New Pension Scheme(NPS) Vs Old Pension Scheme(OPS)

New Pension Scheme(NPS) Vs Old Pension Scheme(OPS)

Various questions asked in Parliament regarding Old and New Pension Schemes on 10th August 2018 and the Minister replied for the questions are given below…

GOVERNMENT OF INDIA MINISTRY OF FINANCE LOK SABHA

UNSTARRED QUESTION NO: 4075 ANSWERED ON: 10.08.2018

Reintroduction of Old Pension Scheme

RAKESH SINGH 

Will the Minister of FINANCE be pleased to state:-

(a) the details of drawbacks of the New Pension Scheme (NPS) introduced for the Government officials; (b) whether the NPS is not as beneficial monetarily as the Old Pension Scheme (OPS) and if so, the details thereof; (c) whether the Government employees are disgruntled with the NPS and if so, the details thereof; and (d) whether the Government proposes to reintroduce the OPS replacing the NPS, if so, the details thereof and the action taken by the Government in this regard?

Also read: New Pension System (NPS) – NC JCM Staff Side

ANSWER

 The Minister of State in the

 Ministry of Finance

(a) & (b) National Pension System (NPS) has been designed giving utmost importance to the welfare of the subscribers. Government has made a conscious move to shift from the defined benefit pension scheme to defined contribution pension scheme i.e. NPS, due to rising and unsustainable pension bill. There are a number of benefits available to the employees under NPS. Some of the benefits are enlisted below:

• NPS is a well designed pension system managed through an unbundled architecture involving intermediaries appointed by the Pension Fund Regulatory and Development Authority (PFRDA) viz. pension funds, custodian, central record keeping and accounting agency, National Pension System Trust, trustee bank, points of presence and Annuity service providers. It is prudently regulated by PFRDA which is a statutory regulatory body established to promote old age income security and to protect the interest of subscribers of NPS.

• The pension wealth which accumulates over a period of time till retirement grows with a compounding effect. The all-in-costs of the institutional architecture of NPS are among the lowest in the world.

• Contribution made to the NPS Tier-I account is eligible for tax deduction under the Income Tax Act, 1961. An additional tax rebate of Rs.50000 is also allowed for contributions made to NPS Tier-I under Section 80CCD (1B) of the Income Tax Act, 1961.

• Subscribers can withdraw up to 25% of their own contributions before attaining age of superannuation, subject to certain conditions. Further, PFRDA vide “PFRDA (Exits and Withdrawals under the NPS) (First Amendment) Regulations, 2017” dated 10.08.2017 has liberalized norms for partial withdrawals which also include reduction of requirement of minimum years of being enrolled under NPS from 10 years to 3 years from the date of joining. • PFRDA has increased the maximum age limit from 60 years to 65 years for joining NPS-All Citizen Model and Corporate Sector Model, vide “PFRDA (Exits and Withdrawals under the NPS) (Second Amendment) Regulations, 2017” dated 06.10.2017.

• PFRDA vide “PFRDA (Exits and Withdrawals under the NPS) (Third Amendment) Regulations, 2018” dated 02.02.2018 has facilitated easy exit & withdrawal in case of disability and incapacitation of the subscriber covered under NPS. • Transparency and Portability is ensured through online access of the pension account by the NPS subscribers, across all geographical locations and portability of employments.

Also read: Defined Contribution Pension Scheme (NPS) – Salient Features)

(c) & (d) Representations have been received which inter alia also include the demand that the Government may revert to old defined benefit pension system. However, due to rising and unsustainable pension bill and competing claims on the fiscal, there is no proposal to replace the NPS with old pension scheme in respect of Central Government employees recruited on or after 01.01.2004.

Authority: https://loksabha.nic.in/

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NPS Subscribers: Submit FATCA Self-Certification through Online

NPS Subscribers: Submit FATCA Self-Certification through Online

Foreign Account Tax Compliance Act (FATCA) and Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI)

Ministry of Finance 

Pension Fund Regulatory and Development Authority prescribes New NPS Subscriber Registration Form – Additional Mandatory Requirements

Pension Fund Regulatory and Development Authority (PFRDA) has been established by the Government of India for regulation and development of Pension Sector in order to protect the old age income security of subscribers. PFRDA takes various initiatives from time to time in order to simplify and improve the operational issues in National Pension System (NPS) like new functionality development under NPS architecture, simplification of account opening, withdrawal, grievance management etc. In this regard, it has been decided by the Authority to make bank account details and mobile no. mandatory to provide ease of operation for the benefit of subscribers and make the process of Exit from NPS hassle free.

Further, in compliance with the Prevention of Money Laundering Act guidelines issued by the Government of India, Foreign Account Tax Compliance Act (FATCA) and Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI) have been made mandatory for new as well as existing subscribers. These have been made mandatory in the new Common Subscriber Registration Form (CSRF) forms that are required to be filled in by the new subscribers. The existing subscribers have been provided the facility to submit online FATCA Self-Certification in their login (www.cra-nsdl.com or https://enps.karvy.com/Login/Login ). The information regarding the said functionality is also made available on Central Record-keeping Agency (CRA) websites. The steps to be followed by the subscriber to submit online FATCA self-certification are also mentioned on the website.

It is to be ensured by the subscribers to fill the mandatory fields correctly and not leave them blank in order to avoid rejection of their forms.

How to know your FATCA Compliant Status – Click here

FATCA Self Declaration Format – Click here

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NPS Subscribers: Know your FATCA Compliant Status

NPS Subscribers: Know your FATCA Compliant Status

Click here to Know your FATCA Compliant Status 

Online Submission of FATCA Self-Certification

Subscribers registered on or after July 1, 2014 are mandatorily required to submit FATCA Self–certification

Please follow the steps given below for online Self-Certification:

• Log-in to your NPS account (please visit www.cra-nsdl.com)
• Click on sub menu “FATCA Self-Certification” under the main menu “Transaction”
• Submit the required details under “FATCA/CRS Declaration Form”
• Click on “Submit”
• You are requested to read and tick “Declaration & Authorization by all customers”
• Click on “Confirm”
• Enter OTP received on your registered mobile number.
• After Authentication through OTP, Acknowledgment for the completion of FATCA Self-certification will be displayed.

You are requested to provide Online Self-certification even if you have submitted /sent the physical Self-Certification form to CRA.

Kindly note, you are required to submit physical FATCA Self-certification form to your Nodal Office or CRA if your Birth Place, Citizenship and Residence for the Tax Purposes is other than India or you are an US person. The format of the self-certification is provided in below link.

FATCA Self Declaration Format

The form is required to be submitted to Central Recordkeeping Agency (CRA) for NPS at the following address:

NSDL e-Governance Infrastructure Limited, 

1st Floor, Times Tower, Kamala Mills Compound, Senapati Bapat Marg, 

Lower Parel, Mumbai – 400 013

In case you require any clarification or assistance with respect to the above, please contact Ms. Ranjana Chavan / Ms. Mamta Jadhav at 022-40904242.

Please mention “Self-Certification – FATCA/CRS Declaration Form” on top of the envelope

Self-induced contribution (Voluntary and Tier II) and Withdrawal will not be allowed in the CRA system for FATCA non-compliant Subscribers.

Authority: https://www.npscra.nsdl.co.in/

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Scrapping of New Pension Scheme

Scrapping of New Pension Scheme

Representations have been received regarding the implementation of National Pension System (NPS) which, inter alia, include demand that NPS may be scrapped and the Government may re-introduce old defined benefit pension system.

Government has made a conscious move to shift from the defined benefit pay-as-you-go pension scheme to defined contribution pension scheme, now called as National Pension System (NPS), after considering the rising and unsustainable pension bill. The transition also has the added benefit of freeing the limited resources of the Government for more productive and socio-economic sectoral development.

There is no proposal to replace the NPS with old pension scheme in respect of Central Government employees recruited on or after 01.01.2004.

(e): National Pension System (NPS) had been designed giving utmost importance to the welfare of the subscribers. There are a number of benefits available to the employees under NPS. Some of the benefits are enlisted below:

• NPS is a well designed pension system managed through an unbundled architecture involving intermediaries appointed by the Pension Fund Regulatory and Development Authority (PFRDA) viz. pension funds, custodian, central record keeping and accounting agency, National Pension System Trust, trustee bank, points of presence and Annuity service providers. It is prudently regulated by PFRDA which is a statutory regulatory body established to promote old age income security and to protect the interest of subscribers of NPS. • Dual benefits of Low Cost and Power of Compounding- The pension wealth which accumulates over a period of time till retirement grows with a compounding effect. The all-in-costs of the institutional architecture of NPS are among the lowest in the world. • Tax Benefits- Contribution made to the NPS Tier-I account is eligible for tax deduction under the Income Tax Act, 1961. An additional tax rebate of Rs.50000 is also allowed for contributions made to NPS Tier-I under Section 80CCD (IB) of the Income Tax Act, 1961. • Transparency and Portability is ensured through online access of the pension account by the NPS subscribers, across all geographical locations and portability of employments. • Partial withdrawal- Subscribers can withdraw up to 25% of their own contributions before attaining age of superannuation, subject to certain conditions.

The amount of monthly annuity payable to a Government servant on exit from NPS depends upon various factors such as accumulated pension wealth of the Government servant, portion of accumulated pension wealth utilized for the purchase of annuity and the type of annuity purchased.

Under the defined benefit pension system applicable to Government servants appointed before 01.01.2004, pension is calculated based on qualifying service and the last pay drawn by the Government servant.

Authority: Lok Sabha

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Pending issues of Central Government Employees – NC JCM Staff Side

Pending issues of Central Government Employees – NC JCM Staff Side

Shiva Gopal Mishra Secretary

National Council (Staff Side) 

Joint Consultative Machinery 

for Central Government Employees 

13-C, Ferozshah Road, New Delhi – 110001 

E-Mail : nc.jcm.np@gmail.com

No.NC-JCM-2018-CS/PM

April 10, 2018

The Cabinet Secretary, 

Government of India Cabinet Secretariate, 

Rastrapati Bhawan, 

New Delhi.

Sub: Pending issues of Central Government Employees

Dear Sir, 

As you are aware that the Central Government Employees issues particularly review of New Pension Scheme, Minimum Wage and Fitment Formula are pending since long. Its unfortunate that inspite of assurance given by Cabinet Ministers and our pursuation with you time to time has not yilded any result so far. We had deffered the strike on a clear cut assurance but the committees formulated to resolve the issues have not done any thing, with the result creating lot of anguish amoagest Central Government Employees.

It is also unfortunate that inspite of continues persuation the meeting of National Council has also not been fixed gives an impression than no body is serious for resolution of long pending demands of Central Government Employees. The National Council JCM (Staff Side) had tried its level best for a negotiated settlement but unfortunatly could not succed due to willy nilly atitude of Government.

In view of all round dissatisfaction among Central Government Employees it is requested that the above demands could be resolve without further loss of time and meeting of National Council (JCM) should also be convend at an earliest to resolve the other issues submitted as agenda.

Thanking you,

Yours faithfully,

(Shiva Gopal Mishra)

 Secretary

Source: http://ncjcmstaffside.com

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Brief of the meetings held between the Staff Side(JCM) and Official Side

Brief of the meetings held between the Staff Side(JCM) and Official Side

Shiva Gopal Mishra Secretary

National Council (Staff Side)

Joint Consultative Machinery

for Central Government Employees 

13-C, Ferozshah Road, New Delhi – 110001 

E-Mail : nc.jcm.np@gmail.com

No.NC/JCM/2018

Dated: April 10, 2018

The General Secretaries,

 All Constituents Organizations of the JCM(Staff Side)

Dear Comrades,

Sub: Brief of the meetings held between the Staff Side(JCM) and Official Side

Met yesterday, i.e. on 9th April, 2018, with the Secretary(DoP&T), Government of India, Dr. C. Chandramauli, who joined recently, and requested him for holding meetings of the Standing Committee of the NC/JCM and National Anomalies Committee at an earliest. He has promised for the same.

Today, i.e. on 10th April, 2018, met the Cabinet Secretary, Government of India, and handed him over a copy of the enclosed letter.

He said that, the issue of the NPS is under finalization and Secretary(Pension), Government of India, had very recently given presentation. He further said that, there would be some visible changes in the NPS.

On the issue of Minimum Wage and Fitment Formula he once again mentioned that it depends totally on the political call.

So far the issue of non-holding of meetings of the National Council(JCM) is concerned, he said that he would try to hold this meeting very shortly.

This is for your information.

Sincerely Yours, 

sd/- 

(Shiva Gopal Mishra) 

Secretary(Staff Side)

National Council(JCM)

Source: http://ncjcmstaffside.com

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Exemption of Railways from New Pension Scheme (NPS)

Exemption of Railways from New Pension Scheme (NPS)

No.IV/NPS/PFRDA BILL/Part I

Dated: 19/03/2018

Shri Piyush Goyal,

Hon’ble Minister of Railways, 

Rail Bhavan, 

New Delhi

Dear Shri Goyalji,

 Sub: Exemption of Railways from New Pension Scheme (NPS) –reg. 

Ref: (i) Hon’ble MR’s D.O. No. 2012/F(E)III/1/4-Pt dated 29th March 2014 to Hon’ble Finance Minister, Government of India

(ii) Hon’ble MR’s D.O. No. 2012/F(E)III/1/1/4-Pt dated 20th Nov 2015 to the Hon’ble Finance Minister Shri Arun Jaitely.

(iii)NFIR’s letter No. IV/NPS/PFRDA BILL/Part I dated 13th Feb, 2017, 26th Oct, 2017 and 11/12/2017. 

(iv) Railway Board’s letter No. 2012/F(E)/III/1(1)/4-Pt dated 13/02/2018 to GS/NFIR.

Kind attention is invited to the correspondence cited under reference, latest being Railway Board’s reply received vide letter dated 13/02/2018 wherein the Federation has been conveyed that the Hon’ble Minister of Finance and Corporate Affairs has communicated that the matter was re-considered in consultation with Pension Fund Regulatory and Development Authority (PFRDA) and the request for exempting Railway employees appointed on or after 01/01/2004 from the application of NPS does not seem to be a feasible proposition. While NFIR does not agree with the reply of Hon’ble Finance Minister, the Federation re-iterates the valid points placed below, urging upon the Railway Ministry to impress upon the Government, the need for exempting Railways from “National Pension System (NPS).

The Ministry of Finance and the Pension Fund Regulatory and Development Authority (PFRDA) have failed to appreciate the facts that the nature of duties performed by the Railway employees is un-comparable, unique, complex, hazardous and akin to the duties being performed by the Armed Forces, in whose case the NPS has not been made applicable.

The Finance Ministry has also failed to appreciate that even during the British rule the Indian Railways was conceived and operated as an auxilary wing of the Army by virtue of its complex nature of role and uniqueness of working of Railway employees which in turn requires a high degree of discipline, efficiency to run the services and carry passenger and freight traffic throughout the country including supplies to the borders of the nation.

The Finance Ministry has also failed to evaluate that it is the Indian Railways which works as supply line to the Armed Forces during crisis periods by transporting troops from one corner to the other including the nation’s borders besides transporting Military hardware and other war material. In no way the performance of Railway employees can be underestimated than that of the Defence Forces Personnel.

Like Armed Forces, many of the Railway Personnel do stay away from their families for longer durations in the course of performing duties at remote places where minimum basic amenities like suitable accommodation, schooling, drinking water, health care facilities have been missing. Comparing the structure and importance of Railways with that of the Army, it would not be out of place to state that just as the “Army requires a critical mass to fight battle/war, in similar way critical mass of trained employees is required to maintain Railway Tracks, Rolling Stock and ensure operation of services”. On an average over 700 Railway employees die per annum while performing their duties and nearly 3000 employees sustain injuries as reported by High Level Safety Review Committee (HLSRC) headed by Shri Anil Kakodkar. The sacrifices of Railway employees are unparallel.

Considering the strong merits in the demand of the Federation, Hon’ble MRs have written to the Minister of Finance to have a re-look into the case to be considered favourably to exempt Railways from the ambit of National Pension System (NPS)

Federation desires to mention that the Finance Ministry has erred and equally not considered the justified demand of the Railway employees projected by NFIR, perhaps applying different logic and ignoring the facts mentioned above. In this connection, NFIR reminds that the Federation leaders in the meeting held on 09th February, 2018 at Rail Bhavan, New Delhi had specifically requested the Hon’ble MR to kindly reach the Hon’ble Prime Minister for getting Railways exempted from the application of National Pension System (NPS). It is a known fact that the NPS has generated lot of anger and anguish among the younger generation of Railway employees appointed on or after 01/01/2004 due to the inherent disadvantages of the NPS which does not guarantee even minimum pension i.e. half of the last pay drawn by the Railway employees.

NFIR, therefore, once again urges upon the Hon’ble MR to kindly take steps for reaching the Hon’ble Prime Minister for getting exemption of Railways from NPS at an early date.

With regards,

Yours sincerely,

(Dr. M.Raghavaiah)

 General Secretary.

Source: NFIR

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Grant of Minimum Guaranteed Pension under NPS – BPMS

Grant of Minimum Guaranteed Pension under NPS – BPMS

Grant of Minimum Guaranteed Pension under NPS

The Central Government had introduced the National Pension System (NPS) with effect from 1 January, 2004 (except for armed forces). During the budget session of 2003-2004 the Government announced introduction of the “New Defined Contribution Pension Scheme” then known as the New Pension Scheme. It was formally notified vide Ministry of Finance, Department of Economic Affairs letter dated 22-12-2003. Later, it was adopted by various State Governments and Central and State Public Sector Corporations.

Upto 28.02.2018, the total figure of subscribers of NPS working in Central Government Establishments/ Offices including Public Sector Undertaking has reached to 19,12,871 with a corpus of Rs 61,145.65 crore and in State Governments Establishments/ Offices including respective Public Sector Undertaking, it has reached to 38,21,266 with corpus of Rs. 86,897.31 crore.

The above mentioned Scheme was made operative since 01.01.2004 without any concrete instructions and with passage of time, Govt has been trying to develop a system regarding its functioning. But the future as well as retiremental security (Social Security) of the employees is at stake without guarantee of Minimum Pension under the Scheme.

This Federation has been consistently demanding that Government should frame a policy to ensure that irrespective of the financial/market conditions at the time of Retirement of the subscriber under NPS, he should get a guaranteed minimum pension equivalent to 50% of his last drawn Basic Pay plus Dearness Relief for neutralization of price rise.

A resolution to this effect was also passed in the CEC Meeting held at Hyderabad during September 2015 and subsequently several correspondence have also occurred. However, in spite of lapse of such a large time, no tangible action is seen from the Government side on the issue.

After having deliberated the issue in details, the Central Executive while recording its displeasure over the absence of action on the part of the Government on such an important issue, hereby calls upon the Government to immediately notify the subject issue.

This resolution is being passed in the Central Executive Committee held at Dehu Road (Pune) on 28/03/2018.

Source: PBMS

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Guidelines on CGHS benefits to Central Govt. employees (service/retired) covered under NPS

Guidelines on CGHS benefits to Central Govt. employees (service/retired) covered under New Pension Scheme

S.11011/10/2012-CGHS(P)/EHS 

Government of India 

Ministry of Health and Family Welfare 

EHS Section

Nirman Bhawan, New Delhi 

Dated the 28 March, 2017

Office Memorandum

Sub: Guidelines on “CGHS benefits to Central Govt. employees (serving/retired) covered under New Pension Scheme”-reg

The undersigned is directed to say that the matter regarding extension of CGHS facilities to Central Govt. employees (serving/retired) covered under New Pension Scheme (NPS) was under examination in this Ministry.

2. The matter has been examined in this Ministry in consultation with Department of Expenditure and Department of Pension & Pensioner’s Welfare and the guidelines for NPS subscribers to be eligible for CG HS facilities are as follows:

(a) Minimum years of qualifying service for eligibility of CGHS membership after retirement- 10 years.

(b) No minimum qualifying years Of service for availing CGHS facilities in case of death/disability.

(c) In case of absorption into AB/SB’s, NPS subscribers can avail CGHS after their retirement only if the SB/AB where they were absorbed is covered for their retired employees, subject to condition (a) above.

(d) In case of deputation to AB/SB’s, no CGHS coverage till such period of deputation continues unless the entity to where the employee has been transferred is covered by CGHS.

(e) Status-quo to be maintained for‘serving NPS subscribers subject to conditions at (c) and (d) above.

(f) Other conditions such as definition of family, CGHS contributions, conditions of dependency etc will be applicable as per existing rules.

3. This issues with the approval of the Competent Authority.

sd/- 

(Sunil Kumar Gupta) 

Under Secretary to the Government of India

Authority: www.cghs.gov.in Original 

Link: http://cghs.gov.in/showfile.php?lid=4919 

Download Link: Guidelines on CGHS Benefits to Central Government Employees covered under NPS

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Interest Rate on EPF

Press Information Bureau 

Government of India

Ministry of Labour & Employment 

Interest Rate on EPF 

The Minister of State for Mines, Steel and Labour and Employment, Shri Vishnu Deo Sai has said that the government has declared 8.75% interest on Employees’ Provident Fund (EPF) for the year 2013-14. 

In a written reply in the Lok Sabha today, Shri Vishnu Deo Sai has said that return on EPFO fund cannot be compared with return on other Pension Schemes like New Pension Scheme (NPS). The declaration of the return on NPS is on the basis of the accounting policy prescribed by NPS which allows the Net Assets Value (NAV) to be declared on the basis of current market value of the investments, while EPFO follows the cost value of the investment for accounting its investment and return is declared on the basis of actual receipt of interest on the investments. The return on EPFO investments is fixed whereas the return on NPS is not fixed and fluctuates on daily basis depending on the prevailing market conditions. 

The Minister said that presently the funds of EPFO are invested as per the pattern of investment notified by the Government in November, 2013 wherein only investments in corporate debt and Government bonds are allowed. There is no provision for investments in equities. 

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FAQ regarding New Pension Scheme in Ordnance Factories

OFFICE OF THE PRINCIPAL CONTROLLER OF ACCOUNTS(FYS)
10-A, S K BOSE ROAD. KOLKATA – 700001

NPS Section

Questionnaire regarding New Pension Scheme :-

1.What is New Pension Scheme ?

   A new defined contribution pension system in place of existing defined benefit system, applicable for fresh entrants to Central Government Service from 01-01-2004.

2. When it is started & for whom ?

   The system is mandatory for all new recruits to the Central Government Service from 01-01-2004 except the Armed Forces.

3.What is the quantum of the Contribution ?

   The monthly contribution to be deducted amounts to 10% of the Basic Pay, Grade Pay and DA to be paid by the employee & matched by the Central Government.

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Clarification regarding rule position for payment of gratuity to the employees covered under New Pension Scheme.

No.7/2/2013-P&PW(F)
Government of India
Ministry of Personnel, PG & Pensions
Department of Pension &Pensioners Welfare
(Desk-F)

3rd Floor, Lok Nayak Bhavan,
NewDelhi- 10003
Dated the 15th October, 2013

Office Memorandum

Subject : Clarification regarding rule position for payment of gratuity to the employees covered under New Pension Scheme

   The undersigned is directed to refer to Ministry of Defence OM.No12(15)/2013-D(Civ.II) dated 12.7.2013 & 26.9.2013 on the subject noted above and to say that the provision of CCS(Pension) rules are not applicable to government servants appointed on or after 1.1.2004. This department is in the process of framing rules on New Pension scheme.

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PENSION BILL OR PENSIONLESS BILL? - Confederation News.

   Finally the ruling Congress party and the main opposition Party BJP joined together and passed the  Pension Fund Regulatory and Development Authority (PFRDA) Bill in the Parliament. In the year 1982 on 17th December, the Constitution Bench of the Supreme Court consisting of Justice (s) Y. B. Chandrachud, V. D. Tulzapurkar, O. Chinnappa Reddy. D. A. Desai and Bahrul Islam delivered the historic judgment on pension in the D. S. Nakara case, which declared as follows:

   “(i) Pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer and it is Fundamental right (ii) Pension is not an ex-gratia payment, but it is payment for past service rendered (iii) It is a social welfare measure rendering socio-economic justice to those who in the heyday of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in lurch.”

   After 30 years, the bill passed by Parliament categorically proclaims that the Contributory Pension Scheme introduced w.e.f 01.01.2004 will not give any guarantee for a minimum pension of 50% of the pay drawn at the time of retirement of the employee. Nor does it provide for the protection of the family members in the form of family pension in the event of death. New pension is going to make the social security uncertain and dependent on market forces. Government compulsorily imposed the scheme on one section of the employees in a most discriminatory manner, inspite of the fact that such scheme had been a failure in many countries including Chile, U K and even in USA. In USA the entire pension wealth (fund) has been wiped out leaving no pension due to the economic recession and share market crash. In Argentine the contributory scheme which was introduced at the instance of IMF was replaced with the defined benefit pension scheme. In majority of the countries “pay as you go” is the system of pension.

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Option to defer Annuity purchase under NPS at the time of exit.

CIRCULAR

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

PFRDA/ 2013/14/ PDEX /9

September 17, 2013

To,
All Govt depts./PAO’s/DDO/ POP’s, CRA & other stakeholders

Dear Sir/ Madam,

Sub: Option to defer Annuity purchase under NPS at the time of exit

   As per the Exit guidelines of PFRDA for National Pension System (NPS) subscribers, a subscriber on attaining the Normal Retirement Age (applicable to Govt. sector subscribers) or upon attaining 60 years – is required to compulsorily annuitize at least 40% of your pension wealth and the remaining 60% can be withdrawn as a lump sum. Also, a subscriber wishing to exit from NPS before the normal retirement age or before attainment of 60 years is allowed to exit subject to the condition that a minimum of 80% of accumulated pension wealth needs to be mandatorily utilized for purchase of annuity that provides for the monthly pension to the subscriber.

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Additional Relief on death/disability of Government Servants covered by the Defined Contribution Pension System (NPS).

1(7)1/DCPS(NPS)/2009/TA/295
MINISTRY OF FINANCE
DEPARTMENT OF EXPENDITURE
CONTROLLER GENERAL OF ACCOUNTS
7th FLOOR, LOK NAYAK BHAWAN
NEW DELHI

Corrigendum

Dated: 27/05/2013

Sub:- Additional Relief on death/disability of Government Servants covered by the Defined Contribution Pension System (NPS)

   Reference is invited to this office OM No.1(7)/DCPS (NPS)/2009/TA/221 dated 02.7.2009 on the above mentioned subject. The existing para No. 3(xix) of the above OM has been substituted by the following:-

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Fixed Medical Allowance to railway beneficiaries of New Pension Scheme drawing additional relief on death /disability of railway servants.

GOVERNMENT OF INDIA
MINISTRY OF RAILWAYS
(RAILWAY BOARD)

No. PC-VI/ 311  
No. PC-V/2010/A/Med./1

RBE No. 05/2013. 
New Delhi, dated 22-01-2013.

The General Manager
All Indian Railways & Pus
(As per mailing list)

Sub:- Fixed Medical Allowance to railway beneficiaries of New Pension Scheme drawing additional relief on death /disability of railway servants.

   The Fixed Medical Allowance (FMA) is granted,to Railway pensioners/family pensioners in terms of instructions, contained in Board’s letter dated 21-4-99, 1-3-2004 and subsequent clarifications issued from time to time.

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Procedure for refund of money Deposited to GPF Account or Suspense Head of Account in respect of the Officers of All India Services covered under New Pension Scheme.

Government of West Bengal
Finance Department
Audit Branch
Writers’ Buildings, Kolkata-700 001.

No.10263.-F(y)

Kolkata, the 18th December, 2012.

MEMORANDUM

Sub:- Procedure for refund of money Deposited to GPF Account or Suspense Head of Account in respect of the Officers of All India Services covered under New Pension Scheme.

   This Department vide Notification No.1069-F(Y) dated 03.02.2012 prescribed the procedures for the implementation of the ‘New Pension Scheme’ [NPS] of the Government of India applicable for the All India Service [AIS] Officers borne on West Bengal Cadre on or after 01.01.2004.

   In paragraph 1(c) of the said Notification it was stated that “On amendment of the All India Service (Death cum Retirement Benefit) Rules, 1958 and the All India Service (Provident Fund) Rules, 1955,the benefits of the Defined Benefit Pension and General Provident Fund shall not be available to the new recruits. The AIS Officer who is covered under NPS but so far Contributed to General Provident Fund/or any other fund or account, his entire contribution to the General Provident Fund Accounts/ or any other fund or account shall be refunded to him by the concerned DDO in consultation with the DTA and Office of the Pr, A.G.(A&E) WB and that amount may be deposited by the concerned AIS Officer for payment of backlog Contribution to the NPS.”

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Frequently Asked Questions on New Pension Scheme.

1. What is the New Pension System (NPS)?

   The NPS is a new contributory pension scheme introduced by the Central Government for employees joined in Government Service on or after 1.1.2004. During the year 2009, the NPS was kept open for public.

2. Who is covered by the NPS?

   a. Employees who have joined central government service on or after 01 January 2004 including Railways, Posts, Telecommunication or Armed Forces (Civil), Autonomous Body, Grant-in-Aid Institution, Union Territory or any other undertaking whose employees were eligible to a pension from the Consolidated Fund of India., earlier.

   b. This contribution pension scheme is also open to any Indian citizen between the age of 18 and 55.

3. I am covered by the NPS. Can I contribute to the GPF?

   No. The General Provident Fund ( Central Service) Rules, 1960 is not applicable for employees covered by NPS.

4. I Am covered by the NPS. Am I eligible to Gratuity?

   No. You will not be eligible to Gratuity.

5. How does the NPS work ?

   When you join Government service, you will be allotted a unique Personal Pension Account Number (PPAN). This unique account number will remain the same for the rest of your life. You will be able to use this account from any location and also if you change your job. The PPAN will provide you with two personal accounts:

   1. A mandatory Tier-I pension account, and

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Kerala to introduce contributory pension scheme for government staff.

   The employees would be required to contribute 10 per cent of their pay and dearness allowance to the pension fund. The government would also make a contribution to the fund.

   The government has issued orders approving, in principle, the proposed contributory pension plan for government employees. The plan is proposed to apply to new recruits joining service from next year.

   The employees would be required to contribute 10 per cent of their pay and dearness allowance to the pension fund. The government would also make a contribution to the fund.

   Pensions would be available to employees who contribute to the fund for a specified number of years. Payment of full pension by government would be discontinued.

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Comparison between New pension scheme, Insurance (ULIP Based) & Mutual Fund Pension Plans.

Any central government employee who joined the department after 01/01/2004 are already included in the New Pension Scheme. Those who joined before
01/01/2004 can join the New Pension Scheme from any POP-SP (eg Head Post Offices).

View
A guide to New Pension Scheme.

NPS Costs:

What are the costs involved?

 

Transacting in NPS attracts both fixed and variable cost, which is deducted from the fund value.

Fixed cost:

• One-time account opening cost and issuance of PRAN – Rs 50

• Initial subscriber registration and contribution upload –Rs 40; Future fixed upfront charges – Rs 20.

• Annual maintenance charges – Rs 350

• Each transaction of NPS – Rs 10 The fixed cost adds up to Rs 470 per year.

Variable cost:

• Annual custodian charge - 0.0075-0.05 per cent of the fund value

• Annual fund management charge - 0.0009 per cent of the fund value

Advantages of NPS:

1. Cost - NPS is the cheapest among current retirement products and defined contribution schemes; It is also easy to transact in NPS.

2. Flexibility – The subscriber is given a PRAN, which will remain with him for forever. The account is portable irrespective of change in
job/location.

3. Returns - The returns would be higher than traditional debt investments (such as post-office schemes, bank deposits etc) due to equity element in
the investment.

Disadvantages of NPS:

1. Taxability - The contributions get tax benefit under Section 80C. However, at the time of withdrawal, the lump sum would be taxable as per the
individual’s tax slab. It is a case of EET (exempt on contributions made, exempt on accumulation, taxed on maturity) unlike EPF, PPF which are EEE
(exempt, exempt, exempt).

2. Comparison to mutual funds - Since the NPS is meant for retirement and financial security, it does not permit flexible withdrawals as are possible
in the case of mutual funds.

3. Returns - If an individual is voluntarily investing in NPS, then he/ might as well invest in the stocks or mutual funds (MF). It is the tax benefits
that would make NPS an edge above other pension products.

comparison between the New pension scheme, Insurance Pension Plan (ULIP Based) and Mutual Fund Pension Plan.

NPS the cheaper and Tax Friendly Alternative:

	NPS	Insurance Plans (ULIP Based)	Mutual Fund Pension Plan
Investment amount per year	100000	100000	100000
Charges per Year (Initial Period)	925	13200	1250
Charges per year (5 Years to 10 years)	388	6000	1250
Charges per year (11 years to 15 years)	455	3000	1250
charges per year (16 years)	455	0	1250
Fund Management	0.0009 %	1.25 %	1.25 %
Age limit for annuity	60	Flexible	58
Assume CAGR	10 %	10%	10%
Maturity proceeds after 30 years	1.8 Crores	1.3 Crores	1.39 Crores
Lump sum (Max)	60 %	33%	0-100%
Pension Corpus (Min)	40%	67%	0-100%

NPS being the option with the lowest costs eats into the investments the least and hence delivers the highest returns
.

The draft of the much awaited Direct Tax Code, which is expected to bring about a consolidation of the current tax laws and also effect some changes in
the tax laws, has recently been made public.

With the drafts of the Direct Tax Code, there seems to be a decided push for making the NPS product more attractive to investors. The major change that
the DTC will bring about in the retirement products scenario is that ULIPs will now also be taxed under the EET (Exempt-Exempt-Tax) Regime. This means
that unlike in the current scenario, withdrawals from ULIPs will not be tax exempted. It has long been seen in the Indian investments market that the
behavior of the retail investors is largely


guided by tax concerns. There is always a rush to invest in order to save on tax. ULIPs had an advantage over the NPS and mutual funds because it was
taxed as EEE. This means that the withdrawal and is tax free too. Surely this is a major plus, but with the provisions in the new Direct Tax Code, the
NPS will also be taxed in the EEE framework. This will invert the tax situation among retirement products with investment benefits.

NPS will be the only product to be taxed under EEE out of the three (Mutual Funds, ULIPs and NPS).

As a result, its major handicap will now be removed. The government has designed the NPS to benefit the investor to the maximum and the new taxation vis-a-vis the NPS will only add to the attractiveness of NPS.

Conclusion:



NPS remains a very good product for its purpose and by aligning the distributors` interests with the PFMs would greatly help the NPS increase its
strike rate. Re-iterating that NPS is a post-retirement safety tool,


it is a very effective tool that covers capital protection and also provides growth. With its lowest charges, it also is the cheapest way to get an
exposure to the market. For the thousands and lakhs of employees in


the unorganized sector who have negligible or no post-retirement social security benefits, NPS is a boon.

Author: Rajesh Krishnamurthy.

The author is managing director (MD) of iFAST Financial India

Any Queries related to New Pension Scheme ?


ask here @ http://www.postalqueries.blogspot.com

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