• Breaking News

    Tuesday, 8 March 2016

    RECOMMENDATIONS OF SEVENTH PAY COMMISSION ON NATIONAL PENSION SYSTEM (NPS)

    Recommendations of Seventh Pay Commission on NPS

    GOVERNMENT OF INDIA
    MINISTRY OF FINANCE
    RAJYA SABHA
    QUESTION NO 2640
    ANSWERED ON 22.12.2015

    Recommendations of Seventh Pay Commission on NPS

    2640 Smt. Wansuk Syiem

    Will the Minister of FINANCE be pleased to satate :-

    (a) whether the Seventh Pay Commission has recommended that withdrawals under the National Pension System (NPS) should be tax exempt to place the pension system at par with other similar schemes, as also the service tax levied at the time of annuity purchase by NPS subscribers;

    (b) whether the Commission has come down heavily upon callous implementation of the NPS over the years with State Governments depositing contributions (deductions) of employees for eight years in lump sum without any returns or own contributions; and

    (c) if so, the Government's comments thereon ? 

    ANSWER

    The Minister of State in the Ministry of Finance

    (a): Yes, the Seventh Pay Commission has recommended, inter alia, that withdrawals under the National Pension System (NPS) should be tax-exempt to place NPS at par with other pension schemes. The Commission has also recommended that the service tax levied at the time of annuity purchase by NPS subscribers should be exempted. 

    (b) and (c): The Seventh Central Pay Commission has commented on NPS implementation for All India Service (AIS) officers, stating that in the case of AIS officers, some states are yet to release counterpart contributions or pay interest on delayed contributions. The Commission has, therefore, recommended that Central Governments and State Governments should, in a time bound manner, ensure that all the due contribution along with compounded interest, where contributions have been delayed, be deposited in the accounts of the beneficiaries. Advisories should be issued to the State Governments to deposit amounts, if not already done, in respect of NPS beneficiaries belonging to All India Services. 

    However, the statement, that State Governments have deposited contributions (deductions) of employees for eight years together without any returns or own contributions, cannot be generalised. The State Governments have paid interest and also transmitted own contributions in case of AIS officers. Even the States of West Bengal and Tripura, which are yet to implement NPS in respect of State Government employees, are discharging functions related to NPS implementation for AIS officers posted in these two States. The State of Tamil Nadu, however, has yet to adopt NPS architecture for both State Government employees and AIS officers.

    After the establishment of NPS architecture, PFRDA has been sensitising all State Governments about timely remittance of NPS contributions and interest on delayed remittances. States were also informed to sensitise the nodal offices to adhere to the various guidelines. PFRDA constantly interacts with officials of Central Ministries and State Government through letters, meetings, workshop and conferences. 

    PFRDA has notified various Regulations and one of these is PFRDA (Redressal of Subscriber Grievance) Regulations, 2015. PFRDA has issued advisories to all State Governments to streamline and automate various NPS activities. NPS has a centralised grievance management system, where subscriber can lodge grievances and may also be guided by above mentioned regulation. PFRDA has also written letters to all State Governments to frame timelines for various NPS related activities and some of the States have already framed the same.
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