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    Tuesday, 14 August 2018

    BENEFITS UNDER NPS AND REINTRODUCTION OF OLD PENSION SCHEME

    Benefits under NPS and Reintroduction of Old Pension Scheme

    Reintroduction of Old Pension Scheme

    GOVERNMENT OF INDIA
    MINISTRY OF FINANCE
    DEPARTMENT OF FINANCIAL SERVICES
    *****

    LOK SABHA
    UN STARRED QUESTION NO. 4075
    TO BE ANSWERED ON AUGUST 10, 2018/SHRAVANA 19, 1940 (SAKA)

    REINTRODUCTION OF OLD PENSION SCHEME

    4075. Shri 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?

    ANSWER

    The Minister of State in the Ministry of Finance
    (Shri Shiv Pratap Shukla)

    (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.

    (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.

    PDF/WORD    PDF/WORD(Hindi)

    1 comment:

    1. All well....
      Minimum pension is not guaranteed.
      50000 benefit in IT is a false claim as that 50000 is first taken as income and then given as rebate. So where is that extra rebate.

      25% of the accumulated amount which can be withdrawn subject to conditions - unlike statutory pensioners, the conditions are very rigid and 25% is calculated on the employee's contribution and not on the accumulated amount.

      No provision of family pension after unfortunate demise of the employee.

      Can't say how the government is benefitted from this scheme as all through the service life of the employee the government contributes 10% of his monthly payments every month. This amount is also a huge amount. As with passing days more no of nps candidates are adding up this contribution is also increasing. So where is the burden of government reduced?

      Why make nps mandatory? Let it be optional. If PFRDA cannot guarantee minimum pension then why guarantee mandatory membership into this? - Doesn't it seem like that someone's vested interest has been there to benefit those financial institutions?

      If NPS is all that good, why keep the armed forces and parliament heads out of it? Has the government stopped thinking for the benefit of them?

      Some good people who keep themselves shielded from the scheme forces a section of government employees to get into a financial scheme which has no stability, no guaranteed growth and moreover make those employees not even get their full accumulated amount after retirement.

      This is how it has been made beneficial.

      ReplyDelete

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