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Guaranteed Pension under NPS: PFRDA is designing a scheme providing minimum assured returns to NPS subscribers

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY 

B-14/A, Chhatrapati Shivaji Bhawan, Qutab Institutional Area, 

Katwaria Sarai, New Delhi-110016

File No. PFRDA/16/3/29/0081/2017-REG-PF

Date: 13th February,2019

To

Shri C.SriKumar

General Secretary

All India Defence Employee’s Federation

S.M.Joshi Bhavan,Survey No.81,

Dr.Babasaheb Ambedkar Road,

Khadki, Pune – 411 003

Subject: Guaranteed Pension to the Central Government Employees governed under NPS – reg.

Dear Sir,

We refer to your letter No.94/1094/NPS/AIDEF/19 dated 1st February,2019 regarding subject mentioned above.

2. In this regard, we inform that the Authority is in process of designing a scheme providing minimum assured returns to the NPS subscribers in terms of Pension Fund Regulatory and Development Authority Act,2013, in consultation with the Pension Funds Actuaries and Financial Sector Regulators. The Proposal is under active deliberation and being workout in best possible way. It is proposed that the final proposal would be put up for stakeholder consultation in our website once the same is ready and feedback would be received from all concerned before finalizing the proposal.

3. The Authority would notify such minimum assured scheme once finalized with the approval of the Government.

4. This is for your information.

Yours sincerely,

(Venkateswarlu Peri)

Chief General Manager

Source: AIDEF

A Reply given by PFRDA :

We informed that the authority is in process of designing a scheme providing minimum assured returns to the NPS Subscribers in terms of pension Fund Regulatory and Development Authority Act, 2013, in consultation with the pension funds, actuaries and Financial Sector Regulators. The proposal is under active deliberation and being workout in best possible way. The authority would notify such under minimum assured returns schemes once finalized with the approval the Government.

The monthly contribution would be 10 percent of basic plus DA to be paid by the Employee and 14 percent of the basic plus DA by the Central Government

AUTHORIZATION OF WITHDRAWALS UNDER NATIONAL PENSION SYSTEM 

CLICK HERE FOR COPY & DETAILS (85 pages)

Ministry of Finance

Withdrawal from New Pension Scheme

Posted On: 08 JAN 2019 5:29PM by PIB Delhi

Government has allowed premature withdrawal from New Pension Scheme Fund. A subscriber is eligible for three partial withdrawals during the period of subscription under National Pension System (NPS), each withdrawal not exceeding twenty-five percent of the contributions made by the subscriber and excluding contributions made by the employer. There is, however, no restriction on withdrawals from the Tier-II account of the subscriber. Further, keeping in view the possibility of sudden financial needs of the subscribers, the requirement of minimum period under National Pension System (NPS) for availing the facility of partial withdrawal from the mandatory Tier-I account of the subscriber has been reduced from 10 years to 3 years from the date of joining w.e.f. 10th August, 2017. The minimum gap of 5 years between two partial withdrawals has also been removed w.e.f. 10th August, 2017.

• Choice of Pension Fund: Central Government subscribers will be allowed to choose any one of the pension funds including Private sector pension funds. They could change their option once in a year. However, the current provision of combination of the Public-Sector Pension Funds will be available as the default option for both existing as well as new Government subscribers. 

• Choice of Investment Pattern: The following options for investment choices will be offered to Central Government employees:

1. Government employees who prefer a fixed return with minimum amount of risk may be given an option to invest 100% of the funds in Government securities (Scheme G).
2. Government employees who prefer higher returns may be given the options of the following two Life Cycle based schemes.
3. Conservative Life Cycle Fund with maximum exposure to equity capped at 25% at the age of 35 years and tapering off thereafter (LC-25). 
4. Moderate Life Cycle Fund with maximum exposure to equity capped at 50% at the age of 35 years and tapering off thereafter (LC-50).

In case an employee does not submit any choice, the existing allocation of funds shall continue as the default option.

Source: https://loksabha.nic.in/

Compare between NPS and OPS ..REAL EXAMPLES

“Minimum period for partial withdrawal has been reduced from 10 years to 3 years from the date of joining w.e.f. 10th August, 2017”

NPS Withdrawal Norms

The Pension Fund Regulatory and Development Authority (PFRDA) has changed the norms for withdrawal of National Pension System (NPS) subscribers. Keeping in view the possibility of sudden financial needs of the subscribers, the requirement of minimum period under National Pension System (NPS) for availing the facility of partial withdrawal from the mandatory Tier-I account of the subscriber has been reduced from 10 years to 3 years from the date of joining w.e.f. 10th August, 2017. The minimum gap of 5 years between two partial withdrawals has also been removed w.e.f. 10th August, 2017.

A subscriber is eligible for three partial withdrawals during the period of subscription under NPS, each withdrawal not exceeding twenty-five percent of the contributions made by the subscriber and excluding contributions made by the employer. There is, however, no restriction on withdrawals from the Tier-II account of the subscriber.

The extent and purpose for which partial withdrawals from the Tier-I account under NPS are permissible are as under:

Purpose (i) for higher education and marriage of his or her children including a legally adopted child;

(ii ) for the purchase or construction of a residential house or flat in his or her own name or in a joint name with his or her legally wedded spouse. In case, the subscriber already owns either individually or in the joint name a residential house or flat, other than ancestral property, no withdrawal under these regulations shall be permitted;

(iii) for treatment of specified illnesses: if the subscriber, his legally wedded spouse, children, including a legally adopted child or dependent parents suffer from any specified illness, which shall comprise of hospitalization and treatment in respect of the following diseases:

(a) Cancer;

(b) Kidney Failure (End Stage Renal Failure);

(c) Primary Pulmonary Arterial Hypertension;

(d) Multiple Sclerosis;

(e) Major Organ Transplant

(f) Coronary Artery Bypass Graft;

(g) Aorta Graft Surgery;

(h) Heart Valve Surgery;

(i) Stroke;

(j) Myocardial Infarction;

(k) Coma;

(l) Total blindness;

(m) Paralysis;

(n) Accident of serious/ life threatening nature.

(o) Any other critical illness of a life threatening nature as stipulated in the circulars, guidelines or notifications issued by the Authority from time to time.

Towards meeting the expenses by subscriber for skill development/re-skilling or for any other self-development activities.

Towards meeting the expenses by subscriber for establishment of own venture or any start-ups.

To meet medical & incidental expenses arranging out of disability or incapacitation suffered.

Limits: The subscriber should have been in the National Pension System at least for a period of three years from the date of his or her joining; The subscriber shall be permitted to withdraw accumulations not exceeding twenty-five per cent of the contributions made by him or her and standing to his or her credit in his or her individual pension account, as on the date of application for withdrawal;

Frequency: The subscriber shall be allowed to make partial withdrawals for a maximum of three times during the entire tenure of subscription under the NPS. There is, however, no minimum time gap now stipulated between two partial withdrawals.

This was stated by Shri Ship Pratap Shukla, Minister of State for Finance in a written reply to a question in Lok Sabha today.

Source: PIB

The Union Cabinet in its Meeting on 6th December, 2018 has approved the following proposal for streamlining the National Pension System (NPS).

• Enhancement of the mandatory contribution by the Central Government for its employees covered under NPS Tier-I from the existing 10% to 14%.
• Providing freedom of choice for selection of Pension Funds and pattern of investment to central government employees.
• Payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012.
• Tax exemption limit for lump sum withdrawal on exit has been enhanced to 60%. With this, the entire withdrawal will now be exempt from income tax. (At present, 40% of the total accumulated corpus utilized for purchase of annuity is already tax exempted. Out of 60% of the accumulated corpus withdrawn by the NPS subscriber at the time of retirement, 40% is tax exempt and balance 20% is taxable.)
• Contribution by the Government employees under Tier-II of NPS will now be covered under Section 80 C for deduction up to Rs. 1.50 lakh for the purpose of income tax at par with the other schemes such as General Provident Fund, Contributory Provident Fund, Employees Provident Fund and Public Provident Fund provided that there is a lock-in period of 3 years.

The impact on the exchequer on this account is estimated to be to the tune of around Rs. 2840 crores for the financial year 2019-20, and will be in the nature of a recurring expenditure. The financial implications on account of provisions regarding payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012, would be in addition to the amount indicated above.

Approximately 18 lakh central government employees covered under NPS would be benefitted from the streamlining of the National Pension System.

Source : PIB Press Release

Streamlining of National Pension System (NPS) - Govt Decision for 18 lakh central government employees 

Press Information Bureau

Government of India

Ministry of Finance

10-December-2018 15:01 IST

Streamlining of National Pension System (NPS)

Decision 

The Union Cabinet in its Meeting on 6th December, 2018 has approved the following proposal for streamlining the National Pension System (NPS).

Enhancement of the mandatory contribution by the Central Government for its employees covered under NPS Tier-I from the existing 10% to 14%.

Providing freedom of choice for selection of Pension Funds and pattern of investment to central government employees.

Payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012.

Tax exemption limit for lump sum withdrawal on exit has been enhanced to 60%. With this, the entire withdrawal will now be exempt from income tax. (At present, 40% of the total accumulated corpus utilized for purchase of annuity is already tax exempted. Out of 60% of the accumulated corpus withdrawn by the NPS subscriber at the time of retirement, 40% is tax exempt and balance 20% is taxable.)

Contribution by the Government employees under Tier-II of NPS will now be covered under Section 80 C for deduction up to Rs. 1.50 lakh for the purpose of income tax at par with the other schemes such as General Provident Fund, Contributory Provident Fund, Employees Provident Fund and Public Provident Fund provided that there is a lock-in period of 3 years.

Background

The new entrants to the central government service on or after 01.01.2004 are covered under the National Pension System (NPS). The Seventh Pay Commission (7th CPC), during its deliberations, examined certain concerns regarding NPS and made recommendations in the year 2015. The 7th CPC recommended for setting up of a Committee of Secretaries in this regard. Accordingly, a Committee of Secretaries was constituted by the Government to suggest measures for streamlining the implementation of NPS in the year 2016. The Committee submitted its report in the year 2018. Accordingly, based on the recommendations of the Committee, draft Cabinet Note was placed before the Cabinet for its approval.

Implementation strategy and targets

The proposed changes to NPS would be made applicable immediately once time critical decisions are taken in consultation with the other concerned Ministries / Departments.

Major impact

Increase in the eventual accumulated corpus of all central government employees covered under NPS.

Greater pension payouts after retirement without any additional burden on the employee.

Freedom of choice for selection of Pension Funds and investment pattern to central government employees.

Benefit to approximately 18 lakh central government employees covered under NPS.

Augmenting old-age security in a time of rising life expectancy.

By making NPS more attractive, government will be facilitated in attracting and retaining the best talent.

Expenditure involved 

The impact on the exchequer on this account is estimated to be to the tune of around Rs. 2840 crores for the financial year 2019-20, and will be in the nature of a recurring expenditure. The financial implications on account of provisions regarding payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012, would be in addition to the amount indicated above.

No. of beneficiaries

Approximately 18 lakh central government employees covered under NPS would be benefitted from the streamlining of the National Pension System.

States/districts covered

Pan India.

Details and progress of scheme if already running

Presently, the new entrants to the central government service on or after 01.01.2004 are covered under the NPS. NPS is being implemented and regulated by Pension Fund Regulatory and Development Authority in the country.

*****

DSM/RM/KA 

Source: PIB News

Govt contribution to National Pension Scheme raised to 14% of basic salary

Minimum employee contribution will, however, remain at 10 per cent

In a bonanza for government employees, the Cabinet Thursday raised the government's contribution to National Pension Scheme (NPS) to 14 per cent of basic salary from the current 10 per cent, sources said.

Minimum employee contribution will, however, remain at 10 per cent.

The Cabinet also approved tax incentives under 80C of the Income Tax Act for employees' contribution to the extent of 10 per cent, they added.

Presently, the government and employees contribute 10 per cent of basic salary each to NPS.

While the minimum employee contribution remains at 10 per cent, the government contribution has been increased from 10 per cent to 14 per cent.

The Cabinet, headed by Prime Minister Narendra Modi, also allowed government employees to commute 60 per cent of the fund accumulated at the time of retirement, up from 40 per cent at present.

Also, employees will have the option to invest in either fixed income instruments or equities, sources said.

As per the Cabinet decision, if the employee decides not to commute any portion of the accumulated fund in NPS at the time of retirement and transfers 100 per cent to annuity scheme, then his pension would be more than 50 per cent of his last drawn pay, sources said.

The government did not announce the decision in view of the ensuing polls in Rajasthan Friday.

While the government is yet to decide on the date of notification of the new scheme, sources said such changes usually come into effect from the beginning of a financing year, meaning April 1, 2019.

This formula for changes in the NPS was worked out by the Finance Ministry based on the recommendation of a government-appointed committee.

Read at: Business-standard

NPS issue: Old Pension Scheme will be restored by AAP Govt. in National Capital

Delhi CM Arvind Kejriwal announces old pension scheme will be restored by AAP government in national capital

Delhi: Delhi Chief Minister Arvind Kejriwal announced Monday that the old pension scheme will be restored by his government and he will write to his counterparts in other states to follow the suit. He said a resolution to restore the old pension scheme in the city will be passed in a special session of the Legislative Assembly.

"It will then be sent to the Centre for approval. I will fight with the Centre to get it implemented," Kejriwal said while addressing a rally organised by the All Teachers, Employees Welfare Association (ATEWA) at Ramlila Ground here. He said that he will also speak to his counterparts in West Bengal, Kerala, Andhra Pradesh and Karnataka for implementation of the scheme.

"The government employees have the power to change the government of the country. I want to warn the Centre, if the demand of employees is not accepted in three months, there will be an apocalypse in 2019," the Aam Aadmi Party (AAP) convener said. Slogans like "desh ka neta kaisa ho, Kejriwal jaisa ho" greeted the Delhi chief minister as he made the announcement at the rally. Kejriwal slammed the new pension scheme as "betrayal and cheating" with government employees.

"I want to request Modiji that you cannot accomplish nation-building by disappointing the government employees," he said, adding that the AAP government could perform in the areas of education, health, power and water supply only because of the cooperation of its employees. The new pension scheme was introduced by the Centre in 2004. Under it, employees contribute towards pension from their monthly salary along with an equal contribution from their employer. The funds are then invested in earmarked investment schemes through pension fund managers.

Read at: Times Now

IS PENSION UNDER CCS (PENSION) RULES 1972 TO THE NPS

SUBSCRIBERS POSSIBLE?

“YES”

An analysis

About the feasibility

BY

K.SHANMUGASUNDARARAJ

POSTAL PENSIONER

&SECRETARY

ALL INDIA POSTAL AND RMS PENSIONERS’ ASSOCIATION

ORGANISING SECRETARY, CHQ,

CONVENOR, CENTRAL, STATE, LOCAL BODIES AND PUBLIC SECTOR PENSIONERS’ FEDERATION, TIRUNELVELI

TAMILNADU

627002

Dear Comrade,

I am a postal pensioner. I have put in 33 years of service as Lab Technician, Postal Dispensary, Tirunelveli 627001, in Tirunelveli postal division of Tamilnadu circle. Presently I am the secretary of the All India Postal And RMS pensioners Association, Tirunelveli and organizing secretary, CHQ. Also, I am the Convenor, Central, State, Local bodies and Public sector pensioners’ Federation, Tirunelveli.

Everybody fights against this NPS within their ability. The Trade Unions, Pensioner’s associations took it seriously and continue their battle against the government. In this Herculean task, I wish to share the following for your consideration and to take the case at appropriate forum.

The 7th Central Pay Commission has not made any specific recommendations with regard to NPS, but let it to be decided by the government. The government, in turn formulated a committee to consider this issue. Under these circumstances, I took this opportunity to submit my ideas.

I took this opportunity of submitting this article about the feasibility of extending the CCS (Pension) Rules 1972 to the government servants who are covered under New Pension Scheme, with effect from 1.1.2004. You may be more informative about the aspects and dangers of the introduction of the NPS .

The details of the NPS and its impact on the future pensioners have already been discussed and written elsewhere and almost nothing left. In this article I want to submit the negative aspects of the NPS and I try to make an alternative study about the investment of the contributions. The government shows its intentions to provide a social security in the form of a monthly pension to all the Indian Citizens, by introducing the Atal Pension Yojana scheme. At the same time it turns a blind eye to the claim of the NPS subscribers, especially the government servants joined service on or after 1.1.2004 for the benefits under CCS (Pension) Rules 1972. It is noteworthy that the reasons for the social security of the citizens in the words of the government are squarely applicable to these government servants also.

The government introduced this NPS, citing pension, especially the pension under CCS (Pension) Rules 1972 as a financial burden to the government and also stating it widens the fiscal deficit. On the contrary it introduces pension schemes to the citizens of India and conducts intensive mobilization towards it. The scheme, Atal Pension Yojana, introduced by our Honorable Prime Minister is a fitting example. From this it is clear that the government is committed to provide a social security to the population, especially to the unorganized sector, by way of a assured monthly pension. At the same time it is not ready to consider the request of its employees for a defined pension under the old pension scheme.

Sl no	Details	Page
1	The need for a statutory pension	6-8
2	The old pension under CCS(Pension) Rules 1972	9-10
3	The New Pension Scheme	11
4	Drawbacks of the NPS	12-16
5	The expectations of the NPS subscribers	17-19
6	Possibilities for defined pension under NPS	20-21
7	The alternates and a comparative study of investments
	The assumptions	22-23
A	Accumulations kept idle upto retirement and then invested	24-25
B	NPS vs. Pension contributions for foreign service	26-27
C	Atal Pension Yojana-a comparison	28-31
D	Investment in GPF and PPF	32-34
8	Conclusions	35-36
9	Annexures	37
A1	Details of government’s contribution
A2	Table of pension contribution for foreign service
A3	Table of contributions under APY
A4	Table showing the benefits under GPF and a comparative study with APY
A5	Affidavit of then Prime Minister
A6	Exposure draft of PFRDA dated 17.8.2016
A6	Brochure of Atal Pension Yojana