NPS: Union Cabinet approved enhancement of Govt. contribution towards National Pension System (NPS) to 14%

NPS: Union Cabinet approved enhancement of Govt. contribution towards National Pension System (NPS) to 14%
streamlining-national-pension-system-nps


Press Information Bureau
Government of India
Ministry of Finance
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 Out of 60% of the accumulated corpus withdrawn by the NPS subscriber at the time of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. 
Read also :  Emergency Treatment at outside locations/stations – clarifications for Railway Beneficiaries

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 targe
ts
The proposed changes to NPS would be made applicable immediately once time
critical decisions are
Read also :  Small Saving Schemes: Date of submission of Aadhaar number extended upto 31st March, 2018 - MoF
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. 
Source: PIB

https://https://www.facebook.com/stafftoday
https://feedburner.google.com/fb/a/mailverify?uri=blogspot/jFRICS&loc=en_US
https://twitter.com/stafftoday

COMMENTS