be mandatory for all eligible employees joining service from January 1, 2026. Employees governed by CPS who retire on or after that date will also be covered, subject to the rules to be notified. 

Employees covered under TAPS will be allowed to commute a portion of their pension at retirement, under conditions to be prescribed by the government. 

Fiscal impact 

The Tamil Nadu government estimates it will need to provide an additional ₹13,000 crore to the pension fund initially and bear an annual expenditure of around ₹11,000 crore as its contribution. 

The government said detailed rules, eligibility conditions and operational guidelines for TAPS will be notified separately.