Pension Expenditure
Expenditure Intermediateपेंशन व्यय
Definition
Pension expenditure covers the retirement benefits paid to former government employees. Under the Old Pension Scheme (OPS), the government bears the full pension liability. Under the New Pension System (NPS), the government contributes 14% of the employee's gross salary. Pension expenditure is a growing component of committed revenue expenditure.
How Pension Expenditure Appears in India's Budget
Pension expenditure is a significant fiscal burden especially for state governments, where OPS liabilities continue for decades.
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Why Pension Expenditure Matters
Understanding pension expenditure is essential for anyone following government finances, preparing for competitive exams, or analysing India's economic policy. This concept directly affects how the government allocates resources and plans its fiscal strategy.
In the context of India's Union Budget 2026-27, with a total size of Rs 53.47 lakh crore, terms like pension expenditure help citizens and analysts evaluate whether the government is on the right fiscal path. The numbers in the budget are only meaningful when one understands the underlying concepts.
For UPSC aspirants, pension expenditure is frequently tested in both Prelims and Mains, particularly in Paper III (Economic Development). For CA and MBA students, this concept appears in public finance and macroeconomics courses.
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