Posts Tagged ‘New Pension System’

Age Limit for NPS

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Age Limit for NPS

Vide PFRDA (Exits and Withdrawals from National Pension System) Second Amendment Regulations, 2017, dated 6th October, 2017, the Pension Fund Regulatory and Development Authority (PFRDA) has permitted any Indian citizen who is in the age group of 18-65 years to join the National Pension System (NPS) on voluntary basis. As informed by PFRDA, a total of 1056 persons between the ages of 60-65 years have joined up to 31st January, 2018.

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Be the first to comment - What do you think?  Posted by admin - February 13, 2018 at 1:55 pm

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Maximum age of joining National Pension System (NPS) increased from the existing 60 years to 65 years under NPS

Maximum age of joining National Pension System (NPS) increased from the existing 60 years to 65 years under NPS – Private Sector

In continuance of the several initiatives under taken by Pension Fund Regulatory and Development Authority (PFRDA) during the last few years to increase the pension coverage in the country, PFRDA has now increased the maximum age of joining under NPS-Private Sector (i.e. All Citizen and Corporate Model) from the existing 60 years to 65 years of age.

Now, any Indian Citizen, resident or non-resident, between the age of 60- 65 years, can also join NPS and continue up to the age of 70 years in NPS. With this increase of joining age, the subscribers who are willing to join NPS at the later stage of life will be able to avail the benefits of NPS.

NPS provides a very robust platform to the subscriber to save for his/her old age income security. Due to the better healthcare facilities and increased fitness, along with the opportunities and avenues available in the private sector as well as in the capacity of self-employment, more and more people in their late 50s or 60s are now living an active life allowing them to be employed productively.

The subscriber joining NPS beyond the age of 60 years will have the same choice of the Pension Fund as well as the investment choice as is available under the NPS for subscribers joining NPS before the age of 60 years.

Subscriber joining NPS after the age of 60 years will have an option of normal exit from NPS after completion of 3 years in NPS. In this case, the subscriber will be required to utilize at least 40% of the corpus for purchase of annuity and the remaining amount can be withdrawn in lump-sum.

In case of such subscriber willing to exit from NPS before completion of 3 years in the NPS, he/she will be allowed to do so, but in such case, the subscriber will have to utilize at-least 80% of the corpus for purchase of annuity and the remaining can be withdrawn in lumpsum.

In case of unfortunate death of the subscriber during his stay in NPS, the entire corpus will be paid to the nominee of the subscriber.

The increase in joining age will provide the options to the subscribers who are at the fag-end of the employment and expecting lump-sum amount at the time of retirement, but willing to defer their retirement planning for future, to open the NPS account and contribute the lump-sum corpus to NPS for better fund management by Professional Fund Manager to fetch better returns and plan for the regular income after some time. The Annuity rates available in the older age fetch better annuities than that at the age of 60 or less age.

This initiative will allow a larger segment of the society particularly senior citizens to reap the benefits of NPS and plan for their regular income.

PIB

Be the first to comment - What do you think?  Posted by admin - November 1, 2017 at 10:08 pm

Categories: Retirement Age   Tags: , ,

Tax benefit available under National Pension System (NPS) – AIRF

Tax benefit available under National Pension System (NPS) – AIRF

GOVERNMENT OF INDIA (BHARAT SARKAR)
MINISTRY OF RAILWAYS (RAIL MANTRALAYA)
(RAILWAY BOARD)

RBE No. 31/2016

No 2012/F(E)III/1(1)/4

Dated: 07.04.2016

The GMs/FA&CAOs,
All Indian Railways/Production Units/RDSO.
(As per mailing list)

Subject: Tax benefit available under National Pension System (NPS)

A copy of Pension Fund Regulatory & Development Authority (PFRDA)’s letter No.PFRDA/23/CORP/20/5 dated 25.02.2016 on the above subject is enclosed for information and compliance. The contents of the letter regarding opening of e-NPS account shall apply mutatis mutandis on the Railways also. ·

2. Please acknowledge receipt.

(Sanjay Prashar)
Deputy Director Finance, (Estt.)lll,
Railway Board.

Source: AIRF

Click to view the PFRDA Letter dt:25.2.2016

Be the first to comment - What do you think?  Posted by admin - April 15, 2016 at 12:03 pm

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New Pension Scheme : Analysis of the Issues by the 7th Pay Commission

New Pension Scheme : Analysis of the Issues by the 7th Pay Commission

10.3.12 The Commission has examined these concerns raised by the stakeholders. The Commission also interacted with Chairman, PFRDA, and representatives of the Department of Pensions and Pensioners Welfare (DPPW), Department of Personnel and Training (DoPT), Department of Expenditure (DoE) and the Department of Financial Services (DFS).

10.3.13 In so far as the future value of pension under NPS is concerned, the Commission notes that this would depend upon a combination of factors:

(i) performance of the invested fund, which in turn would depend on the asset mix of the investment and general economic situation of the country,
(ii) cost of financial intermediation,
(iii) contribution rates,
(iv) period of contribution,
(v) performance of the fund manager and
(vi) development of the annuity market.

Grievances against the NPS

The NPS has now been in effect for over 10 years. During this period, there has been perceptible progress in putting together the architecture and providing information to subscribers. Major concerns, however, remain. Broadly, these are as under:

i. The larger federations and staff associations advocated scrapping the NPS on the ground that it discriminates between two sets of government employees.

ii. Individuals covered under NPS have pleaded for reverting to the OPS on the grounds of uncertainty regarding the actual value of their future pension in the face of market related risks.

iii. Individuals have pointed out that under NPS, the effective salary becomes less since the employee has to mandatorily contribute 10 percent of pay towards the pension fund.
iv. Individuals have stated that grievance redressal facility is not effective and consultation with stakeholders has been non-existent. This communication gap has generated insecurity in the minds of stakeholders including staff and Group ‘A’ officers of Central Government as well as All India Service Officers.

v. Associations have complained that Family Pension after the death of the employee is not ensured in the NPS. Moreover, if an employee dies at an early age, the family would suffer since annuity from the contribution would be grossly inadequate.

vi. Individuals have complained that NPS subscribers have no recourse to GPF for their savings. Their personal savings (10% of salary) are considered part of a larger corpus. It has been pointed out that the justify approach would be to consider only government’s contribution and the returns earned on it as the effective amount available for purchase of annuities.

vii. Associations have pointed out that unlike the facility under GPF, it is not possible to take refundable advances under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere.

viii. Grievances also relate to tax treatment under NPS. While contributions and accumulations in NPS are exempt, lump sum withdrawals from NPS at any time are
taxable at par with any other income. In addition, there is a service tax liability on any amount utilised for purchase of annuity.

ix. It has been pointed out that though NPS became effective from 2004, detailed instructions were issued only in late 2009 and in many cases the credit of contributions began from 2012. In the case of AIS officers in some States, contributions by the concerned State Government are yet to be fully made and deployed. The net result of this has been that contributions for the period 2004-2012 have not been made in full or have earned simple interest and did not get any market linked returns. Because of the prevailing confusion, contributions made by some AIS officer have been returned to them without interest. This will have a huge impact on the eventual corpus as the benefits of compounding were not available for the first 8 -9 years.

x. Individuals, in their presentation before the Commission, stated that annuities under NPS have no compensation for inflation unlike dearness relief under OPS. Further, in the case of OPS there is a revision in basic pension itself after every Pay Commission. This too is not available in respect of annuity of NPS subscribers.

xi. It has been pointed out that government employees are not given freedom of choice in choosing their fund manager based on performance and track record as the contributions are divided in a pre-specified ratio among selected Pension Fund Managers. It has been stated that government employees have no say in asset allocation
of their money.

xii. Concerns were raised that the contribution of 10% + 10% will not be sufficient to create a corpus which provides reasonable assurance that pension will be 50 percent of the last pay drawn.

Authority : http://7cpc.india.gov.in/

Be the first to comment - What do you think?  Posted by admin - November 26, 2015 at 3:51 pm

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Assets under Management (AUM) of National Pension System (NPS) crosses Rs. 1 lac crore

Assets under Management (AUM) of National Pension System (NPS) crosses Rs. 1 lac crore: PFRDA Press Release
PENSION FUND REGULATORY AND DEVELOPMENT  AUTHORITY

PRESS RELEASE

Assets under Management (AUM) of National Pension System (NPS) crosses Rs. 1 lac crore

NPS has been implemented for all Government Employees (except armed forces) joining Central Govt. on or after 01 January 2004. Most of the State/UT Governments have also notified the National Pension System (NPS) for their new employees. NPS has been made available to every Indian Citizen from 01st May 2009 on a voluntary basis.

Further, from 1st June 2015, the Atal Pension Yojana, has been launched which has given the much required impetus to the social security schemes Currently, NPS and APY together have more than One Crore subscribers with total Asset Under Management (AUM) of Rs.1,00,275 crores. The segment wise status of the NPS and APY as on 03.10.2015 is as under:

Segment No. of Subscribers Asset Under Management (Rs. Cr.)
Central Government 15,71,136 32,381
State Governments 27,74,459 49,974
NPS-Private Sector 5,24,143 7,943
NPS-Lite/Swavalamban 44,67,733 1,865
Atal Pension Yojana (APY) 7,94,467 112
Total 1,01,31,938 1,00,275
PFRDA has taken various steps at the policy as well as operational level to make NPS more subscriber friendly. In addition to this additional tax benefits made available exclusively to NPS has given a fillip to the scheme. This is further expected to result into a substantial increase in the subscriber base by end March 2016.

The following steps have been taken in the recent past for the convenience of the subscriber:

  •  The investment guidelines for NPS have been revised to expand the investment avenues for optimisation of the returns.
  •  Partial withdrawal upto 25% of subscriber’s own contribution for specific purposes like higher education of children, marriage of children, construction of house and specified illness have been allowed to the NPS subscribers after completion of 10 years in NPS.
  • NPS Private Sector subscribers can continue contributing beyond 60 years upto 70 years of age.
  • NPS Subscriber can defer the withdrawal of lumpsum amount upto the age of 70 years and also have the option to defer purchase of annuity upto 3 years from the date of superannuation or 60 years. The funds during this period remain invested in the system.
  • The Statement of Transactions (SOT) being sent by CRA to the existing subscribers has been modified to reflect the returns of the individual subscriber since the date of account opening and also the return generated during the last
    financial year.
  •  To facilitate and operationalize the deposit of additional contribution of Rs.50,000/- to avail of the additional tax benefit under Section 80 CCD(1B), Government Subscribers already covered under NPS have been provided the
    facility to deposit voluntary contributions in their Tier I account through any POPSP. Government employee covered under old pension scheme can also avail this tax benefit by opening individual Tier I account through any POP-SP and contributing to the same.
  •  Online reset of password and facility to change mobile no. and email Id have been provided to all the NPS subscribers.
SMS alerts on balances in the NPS account being sent to the subscribers on quarterly basis, in addition to regular monthly alerts on contribution and other changes in the PRAN.
APY scheme provides minimum Govt guaranteed monthly pension to subscribers ranging from Rs 1000 to Rs 5000. Further, Govt. of India also co-contributes 50% of the total contribution made by a subscriber during a financial year subject to maximum of Rs 1,000/- per annum for a period of five years, if eligible subscribers open the account by 31st December 2015. All Indian Citizens, in the age group of 18-40 years are eligible to join the scheme through any bank branch. About 8 lakh subscribers have joined APY till date.
Source: PFRDA
[http://pfrda.org.in/WriteReadData/Links/Approved%20Press%20Release%20Milestone%20of%201%20lac%20crores%208d3ccf28-4a6e-44e4-91ad-61e1edfa08d8.pdf]

Be the first to comment - What do you think?  Posted by admin - October 16, 2015 at 8:19 am

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Reactivation of PRAN post exit from NPS

 Reactivation of PRAN post exit from NPS: PFRDA Instructions

PFRDA
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

PFRDA/2015/19/CSG/1

Date: 30th June, 2015

All Central Government Ministries & Departments/ State Governments
PrAOs, PAOs, CDDOs, NCDDOs & other CG Nodal offices;
DTAs, DTOs, DDOs & other SG Nodal offices
Autonomous Bodies

Subject: Reactivation of PRAN post exit from NPS

PFRDA has been receiving requests from various government nodal offices to reactivate the PRANs for credit of missing NPS contributions, wherein withdrawal requests have already been settled towards final payment to the subscribers.

Currently, the exit process is initiated with the generation of claim ID six months prior to the date of superannuation. As per PFRDA Exit & Withdrawal Regulations 2015, the employee’s and employer’s contributions of last three months prior to superannuation shall not be uploaded in the NPS account but would be credited to the some other account of the subscriber, directly by the employer. During the withdrawal process which stretches over 6 months, both the subscriber and the nodal office have sufficient time to ensure and to confirm that all the missing contributions have been uploaded in the respective PRAN.

In light of the above, PFRDA shall not entertain any such request forthwith, for uploading contributions of arrears/ missing credits after final settlement of exit/ withdrawal of the subscribers and consequent closure of their NPS account. Henceforth, missing credits, if any, should be settled mutually between the subscriber and the Nodal office as per their internal administrative process and outside the NPS architecture, as is currently applicable to last three months contributions before superannuation in line with the guidelines issued by PFRDA in this regard.

Therefore, all government nodal offices are instructed to ensure uploading of all the pending contributions in the PRANs, before initiating/ processing/forwarding the withdrawal requests to the CRA and take necessary action as per this circular.

Ashish Kumar
General Manager

Source: http://pfrda.org.in/MyAuth/Admin/showimg.cshtml?ID=724

Be the first to comment - What do you think?  Posted by admin - July 6, 2015 at 5:53 am

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Simplification of Withdrawal process – Documentary requirements : PFRDA Clarification

Simplification of Withdrawal process – Documentary requirements : PFRDA Clarification

CIRCULAR

PFRDA
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

PFRDA/2015/07/EXIT/02

12th May, 2015

To,
All Govt depts./PAO’s/PrAO’s/DDO’s/DTO’s & CRA

Dear Sir/ Madam,

SUB: Simplification of Withdrawal process – Documentary requirements- Circular dt. 25th February, 2015

Reference is drawn to the circular issued on 25th February, 2015 on the matter of simplification of withdrawal process and the documentary requirements thereunder.

There have been queries from some of the stakeholders as to whether these simplified documentary requirements as specified in the circular are applicable to withdrawal requests reported to CRA and NPS Trust, prior to the issuance of the circular or not.

In this regard, it is clarified that the circular would be applicable even to the withdrawal requests which were reported prior to the issuance of the said circular to CRA and NPS Trust.

All other terms, conditions of the said circular remain unaltered.

Yours faithfully,
Sd/-
Venkateswarlu Peri
General Manager

Source: PFRDA

Download: NPS Simplification of Withdrawal process – PFRDA Clarification

Be the first to comment - What do you think?  Posted by admin - May 14, 2015 at 3:35 am

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NPS is more beneficial than EPF

NPS is more beneficial than EPF

Is NPS better than EPF?

The NPS is more complicated than EPF, but it may ensure a sufficient retirement kitty

If there’s one investment option that has received generous tax breaks in the Budget, it is the National Pension System (NPS). In a watershed move, the Finance Minister has also announced that employees in the organised sector will now be able to opt out of contributions to the Employees Provident Fund (EPF) and invest in the NPS instead. So, if given this choice, what should you do? Here’s how they compare.
Contributions

EPF contributions are mandatory for employees earning up to Rs. 15,000 a month in the organized sector. Many employers however insist on EPF contributions for all their employees. The contribution is pegged at 12 per cent of your pay (basic plus dearness allowance). Your statutory EPF contributions are matched by your employer. If you are an employee who usually struggles to save, the EPF is a good option for you as it forces you to save at least 12 per cent of your pay.

Read more at The Hindu Business Line

Be the first to comment - What do you think?  Posted by admin - March 8, 2015 at 4:29 pm

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Exempt Defence Civilian Employees From New Pension Scheme – AIDRDO TOA

Exempt Defence Civilian Employees From New Pension Scheme – AIDRDO TOA

All India DRDO Technical Officers Association have represented both the Central Government and 7th Pay Commission to exempt the Defence civilian employees from New Pension Scheme. The copy of the Representation of AIDRDO TOA is given below..

“……Dear colleagues

We have represented to both previous NDA & UPA Governments to scrap NPS.Now we have requested the present Government to exempt the Defence civilian employees from New Pension Scheme at par with Armed Forces.Let’s be optimistic that present Central Government will exempt us.Let’s build pressure on the Govt. by ensuring that employees/officers who joined after 01/01/2004 send individual representations to the Cabinet Secretary through proper channel.Pl.forward this mail to our younger brothers & sisters who joined after 01/01/2014.

During the meeting with Chairman,7th CPC we have categorically told that New Pension Scheme should be rescinded and scrapped.We requested that the CPC can intervene as 6th CPC had given recommendations that Defined Pension Scheme is better than NPS.We requested that the recommendations of 6th CPC should be applied to all entrants since 01/01/2004.

The extract from our memorandum to 7th CPC on NPS is given below for ready reference.

New Pension Scheme (NPS)

2.1 The contributory pension system brought in by the GOI through their notification dated 22.12.2003, now renamed as National Pension System under PFRDA Act, has been imposed on Government employees who entered service on or after 1.1.2004.

2.2 This is an illegal act in as much as the Supreme Court of India had held Pension as an enforceable inalienable fundamental right. Therefore it should be scrapped or at least not made applicable to Government employees. This has also divided the CG employees into two categories and therefore it is discriminatory in respect of persons who have entered service on or after 1.1.2004 who had been denied the statutory pension. Any discriminatory scheme is illegal and ultravires of Article 14 of the Constitution. On this count also the NPS cannot be made applicable to the Government employees.

2.3 The Centre for Economic Studies and Policy, Institute for Social & Economic Change, Bangalore in a Study of Terminal Benefits of the Central Government Employees sponsored by the VI CPC had also observed that Civil Services Pension is in the nature of a deferred wage. It is well known that the principle guiding the pay package of civil servants is one of intentionally spreading out the compensation over a long period of time, thereby the wages paid out during the course of the work tenure is kept low by design, and the pension payments made during the retirement phase compensate for the low working wages.

2.4 The above mentioned study under the heading “Arguments against pension reforms” states as follows:

“Deferred Wage: In the context of civil servant pension payments, it is argued that, the principle guiding the fixation of pay package is one of intentionally spreading out the compensation over a long period of time, whereby the wages paid out during the course of work tenure is kept low by design, and the pension payments made during the retirement phase compensate for the low working wages. The Supreme Court of India held that pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer. It is not an ex-gratia payment, but a payment for past services rendered. It is a social welfare measure, rendering socio-economic justice to those who in the heyday of their life ceaselessly toiled for the employer on an assurance that in their old age, they would not be left in the lurch.”

“Larry Williams observes “Actually, civil service pensions, because they are not based on contributions, are best described as deferred wages. Civil servants accept a lower current wage in exchange for the promise of a pension in their old age. If this pension were contributory, they would insist on a higher wage and government would have to either increase taxes or borrow (issue debt) to pay it. The real cost of civil servants is thus much higher than recorded under the current system of cash accounting. A good reform would be to move to a system of accrual accounting setting up at least a notional fund to pay these deferred wages” (Larry Wilmore, 2004)” “Public and private sector pay differentials: A comparison of the public and private sector wages reveals that while the public sector wages for the lower grades compares well with that of the private sector, the salaries of the employees belonging to the higher grades are highly unfavourable to the public sector employees. The post-retirement benefits that the government employees are entitled to act as some incentive to retain them in government sector.”

2.5 The above study had submitted the following estimated pensionery outgo which tends to increase during the period from 2014-2038. It is only after 2043 that it starts declining and will be reduced to zero only in 2088. The table is given below:

Table showing estimated pensionery outgo 

 Year                                            Employee Pension Payout (in Rs   Crores) Family Pension    Pay out (in Rs. Crores) Total pension payout (in Rs.Crores)
2004 11300.69 2983.38 14284.07
2008 13532.84 3572.68 17105.52
2013 16549.07 4368.94 20918.02
2018 21862.54 5771.79 27634.33
2023 27723.68 7319.11 35042.80
2028 34076.27 8996.13 43072.41
2033 39321.68 10381.01 49702.69
2038 45164.50 11923.41 57087.90
2043 41747.23 11021.30 52768.53
2048 35011.92 9243.18 44255.10
2053 25405.44 6707.07 32112.51
2058 16303.15 4304.07 20607.22
2063 8179.51 2159.39 10838.90
2068 3159.88 834.19 3994.07
2073 800.68 211.34 1012.02
2078 110.26 29.17 139.43
2083 3.52 0.97 4.49
2088 0.00 0.00 0.00

2.6 The above study had also pointed out that expenditure on pensions of civil servants of high income OECD countries on an average is 2% of GDP (less than 1% in Ireland and more than 3.5% in Austria*)(* Source: OECD Social Expenditure Database). But in the 8 South Asian countries it is less than 1% of GDP (Source: World Bank Data base). However, in India between 1964-65 and 2004-05 on an average pension payments (Civil Service pension paid by Central Government) have constituted 0.51% share of GDP. The Pension liability would continue to increase and reach 0.54% level by 2014-15 and remain at that level till 2024-25 after which they would decline as a percentage of GDP according to the same study conducted by Dr.Gayatri at the instance of VI CPC. These figures argue themselves in favour of continuation of the Defined Benefit Pension Scheme for all Central Government employees instead of throwing a section of them to market based NPS. According to 2011 census 62.8% are in the age group of 15 to 60 and only 8.2% are above the age of 60.

2.7 From the above projection it is very clear that the benefit of NPS will commence only after 30 years i.e. in 2044. And during the period it will increase exponentially as because in addition to the Statutory pension liability the Government will be contributing to the NPS also @ 10% of annual salary bill of the CG Employees who have entered service on or after 1.1.2004.

2.8 The final conclusion of this study team has been as under:

“Mainly given the fact that the future liability although may be large in terms of the absolute size is not likely to last very long and does not constitute an alarmingly big share of the GDP which is also on the decline, it appears that pursuing the existing “Pay As you Go” to meet the liability would be an ideal solution.”

2.9 Applying this conclusion we may suggest that the NPS may not be made applicable to the Government employees and all those who had been covered under NPS may be reverted back to statutory pension scheme. The Government may be asked to study the experiences of this scheme in several other countries in the world. In Chile such a scheme has been reversed as because the return which the low paid employees got out of the annuity purchased was not as good as 50% of LPD but as low as 20% of LPD. The UK Government had to pay out of the exchequer large amount by way of subventions in order to ensure that that annuities purchased yield 50% of LPD as pension. It is well known that in USA where there were similar pension schemes dependent upon the market had collapsed during the financial melt down from 2008 onwards. It is estimated that more than 3.5 trillion $ worth of pension wealth was lost. The workers not only lost their pension but also their jobs. Our respectful submission is that taking into account the demographic considerations of India which is a country of young do not need any such market oriented pension scheme, particularly when the international experience is that such schemes had failed and our country can afford to pay pension to civil servants which stands at level of 1% of the GDP. We conclude by quoting the opinions of experts on the future of market dependent pension Scheme.

Mr Joseph Stiglitz (Chief economic advisor to former president of USA Bill Clinton, former vice-chairman and chief economic advisor, World Bank, Nobel Prize winner, Professor of economics, Columbia university) said that “Stock market does not guarantee returns. It does not even guarantee that the stock values will keep up with inflation. Privatization would not protect retirees against the social security systems insolvency. Argentina’s privatization of its pension system was at the centre of its fiscal woes”.

Mr Dean Baker (Co-director for centre for economic and policy research, Washington) said “Privatisation means that you would not have a guaranteed benefit that you have today. It would depend on how will your investments do or how well they have done at the point you retire. He quoted the collapse of NASDAQ and Enron. In Britain, Insurance companies could not honour their promises and the Government had to compensate with 8 billion pounds”.

We have requested the PFRDA Authority to furnish certain information on their working . On receipt of this information we may make certain further submission for the consideration of the Commission.”

With greetings,

Yours fraternally
V.Krishna Mohan

Be the first to comment - What do you think?  Posted by admin - January 7, 2015 at 10:08 am

Categories: 7CPC, Defence, Employees News, General news, Pension   Tags: , , , ,

What are Government’s Plan about New Pension System

Latest on New Pension System

Q- Of late, there have been lot of changes in the NPS. Are more changes coming?
A- The PFRDA Act was notified in February this year. Now the regulations have to be framed under the Act. As many as 12 regulations have already been framed. They have been put on the PFRDA website for stakeholders’ views. We have received good suggestions. These would be placed before the Pension Advisory Committee. Based on the PAC’s suggestions and views, it will come back to PFRDA Board for finalisation and the entire process will be completed by December 15 this year.

Q- What is the rationale behind such a low fund-management charge (0.01%)?
A- The mandate of the Act is to ensure minimum cost. The new fee is decided based on a transparent bidding process. So, we expect all the pension fund managers (PFMs), who are part of this system to be able manage funds at the cost which they agreed on. As we go along, there would be some learning as to how this is motivating stakeholders and how it is affecting subscribers’ interest. We would see if the fund managers are able to do their business sustainably and profitably.
Q- So, there is a scope of upward revision of PFMs fee…

A- No, I cannot say that; certainly, not in the current scheme of things. But we will assess the impact of different fees on the viability and profitability of the PFMs business.
The monthly accretion in NPS today is about Rs 2,500 crore. That’s the incremental flow every month but we certainly need to increase it. We are expanding the scope of PFMs to increase the return by deploying the money in newer instruments. We do not want fund managers to involve in marketing of the scheme. We want them to focus on maximising returns.
Q- Who will market the NPS then?

A- PFRDA itself is engaged in marketing and selling the scheme. We have our own strategy and it involves publicity, reaching out to corporate, state governments and the unorganised sector. We are doing so through PoPs and aggregators and also reaching out to the corporates. We have tied up with FICCI and CII for marketing of the scheme to their members. Though the present taxation rule, which is EET (exempt, exempt, tax), is proving to be an issue with corporate sector. Most employees there are tax payers, and as per present rule the gain at times of redemption is taxable at the hand of the beneficiaries.

Q- Earlier, it was proposed that with the implementation Direct Tax Code (DTC), NPS would become an EEE instrument. What is the status now?

A- The government wants to promote the scheme as this is a defined contribution scheme (wherein an individual contributes himself towards his pension saving) and it saves a lot of money for the government. The defined benefit (where the employer would bear all the cost of employee’s pension) scheme earlier would result in a lot of expense for the government. To that extent, government would not mind losing some money on the fiscal side by making NPS an EEE scheme.

Q- You said PFRDA is expanding the scope of PFMs to increase the yield by deploying the money in newer instruments. What are these new instruments?
A- It’s an ongoing process. We recently allowed PFMs to invest in additional tier 1 bonds issued by banks. We are on the process of allowing them to invest in asset-backed securities and covered bonds. We are also planning to allow them to invest in Real Estate Investment Trusts (REITs) as and when we get more clarity on it.

Money Today’s Dipak Mondal caught up with R V Verma, member, Pension Fund Regulatory and Development Authority (PFRDA), to know the rationale behind recent changes in the National Pension System (NPS).

Be the first to comment - What do you think?  Posted by admin - December 1, 2014 at 5:06 pm

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NPS is far beneficial than Government Pension

GConnect has published an article titled, ‘NPS is far beneficial than Government Pension’

GConnect has published an article titled, ‘NPS is far beneficial than Government Pension’ – Comparison of New Pension Scheme (National Pension Scheme) and Central Government Pension

A very popular website among Central Government employees, GConnect, which began functioning more than 8 years ago, continues to be a strong line of communication between the Central Government and its employees.

The article that was published yesterday seeks to answer critics who claim that the new pension scheme is outright bad. GConnect has made it very clear that the opinions expressed in the article belong to its writer, Mr. Dorai, Deputy Director, ESIC Model Hospital and that the website doesn’t necessarily subscribe to them.

The ‘study report,’ that compares the salient features of the old(Central Government Pension Scheme) and new pension schemes, is bound to create controversies.

While various Central Govt employees associations and federations are putting pressure on the Government to withdraw the new pension scheme and enforce the previous one, we believe that this article is going to make a huge impact.

The writer begins the article by stating that those who are opposing the new pension scheme, with more benefits than the old pension scheme, are doing so due to their ignorance. The article also explains how the new pension scheme could create huge wealth.

The report gives as an example, the case of an employee who joins the Central Government employment as a Upper Division Clerk(UDC) in 2014 and retires after 35 years service, in 2049. The report gives a comparative study of how the pension fund grow each of these 35 years. The study also assumes a regular dearness allowance of 6% every six months, and an annual increment of 3%.

The study also assumes that, at an interval of 10 years, the employee gets 3 promotions during his service tenure. Most importantly, it is assumed that matching the employee’s contribution, the Government’s contribution too would witness an 8.7% increase per annum.

At the time of retirement, the employee is likely to get Rs. 2,87,26,201, which is split into two shares – 40% and 60%, which amounts to Rs. 1,14,90,481, and Rs. 1,72,35,720, respectively. 60% of the lumpsum pension wealth is given at the time of retirement. The remaining 40% is invested in an annuity scheme.

It is stated that the monthly pension will be a minimum Rs. 83,306. In addition to this, at the age of 70, the employee gets the remaining 40% back. The article strongly claims that this money could be the gift that the person leaves behind for his future generation.

The article’s highlight feature is the claim that if the Pay Commission recommendations are taken into account, the amount could be much higher and that the UDC could get as much as Rs. 5 crores at the time of retirement.

According to the old Govt pension scheme, the employee’s monthly pension amount would be Rs. 1,00,934, and after his demise, his spouse would get Rs. 10,317 plus Dearness Allowance. After his/her death, there are no more benefits for the family.

The article is indirectly stating that the absence of gratuity and other such benefits is not a huge issue. According to the old Govt pension scheme, at the time of retirement, the employee would make only Rs. 38,32,550, which is Gratuity (16.5 months) + EL Encashment + Commutation.

While discussing the General Provident Fund (GPF), the article assumes that since nobody leaves anything much in this fund, its overall impact on the total pension fund would be minimal.

The writer concludes his article by declaring that those who oppose the new pension scheme lack intelligence.

Source: 7thpaycommissionnews.in

Be the first to comment - What do you think?  Posted by admin - November 16, 2014 at 8:29 am

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Information sought by PFRDA on existing pension/superannuation schemes from CPSEs

Information sought by PFRDA on existing pension/superannuation schemes

PFRDA Act gives very wide roles and responsibilities to the regulator with respect to the promotion of old age income security in the country, for promoting pension industry and for protecting the interest of the subscriber to pension and retirement funds. PFRDA Act applies to the National Pension System and also to any other pension scheme not regulated by any other enactment.

In keeping with the demand of the market, quite a few pension plans/ superannuation funds/ retirement schemes have been offered by corporates/CPSEs for their employees for which the regulatory framework may not be clear. The market dynamics are such that products and services including financial services develop faster than the regulatory mechanism for such services.

Now that there is a statutorily setup dedicated pension regulator with specific responsibility for the promotion of old age income security, developing and regulating pension funds, and protecting the interest of subscribers, PFRDA is in the process of framing regulations for the National Pension System and also for any other pension schemes which are not regulated by any other enactment. PFRDA has accordingly sought information on existing pension/ superannuation funds/schemes from all PSUs with respect to their regulatory jurisdiction, supervisory mechanism, investment guidelines, risk management strategies, number of subscribers, assets under management etc. so that the areas of concerns can be addressed suitably in line with the provisions of the PFRDA Act.

The letter sent to all CPSEs is as under:

Read more:

http://pfrda.org.in/MyAuth/Admin/showimg.cshtml?ID=527

Be the first to comment - What do you think?  Posted by admin - October 27, 2014 at 9:50 am

Categories: Employees News, General news, Pension, Promotion   Tags: , , , , , ,

Additional Benefits on death/disability of Government servant covered by NPS

PFRDA, FINANCE MINISTRY AND RAILWAY BOARD ORDERS ON ADDITIONAL BENEFITS ON DEATH / DISABILITY OF GOVERNMENT SERVANTS COVERED BY NATIONAL PENSION SYSTEM…

Additional benefit on death/disability of Government Servants covered by New Pension Scheme – Clarification regarding RBE 96/2014

RBE No.96/2014

GOVERNMENT OF INDIA (BHARAT SARKAR)
MINISTRY OF RAILWAYS (RAIL MANTRALAYA)
(RAILWAY BOARD)

No. 2012/F(E)III/1(1)/4

New Delhi, Dated 8.9.2014

The GMs/FA&CAOs,
All Indian Railways/Production Units/RDSO.
(As per mailing list)

Subject: Additional benefit on death/disability of Government servant covered by New Pension System- clarification regarding.

A copy each of the Ministry of Finance, Department of Financial Services O.M.No.11/23/2013-PR dated 21.05.2014 and the Pension Fund Regulatory and Development Authority (PFRDA)’s letter No.PFRDA/24/FXIT/10 dated 22.08.2014 is enclosed for information and compliance. These instructions shall apply mutatis mutandis on the Railways also.

2. The Department of Pension & Pensioners’ Welfare (DOP&PW)’s O.M. dated 05.05.2009 and the PFRDA’s circular No.PFRDA/2013/2/PDEX/2 dated 22.01.2013 mentioned in the Ministry of Finance’s O.M dated 21.05.2014 were circulated to the Zonal Railways vide Board’s letter No. 2008/AC-II/21/19 dated 29.05.2009 and letter No. 2010/AC-II/21/18 dated 02.07.2013 respectively.

3. Please acknowledge receipt.

(Amitabh Joshi)
Deputy Director Finance (Estt.)III,
Railway Board.

Finance Ministry Orders :

Additional benefits on death/ disability of Government servant covered by National Pension System (NPS) – Clarifciation –reg.

No.11/23/2013-PR
Government of India
Ministry of Finance
Department of Financial Services

Jeevan Deep Building, Parliament Street,
New Delhi, dated 21st May, 2014

Office Memorandum

Subject: Additional benefits on death/ disability of Government servant covered by National Pension System (NPS) – Clarifciation –reg.

The undersigned is directed to refer to Railway Board, Ministry of Railways OM No. 2012/F(E)III/1/4 dated 14th January 2013 on the subject above and to say that the comments of this Department on the Ministry of Railways’ reservations as under Para 3 of above OM, are as under:

“The PFRDA’s clarification that the benefits granted vide the Department of Pension & Pensioners’ Welfare (DPPW) O.M. dated 05.05.2009 are over and above the benefits admissible under National Pension System (NPS), needs to be modified to the extent that the employee or the legal heirs of the employees, who wish to opt for pension or family pension as per the DPPW order, can not avail of two pension related benefits under the NPS and CCS (Pension) Rules, 1972 simultaneously.”

2. For any further clarification on the DPPW OM dated 05th May 2009, Ministry of Railways may kindly get in touch with the DPPW itself.

3. This issues with approval of Joint Secretary, Department of Financial services, Ministry of Finance.

(Surinder Kaur)
Under Secretary to the Government of India

Orders issued by PFRDA :

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
1st Floor, ICADR Building, Plot No. 6,
Vasant Kunj Institutional Area,
Phase – II, New Delhi – 110070

VENKATESWARLU PERI
General Manager

PFRDA/24/EXIT/10

22nd Aug, 2014

Mr. Amitabh Joshi
Deputy Director Finance (Estt.)III,
Railway Board,
Ministry of Railways,
Rail Bhawan, New Delhi-01

Subject: Additional Benefits on death/disability of Government servant covered by NPS

Dear Sir,

This has reference letter No. 2012/F-E/ (III)/1/14 dt. 30th June, reference the OM No. 11.23/2013 dt. 21st May, 2013 with respect to Railway Board, Ministry of Railways OM No. 2012/F(E)III/1/4 dated 14th January 2013 on the subject cited above.

In this regard, we wish to inform you that we have included the same in our proposed Exit Regulations and which shall ensure that in case if the government or government authority or entity registered as government sector (as employer) under the NPS with the central record keeping agency (CRA) provides any additional relief or benefit to the family members of a deceased NPS subscriber/subscriber due to any ground like invalidation leading to loss of employment in lieu of the benefits available under National Pension System, the claimants to the accumulated pension wealth of the deceased subscriber/subscriber would be free to avail such benefits subject to the condition that they specifically agree and undertake to transfer the accumulated pension wealth to the Government dept unconditionally’.

We have already provided this information to Department of Financial Services (DFS), vide letter no. PFRDA/24/10/E-82, dt. 1st July 2014, copy of which is enclosed herewith for your information.

Yours faithfully,
sd/-
Venkateswarlu Peri

Source: NFIR

Be the first to comment - What do you think?  Posted by admin - September 23, 2014 at 2:36 am

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Finance Minister launches New Website of PFRDA on 26th August, 2014.

Finance Minister launches New Website of PFRDA on 26th August, 2014.
PFRDA was established by Government of India on 23rd August, 2003. The Government has, through an executive order dated 10th october 2003, mandated PFRDA to act as a regulator for the pension sector. The mandate of PFRDA is development and regulation of pension sector in India.

The National Pension System reflects Government’s effort to find sustainable solutions to the problem of providing adequate retirement income. As a first step towards instituting pensionary reforms, Government of India moved from a defined benefit pension to a defined contribution based pension system by making it mandatory for its new recruits (except armed forces) with effect from 1st January, 2004. Since 1st April, 2008, the pension contributions of Central Government employees covered by the National Pension System (NPS) are being invested by professional Pension Fund Managers in line with investment guidelines of Government applicable to non-Government Provident Funds.

Be the first to comment - What do you think?  Posted by admin - August 28, 2014 at 5:39 pm

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Vision & Mission Statement of PFRDA

Vision & Mission Statement of PFRDA

Mission Statement
“To establish and promote pension system for all citizens through guided development and prudent regulation of the pension industry, with focus on institution-building, capacity development and enabling framework for innovations in products, schemes and programmes across all stakeholders and market participants, in the best interest of the subscribers and the pension system”

Vision Statement
“To be a model Regulator for promotion and development of an organized pension system to serve the old age income needs of people on a sustainable basis”

#New Pension Scheme, #New Pension System, #PFRDA, #National Pension System, #New Pension System

Be the first to comment - What do you think?  Posted by admin - August 11, 2014 at 4:19 pm

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PFRDA – Comments are invited on PFRDA Regulations 2014 from all concerned

PFRDA – Comments are invited on PFRDA Regulations 2014 from all concerned

DRAFT – Pension Fund Regulatory and Development Authority (Pension Fund) Regulations, 2014

1. The PFRDA Act was passed by Parliament on Sep/19/2013 and notified on Feb/01/2014. In accordance with section 52 of the Act, the Authority may, by notification make regulation consistent with the Act and rules made thereunder for carrying out the provisions of the Act.

2. “Pension fund” is defined under Section (2) (l) of the Act as “intermediary which has been granted a certificate of registration under sub-section (3) of section 27 by the Authority as a pension fund for receiving contributions, accumulating them and making payments to the subscriber in the manner as may be specified by regulations”.

3. The objective of these Regulations is to standardize and to provide regulatory framework for Pension Fund (PFs) that would provide interalia criteria for registration, capital adequacy, code of conduct, obligation and responsibilities etc. Further, the regulation would ensure an effective procedure for inspection and audit to protect the interests of subscribers.

4. Therefore, in order to safeguard the interest of the subscribers, PFs as an intermediary, through this regulation, are required to adopt high level of standard practices that requires compliance with standards for internal control and operational conduct, with the aim of protecting the NPS assets, proper management of risk and generation of optimum returns.

5. Public comments are invited on the draft regulations on Pension Fund Regulatory and Development Authority (Pension Fund) Regulations, 2014 . All comments from the public will be considered before the regulations are finalized. Comments may be forwarded by email to sumeet.kapoor@pfrda.org.in or may be sent at the under-mentioned address latest by 18th Aug 2014 as per format given below.

Aug 2014 as per format given below.

Name of the Person:
Organisation:
Designation:
Sr. No. Pertains to which regulation /Sub-regulation
(Regulation No. & Clause No.)
Proposed/suggested
changes*
Rationale
1.
2.
3.

Instruction to fill up the format:

1. All letters or emails to clearly specify the name and number of the regulation, sub-regulation and clause.
2. Separate letters/emails to be used for different regulations.
3. Each proposed amendment to be given separately.
4. Each proposed amendment (preferably) not to exceed 200 words*

Your letter(s) can be addressed to:

Ms. Sumeet Kaur Kapoor
General Manager
Pension Fund Regulatory & Development Authority (PFRDA)
1st Floor, ICADR Bldg, Plot No.6
Vasant Kunj Institutional Area, Phase II
New Delhi -110070

Source: www.pfrda.org.in
[http://www.pfrda.org.in/writereaddata/linkimages/Draft%20PF%20Regulations%20Letter1.pdf]

Be the first to comment - What do you think?  Posted by admin - July 24, 2014 at 9:27 am

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PFRDA Circular – Registration of Government employees aged 60 years and above under National Pension System (NPS)

PFRDA Circular – Registration of Government employees aged 60 years and above under National Pension System (NPS)

CIRCULAR

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

22 April, 2014

PFRDA/2014/3/PDEX/12
Subject: Registration of Government employees aged 60 years and above under National Pension System (NPS)

The Authority has been receiving several requests from various governments (central & state) to approve the registration of subscribers under National Pension System (NPS) who are aged 60 years and above and which are being approved on case by case basis by PFRDA at present.

Keeping in view of the difficulties being faced by subscribers, now the Authority has decided to enroll all eligible Government employees (central & state) who are on the rolls of the government in to NPS, irrespective of the age at the time of entry, subject to the condition that the total period of contribution to NPS account shall not be more than 42 years. The NPS applications of such subscribers need to be submitted through the appropriate nodal officer of the Govt/ Deptt, in line with the procedure adopted for NPS registration for Government employees aged below 60 years. Also, the responsibility for ensuring that the employee is eligible for being covered under NPS and that the NPS contribution is not paid beyond 42 years during the entire service period for such an employee, lies with the department submitting the subscriber registration form.

This is for the information of all concerned.

Sd/-
Venkateswarlu Peri
General Manager

Source : www.pfrda.org.in
[http://www.pfrda.org.in/writereaddata/linkimages/Registration%20of%20Govt%20employees%20aged%2060%20years%20and%20above763537413.pdf]

Be the first to comment - What do you think?  Posted by admin - April 24, 2014 at 2:47 pm

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Railway Minister has written a do letter to Finance Minister for abolishing New Pension System – AIRF & NFIR

Railway Minister has written a do letter to Finance Minister for abolishing New Pension System – AIRF & NFIR
HON’BLE MINISTER FOR RAILWAYS SH. MALIKARJUN KHARGE HAS WRITTEN A DO LETTER TO MINISTER FOR FINANCE FOR ABOLISHING NEW PENSION SYSTEM (NPS) FROM INDIAN RAILWAYS.

MINISTER FOR RAILWAYS
GOVERNMENT OF INDIA
NEW DELHI

No. 2012/F(E)III/1/4-Part

29 MAR 2014

Dear Shri P. Chidambaram ji,
Through this letter, I wish to draw your attention to a long standing demand raised by both Staff Federations of Railways on National Pension Scheme (NPS) for employees of Indian Railways. The Federations have been expressing resentment over operation in the Railways of the National Pension Scheme, which is perceived as a lower social security cover for Railway employees. Their contention is that there are enough grounds for Railway employees to be treated differently from other civil employees of the Government, and that Indian Railways should operate the traditional defined benefit pension scheme available to pre-01-01-2004 appointees.

You will recall that a few organizations/categories of Government employees were specifically exempted from the purview of NPS on consideration of special, riskier and more onerous nature of duties. The Federations have been drawing parallel with of nature of duties performed by most categories of Railway employees with those in the Armed Forces. They contend that during British period, Railways was conceived and operated as an auxiliary wing of the Army. It was also realized that by virtue of its complex nature, Railways required a high level of discipline and efficiency to be able to perform its role as the prime transport mode. Railways is an operational organization required to be run round the clock through the year. Railway employees have to work in inhospitable conditions, braving extreme weather, unfriendly law and order scenario, and inherent risks associated with the Railway operations itself. As in the Armed Forces, many have to stay away from their families for long periods while performing duties in areas where adequate facilities are lacking.

I feel that there is considerable merit in the contention of the Staff Federations. Besides the critical and complex nature of duties of Railway employees, the hazards involved are also high. Despite best efforts for enhanced safety measures, a large number of Railway employees lose their lives or meet with serious injuries in the course of performance of their duties each year.

During the period 2007-08 to October 2011, the number of Railway employees killed during the course of their duty has been more than number of passengers/other members of public killed in Rail related accidents including accidents at unmanned level crossings. While the nature of duties of Railway employees is inherently high risk during peace time, they also perform functions of critical importance during war time and times of natural calamities, in moving men and materials across the country to maintain supply of essential commodities and safeguard integrity of the nation.

In my view, there are adequate grounds for the Government to consider exemption for Railway employees from the purview of NPS. The Implications of this would be that Government expenditure would reduce over the next few years through discontinuance of Government Contribution under the NPS, but the long term liabilities would increase, as financial commitments in the defined benefit pension scheme would be higher. Since Railways are required to meet the pensionary outgo from their internal resources, switchover to defined benefit pension scheme would call for a more systematic provisioning under the Pension Fund through appropriate revenue generating measures. With Rail Tariff Authority on the horizon, I believe that this would be possible.

In the light of the above, I suggest that our request for exemption from operation of the NPS be considered sympathetically and necessary approvals communicated.

A copy of each demands raised by the two Federations is enclosed.

With regards,

Yours sincerely,
sd/-
(Mallikarjun Kharge)

Shri P.Chidambaram,
Finance Minister,
Government of India,
North Block,
New Delhi-110001.

Source: AIRF & NFIR

Be the first to comment - What do you think?  Posted by admin - at 2:37 pm

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New Pension Scheme : Family pension under NPS

New Pension Scheme : Family pension under NPS

GOVERNMENT OF INDIA
MINISTRY OF  FINANCE
RAJYA SABHA
STARRED QUESTION NO-350

ANSWERED ON-18.02.2014

Family pension under NPS

350. SHRI PRABHAT JHA

Will the Minister of FINANCE be pleased to state:

(a) the details of cases of family pension sanctioned, so far, under the New Pension Scheme (NPS) to the families of deceased Central Government employees;

(b) whether family pension at the rate of old pension scheme to these family members of deceased employees has been stopped after coming into force of the New Pension Scheme;

(c) if not, the fate of those who have been receiving family pension under NPS at the rate of old pension scheme;

(d) whether some of the deceased employees have left behind them only few thousands rupees as Contributory Pension Fund (CPF) with the National Securities Depository Limited (NSDL); and

(e) if so, how Government would pay them family pension from their CPF?

ANSWER

FINANCE MINISTER
(SHRI P. CHIDAMBARAM )

(a) to (e): A Statement is laid on the Table of the House.

STATEMENT OF RAJYA SABHA STARRED QUESTION NO. *350 FOR ANSWER ON 18.02.2014 REGARDING “FAMILY PENSION UNDER NPS” RAISED BY SHRI PRABHAT JHA

(a): Central Pension Accounting Office has informed that as per its records there are 1900 cases of family pension and 20 cases of disability pension under National Pension System (NPS).

(b) and (c): The pension of the Government servants (except in the Armed Forces) appointed on or after 01-01-2004 is regulated by the NPS which is a defined contribution pension system. Employees appointed in the service of Central Government prior to this date are not covered by NPS. However, even after the introduction of NPS, the benefit of family pension is available to the families of the deceased Central Government employees covered under the NPS. Hence, family pension, at the rate of old pension scheme, to family members of deceased employees, who were in the service of the Central Government on or after 01-01-2004, is not denied or affected due to the implementation of NPS, as per the Office Memorandum (OM) No. 38/41/06/P&PW(A) dated 05-05-2009 of the Department of Pension and Pensioners Welfare, Ministry of Personnel, Public Grievances and Pensions. This OM envisages payment of various benefits on death/discharge of a Government employee after adjustment of the monthly annuitised pension from the accumulated funds in the NPS account of the employee.

(d) and (e): National Securities Depository Limited (NSDL) has informed that a few deceased employees, who passed away within a short span after joining NPS, had minimal accumulated pension wealth in their NPS accounts. However, as stated in reply to parts (b) and (c) above, the family members of the deceased employees are covered by the family pension

Source : http://rajyasabha.nic.in/

Be the first to comment - What do you think?  Posted by admin - April 6, 2014 at 12:13 pm

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Justification to Scrap New Pension Scheme – AIRF submitted to Finance Minister

Justification to Scrap New Pension Scheme – AIRF submitted to Finance Minister

AIRF has submitted Material Justification for the Abolition of New Pension System this will be sent to Hon’ble Finance Minister through Hon’ble Railway Minister.

Justification to Scrap New Pension Scheme

AIRF
ALL INDIA RAILWAYMEN’S FEDERATION
No.AIRF/24/(C)
Dated : February, 2014
The Executive Director, Estt.(IR),
Railway Board,
New Delhi
Dear Madam,
Sub: Justification to Scrap New Pension Scheme
It was agreed in the Joint Meeting, held on 7th February, 2014 with Full Board that, necessary material/justification may also be furnished by the Federations for proposed refernce to be sent to Hon’ble Finance Minister from the Hon’ble Minister for Railways. Accordingly, we are sending herewith a detailed justification for taking necessary action in the matter.
Yours faithfully,
sd/-
(Shiva Gopal Sharma)
General Secretary
AIRF’s Justification to Scrap New Pension Scheme (NPS)
1. Discriminatory treatment between two sets of Railway employees viz – one appointed before 01.01.04 and the others appointed on 01.01.2004 and thereafter.
2. Although the contribution is defined, the benefit has not been defined.
3. Extract from Railway Safety Review Committee, 1998-vide para 2.1.1 and para 2.1.2 the Committee has recommended that the working in the Railways is more closely allied to the armed forces than the sometimes lacks civilian forms. As such railwaymen cannot be bracketed with other Central Govt. Employees for the purpose of Social benefit.

Para 2.1.1 During the colonial period, the Railways was conceived and operated as an auxiliary wing of the Army, primarily because it provided the transport muscle that enabled rapid movement of troops across the Indian subcontinent. There was, however, another less visible but important reason for the close linkage with the Army. The colonisers realized that the Railways, by virtue of its complex nature, required a high degree of discipline and efficiency to be able to perform its role as the prime transport mode. This, in turn, meant a system of working more closely allied to the Armed Forces than the sometimes lax civilian forms. Thus ,historically, Indian Railways (IR) has functioned differently from other Government institutions. 

Para 2.1.2 “…………. It is not only unrealistic but also dangerous to treat the Railways and its problems on par with other Government departments which has unfortunately been the case during the last five decades “.

4. Committee on railway safety was appointed by the Ministry of Railway under the Chairmanship of Dr. Anil Kakodkar. Vide para 2.3 of the report is cited below:
Killed Injured
Railwaymen 1,600 8,700
Passenger / Public 1.019 2,118
(Unmanned Level Crossing) 723 690
It would be seen that number of Railwaymen killed and injured while on duty during the period 2007 – 08 to October, 2011 was much more than passenger and public killed during the year.
5. Railwaymen are the second line of Defence. During Chinese aggression in the year 1962 there was massive exodus of civil population near in Arunachal Pradesh and North Bank of Brahmaputra, currency notes were burnt at the order of Dy. Commissioner, Tezpur (Sonitpur), the jail birds were freed but the Railwaymen did not leave their duty post. In this connection extract from Special Gazette published by the Railway Board during Railway Week, 1963 is given below.

“On the night of 20/21 November, 1962 following the exodous of Civil Population from Rangapara North in the Wake of reported Chinese advance Shri Rakhal Das Banerjee bravely struck to this post in the Station, displaying an extra ordinary sense of duty and great courage, he ensured safe custody of Railway Cash amounting to Rs. 26 lakhs”.

Similarly when Pakistan attacked India during 1965, the Railwaymen at the Western Sector saved lives of thousands and thousands of people by sacrificing their own lives while Bomb was exploded on Oil Tankers (Raway Wagon Tanker) (This News was appeared in the Railwaymen of 1965, may be 1966), they parted the effected wagons from the rest, but in the effort an good number of Railwaymen burnt alive.
Braving insurgency, Railwaymen continued to maintained the services in North Eastern Region, Naxual infested areas in Jharkhand, Madhya Pradesh, Crissa, Andhra Pradesh etc.
In May 2008, Loco Pilot of Lumding N. F. Railway saved lives of many persons at the cost of his own life and he was awarded ‘KIRT1 CHAKRA’. The incident is as under.

“On 15th May, 2008, ShrI N. N. Bora, Loco Pilot, Lumding was booked to work Security Special from Lumding. When the Special reached nearTunnel No. 3 at KM 57/12 between Lumding — Badarpur section terrorist pumped bullets injuring Shri N. N. Bora critically. Despite critical injury Shri Bora’s devotion to duty and presence of mind worked, the train was pushed back to a safer place and Shri Bora succumbed to the u/njury. He could save lives of all his colleagues in the train, sacrificing his life”.

6. NPS is an additional financial burden in the Railways Exchequer.
Indian Railway is paying pension and family pension and in addition to that the Indian Railway is to contributing 10% of pay and 10% of Dearness Allowance to the Pension Fund (NPS). At present the number of New Pension Holders are 4.5 Lakhs taking the average salary of such newly recruited persons as Rs. 20,000, at present the Railway is paying Rs. 2160 Crores annually towards Pension Fund. This will go on increasing with more and more persons to be recruited vice retirement and the amount will also be compounded because of annual increment, increase in the rates of Dearness allowance, MACP & Promotional benefits. This is the additional burden which the railway will have to bear with its compound effect from coming years to years on the Railway’s Finance.
7. Effect on Industrial relation
Gradually the number of new recruitees on or after 01.01.2004 will take over the number of persons appointed prior to 01.01.2004 and they will compel their pre 01.01.2004 counterparts to join precipitateve action to secure their (NPS Holders) rightful daim of social security i.e. Pension and Family Pension and this will leads to serious industrial unrest in the Railway Industry.
Taking all these factors into consideration all Railwaymen irrespective of date of appointment should be covered under Pension and Family Pension Scheme.
Yours faithfully,
sd/-
(Shiva Gopal Mishra)
General Secretary
Source: AIRF

Be the first to comment - What do you think?  Posted by admin - February 15, 2014 at 4:31 pm

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