Union Budget 2024 represents a medley of provisions empowering the commoner, complete with critical elements impacting his savings and investments.

The Finance Minister, who has upped levies on capital gains, has helped draw the market’s attention to key aspects like holding periods, unlisted securities, indexation — all relevant factors for the new-age investor. While many quarters have already waxed eloquent on tax rates, the cynosure of all eyes, allow me to underscore a few relatively divergent issues, beginning with pension.

The point is that New Pension Scheme, or NPS, will be fine-tuned to make it more impactful. The deduction of expenses by an employer towards the scheme will be increased to 14 per cent from 10 per cent of an employee’s salary. Moreover, deduction of this expenditure up to 14 per cent of salary (from income of a private-sector employee) under the new tax regime has been proposed. Employees of public sector corporations, including state-controlled banks, will be covered by this too.

Pension punch

NPS, in fact, finds a categorical mention in the FM’s speech, the significance of which will not be lost on pension reformists. The committee empowered to review NPS, the FM has stated, has achieved “considerable progress”. Indeed, this will have an overbearing impact on fiscal prudence as many challenging issues are involved. It is well known that the country bears a heavy pension bill; further, there is a shrill call from some sections to revert to the old system of retirement benefits.

Pension has been also assigned greater importance in terms of higher deduction on family pension (with reference to personal income tax). The Budget has specified that such deduction will be stepped up to Rs 25,000 -- a neat increase of Rs 10,000. This, the FM has pointed out, will support about four crore salaried individuals (considering a proposed 50 per cent increase in their standard deduction) and pensioners. Measures such as these will pave the way for further pension reforms, it is felt.

Pensions, I must mention, could have been given a longer rope this time by the authorities. A number of critical matters have lately come up on the social security and retirement front. Some of these need immediate attention.

The fact is that there are many inadequacies in the social security space. For a country like ours -- with very large unorganised segments, population dynamics, higher longevity, greater dependancy -- the need for pension reforms cannot be overemphasised. The recent Economic Survey and a number of policy proposals have referred to such matters (repeatedly, I must say), especially in the context of rural India. The Budget could have rooted for continuity in a more specific and emphatic manner.

The FM has also sought to omit references to initiatives taken recently by the pension regulator. A few crucial steps are still expected in the coming quarters.

These, one hopes, will provide sufficient succour to the common man in need of post-retirement relief. One or two measures to introduce new savings options could have been taken too. No specific effort to harness long term pension assets was noticed this time. The government, which has taken a slew of development measures on infrastructure, could have adopted a more positive stance in this Budget.

However, a delightful silver lining appears in the shape of “NPS Vatsalya”, a proposal made available to parents who wish to invest on behalf of their progeny. From childhood to adulthood, an individual’s journey is often long and challenging — proper investments by seniors in the family are perhaps one of the ways to ameliorate it.