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NPS is far beneficial than Government Pension
NPS is far beneficial than Government Pension
Comparison of New Pension Scheme (National Pension Scheme) and Central Government Pension The Central Government employees who have joined after 1/1/2004 and are put under National Pension System (NPS) have been demanding abolition of NPS and have been persuading the Central Government to make the government pension scheme applicable to them.
This only exhibits their ignorance of the fact that the New Pension System is highly lucrative and make the government employees who joined after 1/1/2004 far richer than the government employees who enjoy government pension scheme. By doing so they are in the process of ruining the great fortunes that lies in store under New Pension System.
Let me compare both the scheme:
Comparison of New Pension Scheme (National Pension System) and Central Government Pension
Benefits under NPS
Let me take a case of Upper Division Clerk(UDC) who joins government service in 2014 at the age of 25 and renders 35 years of service till attaining 60 years of age. He / She gets 3% annual increment every year and gets one promotion every 10 year under M.A.C.P. Although he / she is likely to get 14 to 20% increase in D.A every year as per Consumer Price Index I just take 12%(assuming 6 + 6%) 2 times D.A in a year
* MACP / Promotion Years
(A) Therefore, the total pension wealth of a government servant who joined in 2014 and retiring under New Pension Scheme shall at the time of his retirement be Rs. 2,87,26,201/-
(B) 60% of the lump-sum pension wealth which he / she will be getting on retirement: Rs.1,72,35.720
(C) 40% invested in an annuity scheme which he / she can receive before 70 years: Rs.1,14,90,481
(D) Earned Leave Encashment: Rs. 215625 x 10 months : Rs. 21,56,250
TOTAL of (A) (B) (C) and (D) will be Rs. 3,08,82,451
Death Gratuity:
Although not entitled for retirement gratuity, but eligible for Death Gratuity If died during the service
Monthly Pension:
At the assumed Interest at the rate of 8.7% per annum on the other 40% of pension wealth of Rs.1,14,90,481 invested in annuity shall fetch monthly pension of at least : Rs.83,306/ – Not only this, before he / she attains the age of 70 he / she can withdraw the remaining 40% of his pension wealth of Rs. 1,14,90,481/- which if invested in Fixed Deposit of a nationalised bank can fetch interest and take care of not only of his wife and children but his descendants also for generations to come.
This is just a tip of the iceberg. If we consider the other 4 pay commission benefits that materialize on1/1/2016, 1/1/2026, 1/1/2036 and 1/1/2046 which a NPS pensioner who joins as UDC shall be getting before his retirement in 2049,his total pension wealth will be undoubtedly double the above amount which comes to more than Rs.5 crores. While a person who joins as U.D.C. gets this much, one will be rocked out of stupor to know what a Group A officer who renders 35 years of service may get – undoubtedly his total pension wealth will be more than Rs.10 crores.
Benefits under Central Government Pension Scheme
Now let us see what will be the retirement benefits of the above person if he / she is put in government pension scheme:
Gratuity for 16.5 months : Rs.2,15,625 x 16.5 months = Rs.35,57,812/- Restricted to Rs.10,00,000
Earned Leave Encashment: Rs. 215625 x 10 months : Rs.21,56,250
Pension Commutation: Rs.17195 x 40% = Rs.6878 x 12 x 8.194 years Rs 6,76,300
Total Benefits under Central Government Pension Scheme: Rs.38,32,550
GPF Balance: As it is a general tendency of the government servants to withdraw from GPF frequently, there will be very little left at the time of retirement.
Monthly pension i) Rs.34390 / 2 = Rs.17195 (basic pension being 50% of pay and grade pay Less 40% of basic pension towards commutation (Rs 6878) which will be restored after 15 years Balance basic pension is Rs. 10317
Comparison of New Pension Scheme (National Pension Scheme) and Central Government Pension The Central Government employees who have joined after 1/1/2004 and are put under National Pension System (NPS) have been demanding abolition of NPS and have been persuading the Central Government to make the government pension scheme applicable to them.
This only exhibits their ignorance of the fact that the New Pension System is highly lucrative and make the government employees who joined after 1/1/2004 far richer than the government employees who enjoy government pension scheme. By doing so they are in the process of ruining the great fortunes that lies in store under New Pension System.
Let me compare both the scheme:
Comparison of New Pension Scheme (National Pension System) and Central Government Pension
Benefits under NPS
Let me take a case of Upper Division Clerk(UDC) who joins government service in 2014 at the age of 25 and renders 35 years of service till attaining 60 years of age. He / She gets 3% annual increment every year and gets one promotion every 10 year under M.A.C.P. Although he / she is likely to get 14 to 20% increase in D.A every year as per Consumer Price Index I just take 12%(assuming 6 + 6%) 2 times D.A in a year
* MACP / Promotion Years
(A) Therefore, the total pension wealth of a government servant who joined in 2014 and retiring under New Pension Scheme shall at the time of his retirement be Rs. 2,87,26,201/-
(B) 60% of the lump-sum pension wealth which he / she will be getting on retirement: Rs.1,72,35.720
(C) 40% invested in an annuity scheme which he / she can receive before 70 years: Rs.1,14,90,481
(D) Earned Leave Encashment: Rs. 215625 x 10 months : Rs. 21,56,250
TOTAL of (A) (B) (C) and (D) will be Rs. 3,08,82,451
Death Gratuity:
Although not entitled for retirement gratuity, but eligible for Death Gratuity If died during the service
Monthly Pension:
At the assumed Interest at the rate of 8.7% per annum on the other 40% of pension wealth of Rs.1,14,90,481 invested in annuity shall fetch monthly pension of at least : Rs.83,306/ – Not only this, before he / she attains the age of 70 he / she can withdraw the remaining 40% of his pension wealth of Rs. 1,14,90,481/- which if invested in Fixed Deposit of a nationalised bank can fetch interest and take care of not only of his wife and children but his descendants also for generations to come.
This is just a tip of the iceberg. If we consider the other 4 pay commission benefits that materialize on1/1/2016, 1/1/2026, 1/1/2036 and 1/1/2046 which a NPS pensioner who joins as UDC shall be getting before his retirement in 2049,his total pension wealth will be undoubtedly double the above amount which comes to more than Rs.5 crores. While a person who joins as U.D.C. gets this much, one will be rocked out of stupor to know what a Group A officer who renders 35 years of service may get – undoubtedly his total pension wealth will be more than Rs.10 crores.
Benefits under Central Government Pension Scheme
Now let us see what will be the retirement benefits of the above person if he / she is put in government pension scheme:
Gratuity for 16.5 months : Rs.2,15,625 x 16.5 months = Rs.35,57,812/- Restricted to Rs.10,00,000
Earned Leave Encashment: Rs. 215625 x 10 months : Rs.21,56,250
Pension Commutation: Rs.17195 x 40% = Rs.6878 x 12 x 8.194 years Rs 6,76,300
Total Benefits under Central Government Pension Scheme: Rs.38,32,550
GPF Balance: As it is a general tendency of the government servants to withdraw from GPF frequently, there will be very little left at the time of retirement.
Monthly pension i) Rs.34390 / 2 = Rs.17195 (basic pension being 50% of pay and grade pay Less 40% of basic pension towards commutation (Rs 6878) which will be restored after 15 years Balance basic pension is Rs. 10317
Now, India Post to deliver Gangajal
Now, India Post to deliver Gangajal
Now people can get “Gangajal” - holy water from the Ganga - at all post offices across the country and if they want, they can even get it delivered to their doorsteps. Union Ministers Ravi Shankar Prasad and Manoj Sinha on Sunday launched a new scheme here that makes “Gangajal” available at all post offices and enables India Post to deliver it to people’s doorstep. “Now holy Gangajal from Gangotri and Rishikesh will be available at all the post offices,” Prasad said. Also Read: Gangajal in the mail? India Post’s working on it General Post Office in Indore to start selling Gangajal India Post gears up to begin Ganga jal delivery service Mr. Sinha said that after the Ganga water in Bihar’s Sultanganj will become clean, the postal department will send it to the people’s doorstep. “Right now only holy Ganga water from Gangotri and Rishikesh will be delivered to the people across the country by India Post,” he said. - IANS
Now people can get “Gangajal” - holy water from the Ganga - at all post offices across the country and if they want, they can even get it delivered to their doorsteps. Union Ministers Ravi Shankar Prasad and Manoj Sinha on Sunday launched a new scheme here that makes “Gangajal” available at all post offices and enables India Post to deliver it to people’s doorstep. “Now holy Gangajal from Gangotri and Rishikesh will be available at all the post offices,” Prasad said. Also Read: Gangajal in the mail? India Post’s working on it General Post Office in Indore to start selling Gangajal India Post gears up to begin Ganga jal delivery service Mr. Sinha said that after the Ganga water in Bihar’s Sultanganj will become clean, the postal department will send it to the people’s doorstep. “Right now only holy Ganga water from Gangotri and Rishikesh will be delivered to the people across the country by India Post,” he said. - IANS
Frequently Asked Question About New Pension Scheme (NPS)
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: A mandatory Tier-I pension account, and A voluntary Tier-II savings account.
6. What is the difference between Tier-I and Tier-II accounts? Tier-I account: You will have to contribute 10% of your pay in pay band + grade pay + DA into your Tier-I (pension) account on a mandatory basis every month. You will not be allowed to withdraw your savings from this account till you retire at age 60. Your monthly contributions and your savings in this account, subject to a ceiling to be decided by the government, will be exempt from income tax. These savings will only be taxed when you withdraw them at retirement. Tier-II account: This is simply a voluntary savings facility for you. Your contributions and savings in this account will not enjoy any tax advantages. But you will be free to withdraw your savings from this account whenever you wish.
7. How will I contribute to my Tier-I (pension) account? Every month, the government will deduct 10% of your salary (10% of pay in pay band + grade pay + DA) and automatically transfer this amount to your Tier-I account in your name.
8. Will the Government contribute anything to my Tier-I (pension) account? Yes. As your employer, the Government will match your contribution (10% of pay in pay band + grade pay + DA) and transfer this amount also to your Tier-I account in your name.
9. Can I contribute more than 10% into my Tier-I account? Yes. You will be permitted to contribute more than the mandated 10% of pay in pay band + grade pay + DA into your Tier-I account – subject to any ceiling that may be decided by the Government.
10. Will the Government also contribute more than 10% into my Tier-I account? No. The contribution of the Government will be limited to 10% of your pay in pay band + grade pay + DA.
11. What will happen if I am transferred to another city? The PPAN number will stay the same and you will be able to use the same account.
12. If I leave Government service before I retire will the Government continue to contribute to my Tier-I account? No. The 10% contribution by the Government will stop when you leave Government service. However, your savings in your Tier-I and Tier-II accounts will stay in your name and you will be able to continue using these accounts to save for your retirement.
13. What if I die or become permanently disabled during my service? Additional Relief on death/disability of Government servants covered by the NPS(New Pension Scheme) recruited on or after 1.1.2004 has been discussed in this Office Memorandum No.38/41/06/P&PW(A) Dated 5th May, 2009
14. How will the money be invested? The money you invest in NPS will be managed by professional fund managers. Currently, you have the choice of picking up one of the following six fund managers: ICICI Prudential Pension Management, IDFC Pension Fund Management, Kotak Mahindra Pension Fund, Reliance Capital Pension Fund, SBI Pension Funds, and UTI Retirement Solutions. In addition to this there are three schemes for which you have to opt.
Scheme A This scheme will invest mainly in Government bonds
Scheme B This scheme will invest mainly in corporate bonds and partly in equity and government bonds
Scheme C This scheme will invest mainly in equity and partly in government bonds and corporate bonds.
15. Can I switch fund managers if I am not happy with my current fund manager? Yes, you can switch fund managers. PFRDA, the pension fund regulator, will declare the value of your investment every year in April. At that point of time, if you are not satisfied with the performance of your fund manager, you can switch to another fund manager between May 1 and May 1
16. What are the charges? This is where NPS wins hands down against all other modes of creating a corpus to generate income after retirement. The fund management charge of NPS is 0.0009% of the value of the investment, every year. In comparison, pension plans of insurance companies charge 0.75-1.75% as fund management charge, which is 800-2000 times higher. The other expenses charged are also very reasonable.
17. I am covered by the NPS. Do the old Pension Rules apply to me? No. The Central Civil Service Pension Rules (1972) will not be applicable to you.
18. Who will be responsible for the NPS and for protecting my interests? The Government has set up a new dedicated regulatory authority known as Pension Fund Regulatory and Development Authority (PFRDA). The PFRDA will be responsible for the NPS and for protecting your interests in the NPS in consultation with Ministry of Finance.
19. Who in the Government will issue me a PPAN account and be responsible for the deductions? When you join Government service, your Drawing and Disbursement Officer (DDO) will instruct you to fill out a NPS form. You will be required to provide your full professional and personal details including details of your nominee in this form. The DDO will issue you the PPAN number(PRAN) and will also be responsible for all administrative matters related to your NPS accounts including deduction of your contributions, transferring your contributions and the matching contribution of the Government to your Tier-I pension account.
20. What will happen to my contributions to my Tier-I account? Your monthly contributions, and the matching contributions by the Government into your Tier-I account, will be transferred by the Government in your name to a Pension Fund Manager (PFM). The PFM will invest your contributions on your behalf. In this way, your savings will appreciate and grow over time.
21. Will I be permitted to select more than one Pension Fund Manager to manage my savings? Yes. If you wish, you will be able to spread your savings across multiple PFMs – where a part of your savings are managed by 2 or more PFMs.
22. Am I guaranteed a certain rate of return? No return is guaranteed as it is in case of EPF and PPF. The amount of money you make is dependant on how well the fund managers chosen by you perform. But, the extremely low charges in NPS sure give it an edge over the the pension plans of insurance companies.
23. Can I contribute more than 10 into my Tier-I account? Yes. You will be permitted to contribute more than the mandated 10% of Basic+DA+DP into your Tier-I account – subject to any ceiling that may be decided by the Government.
24. Can I withdraw money from the account? The NPS offers two accounts: tier I and tier II. Currently only tier I account is available. This is a non-withdrawable account and investments in this keep accumulating till you turn 60. Withdrawal is allowed only in case of death, critical illness or if you are building or buying your first house. In case of death the nominee can get 100% of NPS wealth in a lump sum. He can however continue with the NPS in case he wishes to.
25. What will happen to my savings in the Tier-I account when I retire? You will be able to withdraw 60% of your savings as a lump sum when you retire. You will be required to use the balance 40% of your savings to purchase an annuity scheme from a life insurance company of your choice. The life insurance company will pay you a monthly pension for the rest of your life.
26. Can I use more than 40% of my savings to purchase the annuity? Yes. You can use more than 40% of your savings to purchase annuity.
27. What will happen to my savings if I decide to retire before age 60? You will be required to use 80% of your savings in your Tier-I account to purchase the annuity. You will be able to withdraw the balance 20% of your savings as a lumpsum. The other option is , you can continue to invest in NPS on monthly basis and then purchase annuity using 40% of your savings at the age of 60.
28. Will the annuity also provide a family (survivor) pension? Yes. You will have an option of selecting an annuity which will pay a survivor pension to your spouse.
29. What will happen to my savings in the Tier-I account when I retire? You will be able to withdraw 60% of your savings as a lumpsum when you retire. You will be required to use the balance 40% of your savings to purchase an annuity scheme from a life insurance company of your choice. The life insurance company will pay you a monthly pension for the rest of your life.
30. What happens at retirement? NPS by default sets the retirement age at 60. Once you attain that age, you can use the money that has accumulated to generate a regular pension for yourself. In order to do this, you have to compulsorily buy immediate annuity from a life insurance company with 40% of the money that has accumulated. As explained at the beginning, buying an immediate annuity will assure a regular payment for you. Since a minimum of 40% needs to be used to buy an immediate annuity, a maximum of 60% of the money accumulated can be withdrawn. However, unlike other tax-saving instruments like Public Provident Fund (PPF) and Employees’ Provident Fund (EPF), wherein the amount at maturity is tax-free, in case of NPS this amount is taxable.
31. Whether a retiring Government servant is entitled for leave encashment after retirement under the NPS? The benefit of encashment of leave salary is not a part of the retirement benefits admissible under Central Civil Services (Pension) Rules, 1972. It is payable in terms of CCS (Leave) Rules which will continue to be applicable to the government servants who join the government service on after 1-1-2004. Therefore, the benefit of encashment of leave salary payable to the governments/to their families on account of retirement/death will be admissible.
32. Why is it mandatory to use 40% of pension wealth to purchase the annuity at the time of the exit (i.e. after the age of 60 years) from NPS? This provision has been made in the New Pension Scheme with an intention that the retired government servants should get regular monthly income during their retired life.
33. Whether any minimum age or minimum service is required to quit from Tier-I? Exit from Tier-I can only take place when an inpidual leaves Government service. 34. Whether Dearness Pay is counted as basic pay for recovery of 10% for Tier-I? As per the New Pension Scheme, the total Dearness Allowance is to be taken into account for working out the contributions to Tier-I. Subsequently, a part of the “Dearness Allowance” has been treated as Dearness Pay. Therefore, this should also be reckoned for the purpose of contributions.
35. Whether contribution towards Tier-I from arrears of DA is to be deducted? Yes. Since the contribution is to be worked out at 10% of (Pay+ DP+DA), it needs to be revised whenever there is any change in these elements.
36. Who will calculate the interest PAO or CPAO? The PAO should calculate the interest.
37. What happens if an employee gets transferred during the month? Which office will make deduction of Contribution? As in the case of other recoveries, the recovery of contributions towards New Pension Scheme for the full month (both inpidual and government) will be made by the office who will draw salary for the maximum period.
38. Whether NPA payable to medical officers will count towards ‘Pay’ for the purpose of working out contributions to NPS? Yes. Ministry of Health & Family Welfare has clarified vide their O.M. no. A45012/11/97-CHS.V dated 7-4-98 that the Non-Practicing Allowance shall count as ‘pay’ for all service benefits. Therefore, this will be taken into account for working out the contribution towards the New Pension Scheme.
39. Whether a government servant who was already in service prior to 1.1.2004, if appointed in a different post under the Government of India, will be governed by the CCS (Pension) Rules or NPS? In cases where Government servants apply for posts in the same or other departments and on selection they are asked to render technical resignation, the past services are counted towards pension under CCS (Pension) Rules, 1972. Since the Government servant had originally joined government service prior to 1-1-2004, he should be covered under the CCS (Pension) Rules, 1972.
40. Will I get a tax deduction for the investment? Yes, under Section 80CCD of the Income Tax Act investments of up to Rs 1 lakh in the NPS can be claimed as tax deductions. Readers should remember that this Rs 1 lakh limit is not over and above the Rs 1 lakh limit available under Section 80C. In fact, the combined limit of investments made under Section 80C, 80CCD and section 80CCC (for investments made into pension plans of insurance companies) is Rs 1 lakh.
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: A mandatory Tier-I pension account, and A voluntary Tier-II savings account.
6. What is the difference between Tier-I and Tier-II accounts? Tier-I account: You will have to contribute 10% of your pay in pay band + grade pay + DA into your Tier-I (pension) account on a mandatory basis every month. You will not be allowed to withdraw your savings from this account till you retire at age 60. Your monthly contributions and your savings in this account, subject to a ceiling to be decided by the government, will be exempt from income tax. These savings will only be taxed when you withdraw them at retirement. Tier-II account: This is simply a voluntary savings facility for you. Your contributions and savings in this account will not enjoy any tax advantages. But you will be free to withdraw your savings from this account whenever you wish.
7. How will I contribute to my Tier-I (pension) account? Every month, the government will deduct 10% of your salary (10% of pay in pay band + grade pay + DA) and automatically transfer this amount to your Tier-I account in your name.
8. Will the Government contribute anything to my Tier-I (pension) account? Yes. As your employer, the Government will match your contribution (10% of pay in pay band + grade pay + DA) and transfer this amount also to your Tier-I account in your name.
9. Can I contribute more than 10% into my Tier-I account? Yes. You will be permitted to contribute more than the mandated 10% of pay in pay band + grade pay + DA into your Tier-I account – subject to any ceiling that may be decided by the Government.
10. Will the Government also contribute more than 10% into my Tier-I account? No. The contribution of the Government will be limited to 10% of your pay in pay band + grade pay + DA.
11. What will happen if I am transferred to another city? The PPAN number will stay the same and you will be able to use the same account.
12. If I leave Government service before I retire will the Government continue to contribute to my Tier-I account? No. The 10% contribution by the Government will stop when you leave Government service. However, your savings in your Tier-I and Tier-II accounts will stay in your name and you will be able to continue using these accounts to save for your retirement.
13. What if I die or become permanently disabled during my service? Additional Relief on death/disability of Government servants covered by the NPS(New Pension Scheme) recruited on or after 1.1.2004 has been discussed in this Office Memorandum No.38/41/06/P&PW(A) Dated 5th May, 2009
14. How will the money be invested? The money you invest in NPS will be managed by professional fund managers. Currently, you have the choice of picking up one of the following six fund managers: ICICI Prudential Pension Management, IDFC Pension Fund Management, Kotak Mahindra Pension Fund, Reliance Capital Pension Fund, SBI Pension Funds, and UTI Retirement Solutions. In addition to this there are three schemes for which you have to opt.
Scheme A This scheme will invest mainly in Government bonds
Scheme B This scheme will invest mainly in corporate bonds and partly in equity and government bonds
Scheme C This scheme will invest mainly in equity and partly in government bonds and corporate bonds.
15. Can I switch fund managers if I am not happy with my current fund manager? Yes, you can switch fund managers. PFRDA, the pension fund regulator, will declare the value of your investment every year in April. At that point of time, if you are not satisfied with the performance of your fund manager, you can switch to another fund manager between May 1 and May 1
16. What are the charges? This is where NPS wins hands down against all other modes of creating a corpus to generate income after retirement. The fund management charge of NPS is 0.0009% of the value of the investment, every year. In comparison, pension plans of insurance companies charge 0.75-1.75% as fund management charge, which is 800-2000 times higher. The other expenses charged are also very reasonable.
17. I am covered by the NPS. Do the old Pension Rules apply to me? No. The Central Civil Service Pension Rules (1972) will not be applicable to you.
18. Who will be responsible for the NPS and for protecting my interests? The Government has set up a new dedicated regulatory authority known as Pension Fund Regulatory and Development Authority (PFRDA). The PFRDA will be responsible for the NPS and for protecting your interests in the NPS in consultation with Ministry of Finance.
19. Who in the Government will issue me a PPAN account and be responsible for the deductions? When you join Government service, your Drawing and Disbursement Officer (DDO) will instruct you to fill out a NPS form. You will be required to provide your full professional and personal details including details of your nominee in this form. The DDO will issue you the PPAN number(PRAN) and will also be responsible for all administrative matters related to your NPS accounts including deduction of your contributions, transferring your contributions and the matching contribution of the Government to your Tier-I pension account.
20. What will happen to my contributions to my Tier-I account? Your monthly contributions, and the matching contributions by the Government into your Tier-I account, will be transferred by the Government in your name to a Pension Fund Manager (PFM). The PFM will invest your contributions on your behalf. In this way, your savings will appreciate and grow over time.
21. Will I be permitted to select more than one Pension Fund Manager to manage my savings? Yes. If you wish, you will be able to spread your savings across multiple PFMs – where a part of your savings are managed by 2 or more PFMs.
22. Am I guaranteed a certain rate of return? No return is guaranteed as it is in case of EPF and PPF. The amount of money you make is dependant on how well the fund managers chosen by you perform. But, the extremely low charges in NPS sure give it an edge over the the pension plans of insurance companies.
23. Can I contribute more than 10 into my Tier-I account? Yes. You will be permitted to contribute more than the mandated 10% of Basic+DA+DP into your Tier-I account – subject to any ceiling that may be decided by the Government.
24. Can I withdraw money from the account? The NPS offers two accounts: tier I and tier II. Currently only tier I account is available. This is a non-withdrawable account and investments in this keep accumulating till you turn 60. Withdrawal is allowed only in case of death, critical illness or if you are building or buying your first house. In case of death the nominee can get 100% of NPS wealth in a lump sum. He can however continue with the NPS in case he wishes to.
25. What will happen to my savings in the Tier-I account when I retire? You will be able to withdraw 60% of your savings as a lump sum when you retire. You will be required to use the balance 40% of your savings to purchase an annuity scheme from a life insurance company of your choice. The life insurance company will pay you a monthly pension for the rest of your life.
26. Can I use more than 40% of my savings to purchase the annuity? Yes. You can use more than 40% of your savings to purchase annuity.
27. What will happen to my savings if I decide to retire before age 60? You will be required to use 80% of your savings in your Tier-I account to purchase the annuity. You will be able to withdraw the balance 20% of your savings as a lumpsum. The other option is , you can continue to invest in NPS on monthly basis and then purchase annuity using 40% of your savings at the age of 60.
28. Will the annuity also provide a family (survivor) pension? Yes. You will have an option of selecting an annuity which will pay a survivor pension to your spouse.
29. What will happen to my savings in the Tier-I account when I retire? You will be able to withdraw 60% of your savings as a lumpsum when you retire. You will be required to use the balance 40% of your savings to purchase an annuity scheme from a life insurance company of your choice. The life insurance company will pay you a monthly pension for the rest of your life.
30. What happens at retirement? NPS by default sets the retirement age at 60. Once you attain that age, you can use the money that has accumulated to generate a regular pension for yourself. In order to do this, you have to compulsorily buy immediate annuity from a life insurance company with 40% of the money that has accumulated. As explained at the beginning, buying an immediate annuity will assure a regular payment for you. Since a minimum of 40% needs to be used to buy an immediate annuity, a maximum of 60% of the money accumulated can be withdrawn. However, unlike other tax-saving instruments like Public Provident Fund (PPF) and Employees’ Provident Fund (EPF), wherein the amount at maturity is tax-free, in case of NPS this amount is taxable.
31. Whether a retiring Government servant is entitled for leave encashment after retirement under the NPS? The benefit of encashment of leave salary is not a part of the retirement benefits admissible under Central Civil Services (Pension) Rules, 1972. It is payable in terms of CCS (Leave) Rules which will continue to be applicable to the government servants who join the government service on after 1-1-2004. Therefore, the benefit of encashment of leave salary payable to the governments/to their families on account of retirement/death will be admissible.
32. Why is it mandatory to use 40% of pension wealth to purchase the annuity at the time of the exit (i.e. after the age of 60 years) from NPS? This provision has been made in the New Pension Scheme with an intention that the retired government servants should get regular monthly income during their retired life.
33. Whether any minimum age or minimum service is required to quit from Tier-I? Exit from Tier-I can only take place when an inpidual leaves Government service. 34. Whether Dearness Pay is counted as basic pay for recovery of 10% for Tier-I? As per the New Pension Scheme, the total Dearness Allowance is to be taken into account for working out the contributions to Tier-I. Subsequently, a part of the “Dearness Allowance” has been treated as Dearness Pay. Therefore, this should also be reckoned for the purpose of contributions.
35. Whether contribution towards Tier-I from arrears of DA is to be deducted? Yes. Since the contribution is to be worked out at 10% of (Pay+ DP+DA), it needs to be revised whenever there is any change in these elements.
36. Who will calculate the interest PAO or CPAO? The PAO should calculate the interest.
37. What happens if an employee gets transferred during the month? Which office will make deduction of Contribution? As in the case of other recoveries, the recovery of contributions towards New Pension Scheme for the full month (both inpidual and government) will be made by the office who will draw salary for the maximum period.
38. Whether NPA payable to medical officers will count towards ‘Pay’ for the purpose of working out contributions to NPS? Yes. Ministry of Health & Family Welfare has clarified vide their O.M. no. A45012/11/97-CHS.V dated 7-4-98 that the Non-Practicing Allowance shall count as ‘pay’ for all service benefits. Therefore, this will be taken into account for working out the contribution towards the New Pension Scheme.
39. Whether a government servant who was already in service prior to 1.1.2004, if appointed in a different post under the Government of India, will be governed by the CCS (Pension) Rules or NPS? In cases where Government servants apply for posts in the same or other departments and on selection they are asked to render technical resignation, the past services are counted towards pension under CCS (Pension) Rules, 1972. Since the Government servant had originally joined government service prior to 1-1-2004, he should be covered under the CCS (Pension) Rules, 1972.
40. Will I get a tax deduction for the investment? Yes, under Section 80CCD of the Income Tax Act investments of up to Rs 1 lakh in the NPS can be claimed as tax deductions. Readers should remember that this Rs 1 lakh limit is not over and above the Rs 1 lakh limit available under Section 80C. In fact, the combined limit of investments made under Section 80C, 80CCD and section 80CCC (for investments made into pension plans of insurance companies) is Rs 1 lakh.
Saturday, July 2, 2016
Status of HRA and TA in 7th CPC Salary
The Government has decided to Constitute a committee to examine the 7th CPC Allowances. We cannot assume anything about the rates of Allowances until the Committee submit its report on Allowances. Mainly the HRA and TA are one of the Main component of Salary. So the government employees are disheartened by the Government decision to take time to decide on these allowances. Already it has been reported that 7th CPC will be implemented in a staggered manner. Now it is clear that, if the 7th Pay Commission come into force with immediate effect after publication of Gazette Notification, the HRA and TA will be paid at Sixth CPC rates in pre revised Scale. It means the amount of HRA and TA paid in Sixth CPC will continue for next few months. The Central staffs will be paid all the allowances in pre revised Scale up to the Committee decides on Allowances. It will take more than four months for Government to decide on HRA and TA. So actual increase on account of 7th pay commission implementation will be 14.29 percent over Sixth CPC Basic + 125% DA. The increase in Basic Pay only will be reflecting in 7th CPC salary . Nobody can say that 7th CPC gives 23.45% increase in Pay and Allowance for CG employees at least for some time
Tuesday, June 28, 2016
Wait till Tomorrow!!?
http://7thpaycommissionnews.in/7th-cpc-news-minimum-pay-could-be-as-high-as-20000-21000-23500-24000/
Friday, June 24, 2016
Holidays to be observed in Central Government offices during year 2017
12/8/2016-JCA-2
Government of India
Ministry of Personnel, Public Grievances and Pensions
(Department of Personnel and Training
JCA-2 section
North Block, New Delhi
Dated the 24th June. 2016
Subject : Holidays to be observed in Central Government offices during year 2017- reg.
It has been decided that the holidays as specified in the Annexure —I to this O.M. will be observed in the Administrative Offices of the Central Government located at Delhi/New Delhi during the year 2017. In addition, each employee will also be allowed to avail himself / herself of any two holidays to be chosen by him/her out of the list or Restricted Holidays in Annexure — II.
2.Central Government Administrative Offices located outside Delhi / New Delhi shall observe the following holidays compulsorily in addition to three holidays as per para 3. below:
1. REPUBLIC DAY
2. INDEPENDENCE DAY
3. MAHATMA GANDHI’S BIRTHDAY
4. BUDDHA PURNIMA
5. CHRISTMAS DAY
6. DUSSEHRA (VIJAY DASHMI)
7. DIWALI IDEEPAVALI)
8. GOOD FRIDAY
9. GURU NANAK’S BIRTHDAY
10. IDU’L FITR
11. IDU’L ZUHA
12. MAHAVIR JAYANTI
13. MUHARRAM
14. PROPHET MOHAMMAD’S BIRTHDAY (ID-E-MILAD)
3.1. In addition to the above 14 Compulsory holidays mentioned in para 2 , three holidays shall be decided from the list indicated below by the Central Government Employees Welfare Coordination Committee in the State Capitals, if necessary, in consultation with Coordination Committees at other places in the State. The final list applicable uniformly to Central Government offices within the concerned State shan be notified accordingly and no change can be carried out thereafter. It is also clarified that no change is permissible in regard to festivals and dates as indicate.
1. AN ADDITIONAL DAY FOR DUSSEHRA
2. HOLI
3. JANAMASHTAMI IVAISHNAVI)
4. RAM NAVAMI
5. MAHA SHIVRATRI
6. GANESH CHATURTHI VINAYAK CHATURTEA
7. MAKAR SAKARANTI
8. RATH YATRA
9. ONAN
10. PONGAL
11. SRI PANCHAML / BASANT PANCH.AMI
12. VISHU/ VAISAKHI / VAISAKHADI / BHAG BKHU / MASHADI UGADI / CENTRA SUKLADI / CHETI CHAND / GUDL PADAVA 1st NAVRATRA /NAURAJ/CHHATH POOJA/KARVA CHAVTH.
3.2 No substitute holiday should be allowed if any of the festival holidays initially declared subsequently happens to fall on a weekly off or any other non-working day or in the event of more than one festivals falling on the same day.
4. The list of Restricted Holidays appended to this O.M. is meant for Central Government Offices located in Delhi / New Delhi. The Coordination Committees at the State Capitals may draw up separate list of Restricted Holidays keeping in view the occasions of local importance but the 9 occasions left over, after choosing the 3 variable holidays in para 3.1 above, are to be included in the list of restricted holidays.
5.1 For offices in Delhi / New Delhi, any change in the date of holidays in respect of Idu’l Fitr, Idu’l Zuha, Muharram and Id-e-Milad, if necessary, depending upon sighting of the Moon, would be declared by the Ministry of Personnel, Public Grievances and Pensions after ascertaining the position from the Govt. of NCT of Delhi (DCP, Special Branch, Delhi Police).
5.2 For offices outside Delhi / New Delhi, the Central Government Employees Welfare Coordination Committees at the State Capitals are authorised to change the date of holiday, if necessary, based on the decision of the concerned State Governments / Union Territories, in respect of Idu’l Fitr, Idu’l Zuha, Muharram and Id-e-Milad.
5.3 It may happen that the change of date of the above occasions has to be declared at a very short notice. In such a situation, announcement could be made through P.I .B /T.V. /A.I.R. / Newspapers and the Heads of Department / Offices of the Central Government may take action according to such an announcement without waiting for a formal order, about the change of date.
6. During 2017, Diwali (Deepavali) falls on Thursday , October 19, 2017 (Ashvina 28). In certain States, the practice is to celebrate the occasion a day in advance, i.e., on “Narakachaturdasi Day”. In view of this, there is no objection if holiday on account of Deepavali is observed on- “Naraka Chaturdasi Day (in place of Deepavali Day) for the Central Government Offices in a State if in that State that day alone is declared as a compulsory holiday for Diwali for the offices of the State Government.
7. Central Government Organisations which include industrial, commercial and trading establishments would observe upto 16 holidays in a year including three national holidays viz. Republic Day, Independence Day and Mahatma Gandhi’s birthday, as compulsory holidays. The remaining holidays / occasions may be determined by such establishments / organisations themselves for the year 2017, subject to para 3.2 above.
8. Union Territory Administrations shall decide the list of holidays in terms of Instructions issued in this regard by the Ministry of Home Affairs.
9. In respect of Indian Missions abroad, the number of holidays may be notified in accordance with the instructions contained in this Department’s O.M. No.12/5/2002-JCA dated 17th December, 2002. In other words, they will have the option to select 11(Eleven) holidays of their own only after including in the list, three National Holidays and Mahavir Jayanti, Id-ulZuha (Bakrid), Vijay Dashmi, Muharram, Guru Nanak Birthday and Miladun-Nabi(Id-e-Milad (Birthday of Prophet Mohammad) included in the list of compulsory holidays and falling on day of weekly off.
10. In respect of Banks, the holidays shall be regulated in terms of the extant instructions issued by the Department of Financial Services, Ministry of Finance.
11. Hindi version will follow.
sd/-
(K.Salil Kumar)
Under Secretary (JCA)
Encl.: Lists of holidays
Thursday, June 23, 2016
New Pension Scheme: Guidelines for processing of Family Pension Cases
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY B-14/A,
Chhatrapati Shivaji Bhawan Qutab Institutional Area,
Katwaria Sarai New Delhi~110016
F. No. PFRDA/24/Exit/1 May 26, 2016
Shri Amit Sinha Executive Vice President,
NSDL e-Governance Infrastructure Limited,
1st Floor, Times Tower. Kamla Mills Compound,
Senapati Bapat Marg, Lower Parel, Mumbai - 400013
Subject: Guidelines for processing of Family Pension Cases.
Dear Mr Sinha,
This has with reference to regulation 6(e) of the PFRDA (Exit and Withdrawals under NPS) Regulation 2015 relating to family pension and transfer of corpus from subscribers NPS account to government nodal office, if the subscriber or the family members of the deceased subscriber avails the benefit of family pension. The Authority after examining the issue has finalized the policy with respect to transfer of accumulated pension wealth of the subscribers to government and where the subscribers family has availed the additional relief given by the government in the family of family pension Accordingly, the guidelines for processing of such claims are being enclosed herewith for your guidance and implementation of the same. Therefore, you are advised to intimate to all the accounting formations under the central government, state governments (excluding the states which have clarified that they do not provide the benefit including Punjab & Sikkim) and autonomous bodies falling under theirjurisdiction about the policy guidelines and also the process to be followed The same shall be made part of the online exit module. In case if you want any clarifications on the matter. you may write back to us
Yours sincerely,
(Venkateswarlu Peri)
General Manager
Enclosure: a/a CC: Shri Kamal Chaudary
Chief Executive Officer,
National Pension System Trust,
3'd Floor, Chatrapati Shivaji Bhawan B-14/A,
Qutab Institutional Area New Delhi 3100 016
Guidelines for processing of Family Pension cases
1. The family member(s)/subscriber(s) who is/are availing Family Pension from will submit the No objection certificate (Annexure-II) to the concerned Nodal Office.
2. Nodal Office will authenticate the Annexure II.
3. Nodal Office shall fill in the declaration form Annexure I & provide necessary authentications.
4. Nodal Office (first User) will login into CRA system to select the option that the family pension is being/ has been granted to the family members of the deceased subscriber or to the subscriber.
5. Nodal office will enter the details of family member(s)/subscriber(s) into the CRA system to whom the family pension is being given (as mentioned under Annexure II).
6. A new field - Nodal Office bank detail will be enabled. Nodal Office will provide its bank details as per Nodal Office Declaration form (Annexure I).
7. Nodal Office (first User) will submit post entering the complete details.
8. Nodal Office (second User) will authenticate and authorise the said request. Claim ID will get generated on successful submission of Withdrawal request.
9. Nodal Office will print the online form dispatch the same along with duly filled attested both the Annexures - I and II to CRA.
10. On receipt of documents, CRA will initiate the withdrawal request in the CRA system.
11. The accumulated pension wealth, of the particular deceased subscriber or the subscriber (in case of disability) for whom the withdrawal request is raised, will be transferred to the Nodal Office bank account as per the settlement cycle.
Courtesy : PA Legacy (http://www.palegacyblogspot.in/)
Wednesday, June 22, 2016
* Full detail of KVP / NSC issue w.e.f. 01/7/2016 *
* Full detail of KVP / NSC issue w.e.f. 01/7/2016 *
1. Do you want to know how NSC and KVP will be issue after discontinuance of pre printed form ?
From 01 JULY 2016, KVP Certificates and NSCs can be issued for any amount above Rs. 1000 for KVP and Rs.100 for NSC in one transaction, provided the certificate is issued for an amount rounded off to the nearest 1000 for KVP and nearest 100 for NSC. One transaction of one (set of) investor(s) should result in only one certificate in e-mode or one entry in the passbook on one day. So issue of certificate need not be dependent on the availability of pre-printed certificate of the appropriate denomination.
2. What will happen with denominations and prefix/suffix ??
- New serial numbering of Kisan Vikas Patra
KVP2016Q2(DoP)(PIN Code)(Registration no.)
KVP2016 - Showing that the scheme code and Year of issue.
Q2 - showing that the quarter of Financial Year (in above case July to Sep 2016)
PIN Code - will showing that pincode of issuing post office
Reg No- will be automatically generated by the CBS Software ( Finacle ).
- New Serial No of NSC
5NS2016Q1(DoP)(PIN Code)(Registration no. )
5NS - Showing that the 5Year NSC and Year of issue.
Q2 - showing that the quarter of Financial Year (in above case July to Sep 2016)
PIN Code - will showing that pincode of issuing post office
Reg No- will be automatically generated by the CBS Software ( Finacle ).
Thanks to Ashutosh Kumar Kaushal
7th CPC before July 11th strike!!?
Govt has to decide on 7th Pay Commission before Indefinite Strike
The Indefinite Strike Called by National Joint Council of Action from July 11th will play a vital role to determine the fate of the 7th Pay Commission. The amount of pressure exerted on the Government through this agitation may change the Govt Views over Pay Commission.
It is evident that the present NDA Government is not in favour of Bapus. And the Public opinion about Government Employee’s attitude and work Culture is too not in favour of CG Employees. So it is now the unity among Central Staffs and their undisputed faith over Unions, Staff Associations and Federations only will get them expected results.
At this juncture, somehow, the call for Indefinite Strike is a timely decision taken by NJCA and it is the only weapon, through which the powerless Central Staffs can intimidate the Government to do Justice for them in respect of Pay Revision and Improving Service Conditions.
That is why Federations are keep on telling the CG Staffs to be prepared for Indefinite Strike. They are, however, alarming the affiliated unions to be vigilant about the rumors about 7th Pay Commission. They informed that Social Media and Some News Agencies are publishing the false news which may deteriorate the Spirit of Govt Servants.
The Success rate of agitation Programs to be conducted by NJCA in order to prepare the Central Government Employees for Indefinite Strike will be the Pressure indicator to the Central Government to take decisions on 7th CPC issues and Pending demands prior to the Strike.
The Indefinite Strike is a well-defined and calculated move by NJCA to give the pressure to the Central Government as the Govt is reluctant to address the issues of CG Staffs and implement the 7th CPC recommendations.
It is inevitable to the Government to take decision on 7th Pay Commission before the commencement of Indefinite Strike
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