NPS (New Pension System) and the old defined benefit (DB) pension system



Ministry of Finance

New Pension System

The Government has implemented the New Pension System (NPS) for Government employees who join Central Government (except armed forces) on or after 1st January, 2004.

The NPS and the old defined benefit (DB) pension system are two different pension systems. Therefore, there can not be any comparison between the two in so far as the benefits to employees are concerned. The Pension benefits under the DB system are defined, however, under NPS the amount of pension would depend on the investment returns, the accumulation upto the age of retirement and level of annuitisation and type of annuity chosen.

Some representations of Employees’ Associations have been received by the Government. The major reasons for its opposition by the Employees’ Associations are minimum pension, safety and returns on investment. Many measures have been taken to protect the interests of the NPS subscribers, like prescribing a flexible investment pattern, establishing a regulator in the form of the Interim Pension Fund Regulatory and Development Authority and creating the modern institutional architecture of NPS, which is low cost.

There is no proposal from the Government to reconsider the NPS.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Lok Sabha today.

PIB

Comments

SAILENDRA said…
New Pension Scheme is Not good but it is compulsory for Government servant appointed on or after 01/01/2004. It is linked with Share Market and the company managing the fund. The future of this scheme is dark. It is implemented in hurry. some rule are yet not clear abut it like what will happen if a Government servant resign from service before completing 10 years. It is just like cheating Government Servants by the Government.
Sachin Agharkar said…
New Pension Scheme is like LIC policies which benefit can get only after retirement or resignation.... If an employee needs money for his urgent and important responsibility/need, like Hospitalisation, Buying House, Self Marriage, Buying of Bike/Car etc.etc. How may he withdraw the amount??? Can he take any advance against his balance?? Is there any provision for Partial withdrawal?? A Govt. hasn't think about it and kept compulsion to invest the Fund in Share Market which is quite cheap and unuseful for an employee during his service.
rams said…
NEW PENSION SCHEME IS NOT USEFUL GOVT EMPLOYERS OF PARAMILITARY FORCE,
WE HAVE FIGHT FOR INDIA AGAINST TO TERRORISTS, WE HOPE NOW I AM SOLDIER AFTER 50 YEAR LIKE SOLDIER, NO USEFUL, WE HAVE NO BENEFITS LIKE BUILD OUR OWN HOUSE, PENSIONS

I THINK THE GOVT HAS TO BE MODIFIED THE NPS SYSTEM FOR CENTRAL ARMED POLICE FORCE PERSONNEL LIKE AS ARMED FORCES
Anonymous said…
IT IS A DISCRIMINATION BETWEEN THE OFFICERS/STAFF APPOINTED BEFORE 1.4.2004 AND AFTER THAT DATE. NO SOCIAL SECURITY HAS BEEN PROVIDED. SUCH TYPE OF INSTRUMENT CAN BE USED BY INDIVIDUAL HIMSELF/HERSELF FOR THEIR RETIREMENT AGE.

NEEDS TO RE-THINK OTHERWISE A TIME CAME WHEN NPS OFFICERS WILL DISCRIMINATE AGAIN, WHILE RELEASING THE OLD AGE PENSIONS, WHEN THEY ARE THERE.

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