NEW PENSION SCHEME-MORE CLARIFICATION

Sunday, October 25, 2009
Questions & Answers: Related to the New Pension Scheme (NPS)


Clarifications:-

1. 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.

2. 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.

3. Whether any minimum age or minimum service is required to quit from Tier-I?

Exit from Tier-I can only take place when an individual leaves Government service.

4. 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.

5. 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

6. Who will calculate the interest PAO or Central Pension Accounting office(CPAO)?

The PAO should calculate the interest.

7. 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 individual and government) will be made by the office who will draw salary for the maximum period.

8. 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-Practising Allowance shall countas ‘pay’ for all service benefits. Therefore, this will be taken into account for working out the contribution towards the New Pension Scheme.

9. 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.

10.Procedure for allotment of Permanent Retirement Account Number (PRAN):-

Immediately on joining Govt. service, the Govt. servant will be required to provide particulars such as his name, designation, scale of pay, date of birth, nominee(s) for the fund, relationship of the nominee etc. in the prescribed for (Annexure I).

The DDO concerned will be responsible for obtaining this information from all Govt. servants covered under the New Pension Scheme.

The PAO concerned will allot a unique 16 digit Permanent Retirement Account Number (PRAN). The first four digits of this number will indicate the calendar year of joining Govt. service, the next digit indicates whether it is a Civil or a Non-civil Ministry, the next six digits would represent the PAO Code (which is used for the purpose of compiling monthly accounts), the last five digits will be the running serial number of the individual govt.

servant which will be allotted by the PAO concerned. PAO will allot the serial number pertaining to individual Govt. servants from 00001 running from January to December of a calendar year. A register will be maintained for allotment of PRAN to ensure that PRAN are allotted in sequence and there is no duplication of PRAN.

For the flow of information from Non Civil Ministries/Departments to the CPAO, each of them will nominate a Nodal Office, which will be responsible for forwarding the consolidated information/particulars in respect of their Ministry/Departments and for correspondence with CPAO.

The particulars of the Govt. servants received from the various DDOs will be consolidated by the Nodal Office identified in each Ministry/Department/Office and sent to the CPAO. The CPAO will keep this information in their computer database.

The accounting heads involved in the operation of the new pension scheme will be intimated in due course.

The first salary bill of the new entrant will be passed after ensuring that the Annexure-I is received.

Tier1 amount equal to 10% of the (basic+da+npa) will be deducted from the payBill and a matching contribution will also be credited to the individuals credit.

Separate paybill should be prepared for the individuals who are covered under this scheme. The schedule information is to be captured in the Annexure-II, which should be carefully checked. The data file of annexure-I and annexure-II will be created and forwarded to CPAO on monthly basis. CPAO on receipt of this information will update its database and generate exception reports for missing credits, mismatches etc.

No withdrawal of any amount will be allowed during the interim arrangements.

At the end of each financial year the CPAO will prepare annual accounts statements for each employee showing opening balance, details of monthly deduction and Govt.’s matching contribution, interest earned, if any, and the closing balance. CPAO will send these statements to Nodal Office concerned.

After the close of each financial year, CPAO will have to report the details of the balances (PAO-wise) to each PAO for the purpose of reconciliation. The PAO will reconcile the figures of contributions with figures as per the books of CPAO.


SOURCE;CGEN

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NEW PENSION SCHEME ARCHITECTURE

NPS Architecture













Main Features and Architecture of the New Pension System


The new pension system would be based on defined contributions. It will use the existing network of bank branches and post offices etc. to collect contributions. There will be seamless transfer of accumulations in case of change of employment and/or location. It will also offer a basket of investment choices and Fund managers. The new pension system will be voluntary.


The system would, however, be mandatory for new recruits to the Central Government service (except the armed forces). The monthly contribution would be 10 percent of the salary and DA to be paid by the employee and matched by the Central Government. However, there will be no contribution from the Government in respect of individuals who are not Government employees. The contributions and returns thereon would be deposited in a non-withdrawable pension account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the central Government service.


§ In addition to the above pension account, each individual can have a voluntary tier-II withdrawable account at his option. Government will make no contribution into this account. These assets would be managed in the same manner as the pension. The accumulations in this account can be withdrawn anytime without assigning any reason.





Individuals can normally exit at or after age 60 years from the pension system. At exit, the individual would be required to invest at least 40 percent of pension wealth to purchase an annuity. In case of Government employees, the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse at the time of retirement. The individual would receive a lump-sum of the remaining pension wealth, which she would be free to utilize in any manner. Individuals would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitisation would be 80% of the pension wealth.


There will be one or more central record keeping agency (CRA), several pension fund managers (PFMs) to choose from which will offer different categories of schemes.


The participating entities (PFMs, CRA etc.) would give out easily understood information about past performance & regular NAVs, so that the individual would able to make informed choices about which scheme to choose.

source;pfrda

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ABOUT PENSION

Pension :
1 Invalid pension and disability pension are distinct pensions and their payments are regulated as per CCS (Pension) Rules and CCS (Extraordinary Pension) Rules, respectively. Thus the minimum limit on the total of two pensions does not apply. However the amount of disability pension and invalid pension, combined together, should in no case exceed the last pay drawn.
2 The maximum limit for commutation has been raised to 40% w.e.f. 1.1.1996.A Government servant is now entitled to commute for a lumpsum payment up to 40% of his/her pension.
3 Dearness Relief equal to 50% of basic pension/family pension is treated as Dearness Pension w.e.f. 1.4.2004.
4 Provisional pension and provisional gratuity (up to 100%) should be sanctioned by the Head of Office if he were of the opinion that the Government servant is likely to retire before his pension or gratuity or both can be finally assessed and settled in accordance with the relevant rules.
5 In the case of a missing Government servant, family pension can be paid after a period of one year from the date of lodging an FIR with the police authorities.
6 A judicially separated spouse of the deceased Government servant with children can get family pension after the children cease to be eligible till his/her death/remarriage, whichever is earlier.
7 Dependent parents and widowed/divorced daughter/unmarried daughter are now included in the definition of family for the purpose of consideration for grant of family pension.
8 Family pension is also admissible to a posthumous child and also to children from the void or the voidable marriage as per the relevant provisions in the rules.
9 Normal family pension is now at a uniform rate of 30% of pay last drawn, subject to a minimum of Rs. 3500 (w.e.f. 1.1.2006).
10 Family pension is admissible to children from the void or voidable marriage in their own turn, after the legally wedded wife ceases to be the recipient of the family pension.
11 In the event of death of a family pensioner, the arrears of family pension is automatically payable to the eligible member of the family next in line. Succession certificate for payment of the arrears is required only in such cases where there is no eligible family member after the death of the family pensioner.
12 Full pension is payable for govt. servants rendering 20 or more year of service as per 6th pay commission recommendations w.e.f. 1.9.2008
SOURCE;PENSIONERS PORTAL

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NEW PENSION SCHEME

1. 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.
Top

2. 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.
Top

3. Whether any minimum age or minimum service is required to quit from Tier-I?
Exit from Tier-I can only take place when an individual leaves Government service.
Top

4. 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.
Top

5. 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
Top

6. Who will calculate the interest PAO or CPAO?
The PAO should calculate the interest.
Top

7. 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 individual and government) will be made by the office who will draw salary for the maximum period.
Top

8. 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-Practising 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.
Top

9. 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.
SOURCE;PENSION PORTAL

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NEW PENSION SCHEME -FAQ3

New Pension Scheme : Some clarifications..!


ADMINISTRATIVE STRUCTURE
The administrative setup of NPS subscription is planned as:

Employee>Paying officer>DDO>PAO>PrAO>PFRDA/CRA/NSDL>Trustee Bank>Pension Fund managers

IS THE NEW PENSION SCHEME GOOD?

If calculated,we can see that the new pension scheme employees are actually getting 10 % less pay than the old pension scheme staff.There is a wide spread rumour that the new pension scheme offers amount in Lumpsum amount and therefore it is better than the old pension scheme.How much truth is there in it?Let's see...

Please note:The below calculations are based on pay of a Group C cadre of scale 5200-20300(2500 Grade Pay) and if the government puts the whole investment in fixed instruments of 8% annual interest.The percentage of investments in equity which is speculated cannot be calculated.It purely depends on how efficient the appointed fund manager is.The principal amount of contribution without interest otherwise is:

Based on 10 years-210000(employee contribution)+210000(Govt contribution)=Rs420000
Based on 20 years-540000(employee contribution)+540000(Govt contribution)=Rs1080000

Therefore the amount of pension you get is purely based on the scheme you chose.As per now,there is no scheme which allows to put 100% in fixed instruments and the figures are just to compare.

Old and New Pension scheme comparison after completing 10 years(before 60 years)

CPF Calculation

Contribution Amt. year Sub.+Bal.+8%Interest Total Amt.
1300 i st year 15600 + 1248 16848
1400 ii year 16800 + 16848 + 2691 36339
1500 iii year 18000 + 36339 + 4347 58686
1600 iv year 19200 + 58686 + 6230 84116
1700 v year 20400 + 84116 + 8361 112877
1800 vi st year 21600 + 112877 + 10758 145235
1900 vii year 22800 + 145235 + 13442 181477
2000 viii year 24000 + 181477 + 16438 221915
2100 ix year 25200 + 221915 + 19769 266884
2200 x year 26400 + 266884 + 23462 316746



If equal government contribution also provides interest, Total tier-1 amount is 316746x2=Rs633492

80% in pension fund=506794

Amt you get at the time of retiring=Rs126698+Rs 3378 monthly pension (8% interest of Rs506794 in a pension fund)+no gratuity

For old pension scheme after 10 years

GPF =316746
Gratuity=110000[1/4*(last bp+da)*(10*2)]
Total amount= Rs426746+Monthly pension Rs 3500+da (minimum pension )

Thus Comparison of old and new pension scheme gives over Rupees 3 lakh less benefits in lump sum amount and lesser monthly pension for new employees after ten years of service for below 60 years retirement.

Old and New Pension scheme comparison after completing 10 years(reaching 60 years age)

If equal government contribution also provides interest, Total tier-1 amount is 316746x2=Rs633492

40% in pension fund=253396 Amt you get at the time of retiring=Rs380096+Rs 1689 monthly pension (8% interest of Rs253396 in a pension fund)+no gratuity

For old pension scheme after 10 years

GPF =316746
Gratuity=110000[1/4*(last bp+da)*(10*2)]
Total amount=Rs426746+Monthly pension Rs 3500+da (minimum pension )

Thus Comparison of old and new pension scheme gives over Rupees 50000 less benefits in lump sum amount and Rs 1800 lesser monthly pension for new employees after ten years of service for age 60 retirement.

Old and New Pension scheme comparison after completing 20 years(before 60 years)

CPF Calculation

Contribution Amt. year Sub.+Bal.+8%Interest Total Amt.
1300 i st year 15600 + 1248 16848
1400 ii year 16800 + 16848 + 2691 36339
1500 iii year 18000 + 36339 + 4347 58686
1600 iv year 19200 + 58686 + 6230 84116
1700 v year 20400 + 84116 + 8361 112877
1800 vi st year 21600 + 112877 + 10758 145235
1900 vii year 22800 + 145235 + 13442 181477
2000 viii year 24000 + 181477 + 16438 221915
2100 ix year 25200 + 221915 + 19769 266884
2200 x year 26400 + 266884 + 23462 316746
2300 xi year 27600 + 316746 + 27547 371893
2400 xii year 28800 + 371893 + 32055 432748
2500 xiii year 30000 + 432748 + 37019 499767
2600 xiv year 31200 + 499767 + 42477 573444
2700 xv year 32400 + 573444 + 48467 654311
2800 xvi st year 33600 + 654311 + 55032 742943
2900 xvii year 34800 + 742943 + 62219 839962
3000 xviii year 36000 + 839962 + 70076 946038
3100 xix year 37200 + 946038 + 78659 1061897
3200 xx year 38400 + 1061897 + 88023 1188320



If equal government contribution also provides interest, Total Tier-1 amount is 1188320x2=Rs2376640

80% in an annuity pension fund scheme=1901312

Amt you get at the time of retiring=Rs475328+Rs 12675 monthly pension (8% interest of Rs506794 in a pension fund)+no gratuity

For old pension scheme after 20 years

GPF =1188320
Gratuity= 320000 i.e. [1/4*(last bp+da)*(no of every completed six month of service)]
Total amount= Rs1508320+Monthly pension approax Rs 16000+da (half of last bp+da )

Thus Comparison of old and new pension scheme gives over Rupees 10 lakh less benefits in lump sum amount and Rs 4000 lesser monthly pension for new employees after twenty years of service for below age 60 retirement.

Old and New Pension scheme comparison after completing 20 years(reaching 60 years age)

If equal government contribution also provides interest, Total Tier-1 amount is 1188320x2=Rs2376640

40% in an annuity pension fund scheme=950656

Amt you get at the time of retiring=Rs1425984+Rs 6300 fixed monthly pension (8% interest of Rs950656 in a pension fund)+no gratuity

For old pension scheme after 20 years

GPF =1188320
Gratuity= 320000 i.e. [1/4*(last bp+da)*(no of every completed six month of service)]
Total amount=Rs1508320+Monthly pension approax Rs 16000+da (half of last bp+da )

Thus Comparison of old and new pension scheme gives over Rupees 1 lakh less benefits in lump sum amount and Rs 9700 lesser monthly pension for new employees after twenty years of service for age 60 retirement.

And some final questions:

1.The Government notifications only explains about giving a fixed pension with this amount through a annuity and not about giving this huge amount of money back to the employee at anytime.So what happens to the huge principal amount(19 lakh in the case of a VRS) when the pension ceases after the pensioner and his dependent's death?

2.Why doesn't the government give the whole money of contribution as on EPF for the employee at the time of retirement to invest in bank atleast and enjoy interest or his choice of investment?Why is the government putting restrictions of 40% and 80% to be only invested in annuity pension scheme without giving any other choice to employee's hard earned money?

3.Isn't it a violation of Payment of Gratuity Act-1972 when the employer,who is the Government of India,has decided to give no gratuity to new employees without passing the new bill?

4.While EPF provides loan upto 36 months of wage,there is no scope for any loan in CPF,the money is blocked until the employee retires.What should a new employee do in case of an urgent requirement for building a house or marriage of children?
Source: newpension

SOURSE;NEWPENSION
Labels: NPS

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NEW PENSION SCHEME +ALL INDIA SERVICE

New Pension Scheme for Members of the All India Service...



No. 25014/14/2001-AIS (II)

GOVERNMENT OF INDIA

Ministry of Personnel, Public Grievances & Pensions

Department of Personnel & Training

Norht Block,New Delhi,
the 8th September, 2009

To
The Chief Secretaries,
All the State Governments/UTs




Subject:-Introduction of New Pension Scheme for Members of the All India Service joining the All India Service on or after 1/1/2004.




Sir/Madam,

The undersigned is directed to say that the pension of the members of the All India Services appointed on or after 1.1.2004 is regulated by the new Defined Contribution Pension Scheme (known as the New Pension Scheme) notified by the Ministry of Finance (Department of Economic Affairs) vide their O.M. No. 5/7/2003- ECB 2 PR dated 22.12.2003. On introduction of the New Pension Scheme, the All India Service (Death Cum retirement Benefit) Rules, 1958 and the All India Service (Provident Fund) Rules, 1955 were amended on 7.02.2004 & 17th May 2004 respectively. Under the amended Rules, benefits of the old Defined Benefit Pension Scheme and of GPF are not available to the members of the service appointed on or after 1.1.2004.

2. The New Pension Scheme will work on a defined contribution basis and will have two tiers – Tier I and II. Contribution to Tier I will be mandatory for all members of All India Services joining the All India Service on or after 1/1/2004, whereas Tier II will be optional and at the discretion of members of All India Service.

3. In Tier I, members of All India Service will make a contribution of 10% of his/her basic pay plus DA, which will be deducted from his/her salary bill every month by the DTO/TO concerned. The Government will also make an equal matching contribution..

4. Tier I contributions (and the investment returns) will be kept in a non-withdrawable pension Tier I account. Tier II contributions will be kept in a separate account that will be available for withdrawal at the option of the member of the Service. Government will not make any contribution to Tier II account.

5. A member of the service can exit at or after the age of 60 years from the Tier I of the scheme. At exit, it would be mandatory for him/her to invest 40 percent of pension wealth to purchase an annuity (from an IRDA regulated Life Insurance Company), which will provide for pension for the lifetime of the employee and his dependent parents/spouse. In the case of members of the All India Service who leave the Scheme before attaining the age of 60, the mandatory annuitisation would be 80% of the pension wealth.

6. Recoveries towards Tier I contribution will start from the salary of the month following the month in which the member of the service has joined service. No recovery will be made for the month of joining.

7. As the existing provisions of Defined Benefit Pension and GPF would not be available to new members of All India Service joining All India Service on or after 1/1/2004, in case any GPF deduction has been made then it would have to be refunded to the concerned All India Service Officers.

8. Deduction towards Group Insurance will, however, continue to be made from the salary of new members of the All India Service joining the service on or after 1/1/2004.

9. The State Service officers appointed to the IAS/IPS/IFS by way of promotion/selection, who are already covered under the old pension scheme will continue to be governed by the old pension scheme.

10. The pension funds of members of the All India Service would be managed by pension fund managers nominated by the Pension Fund Regulatory Development Authority (PFRDA) and the records would be maintained by a Central Record Keeping Agency, the National Security Depository Limited (NSDL).

11. All State governments would be required to designate a State Nodal Officer (SNO) at the State capital for all NPS related activities. District Treasury Officer (DTO)/Treasury Officer (TO) would be entrusted the responsibility of deducting the amount of employee's subscription from the salary of the AIS subscriber and would forward the same to the State Nodal Officer.

12. The amount and contribution details from each of the TO would be consolidated for all subscribers by the designated State Nodal Officer at the State capital. The SNO would also compile and consolidate Employers contribution.

13. The designated officer in the State Nodal Office would prepare and upload the Subscriber Contribution file (SCF) on CRA system; transfer funds to the Trustee Bank and send information to Department of Personnel & Training for control purposes.

14. Immediately on joining the All India Service, each member of the service will be required to provide particulars such as his/her name, designation, scale of pay, date of birth, nominees (s) for the fund, relationship with the nominee etc. in the prescribed form (Annexure-I). The same procedure should be followed for all AIS officers appointed on or after 1.1.2004. Accordingly all AIS officers recruited on or after 1.1.2004 are advised to fill up the registration form at Annexure-I immediately.

15. The DTO would be responsible for getting the physical registration form filled by all AIS officers and would also fill up their own registration form (DDO registration form) and send it to the State Nodal Officer (SNO). The State Nodal Officer would act as the PAO in the NPSCAN. He would collate the physical registration forms and also fill up the registration form for the PAO and send all these filled forms to NDSL preferably within a month of issuance of these orders. NDSL would process the details and send all the kits to the SNO by the end of October 2009.

16. On receipt of the Permanent Registration Allotment Number (PRAN), the SNO would start the regular uploads and funds transfers. After this is done the legacy data would be send in one or maximum two tranche.

17. For the legacy data, the DDOs would then prepare the arrears-SCF for month wise contribution details and send the same to SNO who will upload the same to NPSCAN and transfer the funds.Accounting procedure for the above would be devised by the State Government in consultation with Accountant General.

18. Payment to Trustee bank: The salary bills and the bills for Government contribution will be passed by TOs after exercising the checks prescribed under financial rules and Treasury Manual. The amount of NPS subscriptions (member contribution) recovered from the salary bills will be shown under the “Recoveries” column of the salary bill and will be classified under the Head “8342-Other Deposits-00-117-Defined Contribution Pension Scheme” in the State Section of Accounts by opening suitable separate sub-heads thereunder for “01-Government Servants Contributions under Tier-1” and “02-Government‟s Contribution under Tier-II”. The amount of Government‟s Contribution shall be debited to “2071-Pension Scheme -01-Civil-117-Contribution for Defined Contribution Pension Scheme-01 –Government Contribution– 00.04-Pensionary Charges” in the Consolidated Fund of the State Government.

19. After the bills are passed, the SNOs will upload the data relating to contributions (both of members of service‟s and Government‟s contributions) into NPSCAN of NDSL and also tally the figures uploaded with that booked. Further, all the accumulated balances under the DCPS would be transferred to the Trustee bank i.e. the Bank of India.

20. After uploading is completed, SNO will get Transaction ID and draw the total amount by minus crediting the head mentioned above either by cheque in favour of the Trustee Bank or remit the amount through RTGS/NEFT. SNO will also ensure the amount of contributions booked is duly tallied with the Subscriber's Contribution File (SCF) being uploaded in the NPSCAN and the same amount is drawn in the Cheque and passed on to the Trustee Bank.

21. The SNO/TO would have to maintain the Alphabetical Index Register in Annexure V wherein they would have to indicate the PRAN numbers allotted to each of the subscriber; the particulars of remittances of contributions to the Trustee bank in the Proforma prescribed vide Annexure VI; and the individual-wise account indicating the amounts of contributions paid to the Trustee Bank and the details of remittance.(vide Annexure VII).

22. In order to enable NSDL to carry out reconciliation and credit the amounts against the individuals‟ accounts, Treasury Officers/ SNOs will have to ensure that their TO Registration numbers / SNO Registration numbers respectively and the month to which the contributions pertain /Transaction ID in NPSCAN are mentioned in the NEFT / RTGS application form (in the 'Remarks' column) to be submitted to their banker. Where payments are made through cheques in favour of the Trustee Bank, these particulars would have to be furnished on the reverse of the cheque as well as in the forwarding letter. The time schedule prescribed will have to be strictly adhered to by SNOs, TOs and DDOs.

23. The SNO along with the State Government would have to ensure that arrears of contributions both of Government and Subscribers, are recovered and transferred to the trustee bank within a definite time span. If the contributions have been recovered but kept elsewhere, then also they must be transferred immediately to the Trustee Bank.

24. If the State Governments decide to recover the contributions in instalments, it may be ensured that the instalments of Government contributions drawn and transferred to the fund do not exceed the individual's contributions.

25. In the case of post 01.01.2004 entrants into the service, whose contributions to NPS are yet to be deducted, the State Government may consider deducting their contribution (arrears from 01.01.2004 or from their date of entry into service) from the second instalment of arrears of revision of pay due on account of the 6th Pay Commission recommendations. Further the pay arrears may be released only after individual application forms for registration to the New Pension Scheme have been obtained by the DDO/SNO from the concerned member of the service.

26. Whenever any member of the service is transferred from one office to another or goes on Central deputation etc, the TO will indicate in the Last Pay Certificate of the member of the service, the PRAN in respect of that individual and the month up to which his contributions have been recovered/ drawn. 27.Accountant Generals/Finance Departments of all State Governments are requested to bring these instructions to the notice of their TOs\DDOs\ SNOs for strictcompliance
SOURCE;CGEN

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NEW PENSION SYSTEM

TODAYS FAVOURITE TOPIC AMONG NEW RECRUITERS IS NEW PENSION SYSTEM AND 60%ARREARS.RECENTLY GOVT GAVE ONE NOTIFICATION REGARDING 60% ARREARS TO NEW RECRUITERS.IN THAT THEY WILL GET ARREARS ONLY AFTER SIGN IN A OPTION FORM.THE REASON FOR GETTING SIGNATURE IS CORRECT BUT THE WAY IS NOT GOOD.THEESE THINGS MAY RISE THEIR DOUHT REGARDING NPS.
MOSTLY SHARE MARKET IS NOT A SAFE INVESTING SPOT.EVERYBODY LIKES THEIR MONEY IN A SAFE HAND.IN 2008 JANUARY SENSEX SHOWS 21000 POINTS.AFTER FEW MONTHS LATER IT SHOWS 8000 POINTS.NOW IN 16000 POINTS.MOST OF THE EMPLOYEES DOES NOT LIKE VOLATILE MARKET INVESTMENT.ANY HOW OUR ECONOMY IS GROWING FASTAND FUNDAMENTALLY STRONG.GOVT SHOULD GIVE WIDE PUBLICITY ABOUT NPS AND INVESTING PORTALS IN THEIR REGIONAL LANGUAGE.
ALL UNION REPRESENTATIVES SHOULD GIVE THEIR OPENION AND GUIDE AFTER 2004 RECRUITERS TO TRAVEL IN A SAFE WAY.

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NEW PENSION SCHEME-FAQ-2

What is "Annuity Scheme Provider"...?


What is the New Pension Scheme?

The New Pension Scheme is an investment option which will help an individual, plan for his or her retirement. The key difference between the old government pension scheme and the New Pension Scheme is that the old pension scheme was based on a defined benefit principle and the new pension scheme is based on a defined contribution principle.
In a defined contribution scheme, an individual invests a defined amount in the scheme until he or she retires. On retirement, the individual has the option to withdraw the money or buy an annuity from an insurance company.

2. 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.

3 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.

4. Whether any minimum age or minimum service is required to quit from Tier-I? Exit from Tier-I can only take place when an individual leaves Government service.

5. 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.

6. 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

7. Who will calculate the interest PAO or CPAO?

The PAO should calculate the interest.

8. 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 individual and government) will be made by the office who will draw salary for the maximum period.

9. 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-Practising 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.

10. 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.

11. What are the minimum and maximum contributions that can be made to this scheme?

The minimum amount to be invested per contribution is Rs. 500 and a minimum of Rs. 6000 needs to be contributed per year. Also, a minimum of four contributions need to be made per year. Therefore, if you are making a monthly contribution of Rs. 500,you will need to make twelve contributions.There is no upper limit to the amount of contributions or the number of times the contribution is made.

12. How will the money contributed to NPS be invested?

The NPS currently offers three investment funds to choose from:
Asset Class E - stocks, fixed income instruments
Assent Class G - debt securities issued by the central as well as the state governments
Asset Class C - debt securities issued by entities other than the state and central government, liquid funds of mutual funds, fixed deposits of banks etc.
In case if the individual is unsure about the investment mix, the default option - auto choice lifecycle fund - will see the investment mix change according to the age of the investor. If the individual’s age is 18 years, auto choice invests 50% in Asset Class E, 30% in Asset Class C and 20% in Asset Class G. This remains unchanged till the individual turns 36, when the ratio of investment in Asset Class E and Asset Class C will decrease annually, while the proportion of G rises till the age of 55, when Asset Class G will account for 80% of the corpus, while the share of Asset Class E and Asset Class C will fall to 10 per cent each.

13. Who handles the investment of the money contributed to an NPS?

The money invested in an NPS is managed by professional fund managers. Currently, the fund managers involved in handling contributions in NPS are:
ICICI Prudential Pension Management
IDFC Pension Fund Management
Kotak Mahindra Pension Fund
Reliance Capital Pension Fund
SBI Pension Funds
UTI Retirement Solutions
While filling out the forms for account opening, you would need to specify one of these fund managers for the form to be accepted. In case you are not satisfied with the chosen fund manager, you have the option to switch managers.

14. Are there any tax benefits for investing in NPS?

At present the, NPS investments are covered under section 80CCD. However, tax is levied if you make a withdrawal.
Response to the New Pension Scheme has been lukewarm because of the tax incentives currently being offered. However, experts believe that with some time, the scheme will gain popularity and what with the Pension Fund Regulatory & Development Authority (PFRDA) asking the government to treat the NPS at par with EPF, PPF etc. so that there are better tax incentives, the NPS is a good investment option to plan your retirement.

15. What and How are the returns scheduled for this scheme?

Contributions will not earn any specified rate of return. The PFM will invest your savings in a scheme of your choice. The returns earned by the PFM on the scheme selected by you will be credited to your account.

16. What is Annuity Service Provider (ASP)?

ASPs would be responsible for delivering a regular monthly pension to the subscriber for the rest of his/her life.

On receipt of personal and banking information details of subscriber from CRA and of specified sum from the trustee bank the ASP would use its access codes to confirm receipt. ASP would then begin payments of annuities to the subscriber. 17. What is "Immediate Annuity Scheme"? Let watch this brochure of ICICI Prudential Life Insurance co.
SOURSE;GEN

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NPS

NPS
PFRDA sees ally in post offices to offer NPS services


Post offices will soon offer services under the new pension system as the department of posts is set to sign an agreement with the Pension Fund Regulatory and Development Authority (PFRDA) in this regard. Initially, the services will be available only in computerised post offices, an official in the ministry of communications & IT said.

After the agreement, the postal department will act as an agency to enrol NPS customers, the official said requesting anonymity. Technically known as ‘points of presence’ (PoPs), these agencies serve as contact and collection centres where pension contributions are collected under the NPS scheme. There are 21 PoPs providing NPS services including banks such as State Bank of India, Axis Bank, ICICI Bank, Oriental Bank of Union Bank of India.

The pension regulator is now convinced that some of the post offices have the IT infrastructure to serve the scheme.

Earlier, the watchdog had expressed doubt due to the poor IT penetration in the postal system, post offices may not be able to provide NPS services. “But around 3,000 post offices were found to be fully equipped,” the official said. The official didn’t specify the time frame within which the agreement will be signed. The PFRDA opened up the new pension system to all citizens from May 1, 2009. It is compulsory for all government employees joining service on or after January 1, 2004.

Under the new pension system, instead of agents selling the scheme, the regulator has banks and other financial institutions as points of presence, where an account could be opened. As a result, the marketing cost of the pension plan remains low and the fees applicable are disclosed upfront. The scheme offers a social security net for workers in the unorganised sector too.

The regulator is now in talks with the government to bear the transaction cost for the unorganised sector, which would make the scheme even more attractive.
Source: The Economic Times
Posted by AMMAN at Tuesday, September 01, 2009 0 comments

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NEW PENSION SCHEME --FAQ

NEW PENSION SCHEME-FAQ
1. What is the New Pension System (NPS)?

The NPS is a new contributory pension scheme introduced by the Central Government for its own new employees. Under the new pension system, each new central government employee will open a personal retirement account on joining service. Every month, and till the employee retires or leaves government service, a part of the employee's salary will be transferred into this account. When the person retires, he will be able to use these savings to take care of the needs and expenses of his family during old age.

2. Who is covered by the NPS?

You are covered by the NPS if

a.You joined central government service on or after 01 January 2004, and

b.You are an employee of a Central (Civil) Ministry or Departments, or

c.You are an employee of a non-civil Ministry or Department including Railways, Posts, Telecommunication or Armed Forces (Civil), or

d.You are an employee of an Autonomous Body, Grant-in-Aid Institution, Union Territory or any other undertaking whose employees are eligible to a pension from the Consolidated Fund of India.

3. If I joined Central Government service on or after 01 January 2004 do I have an option of not being covered by the NPS?

No. The NPS is mandatory for you.

4. I am covered by the NPS. Do the old Pension Rules apply to me?

No. The Central Civil Service Pension Rules (1972) do not apply to you. You are covered only by the New Pension System Rules framed for the NPS.

5. I am covered by the NPS. Can I contribute to the GPF?

No. The General Provident Fund (Central Service) Rules, 1960 also do not apply to you. You will not be permitted to contribute towards GPF.

6. Am covered by the NPS. Am I eligible to Gratuity?

No. You will not be eligible to Gratuity.

7. 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 and this unique PPAN from any location and also if you change your job. The PPAN will provide you with two personal accounts:

1. A mandatory Tier-I pension account, and

2. A voluntary Tier-II savings account.

8. What is the difference between Tier-I and Tier-II accounts?

1. Tier-I account: You will have to contribute 10% of your basic+DA+DP 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.

2. 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.

9. How will I contribute to my Tier-I (pension) account?

Every month, the government will deduct 10% of your salary (basic+DA+DP) and automatically transfer this amount to your Tier-I account in your name.

10. Will the Government contribute anything to my Tier-I (pension) account?

Yes. As your employer, the Government will match your contribution (10% of basic+DA+DP) and transfer this amount also to your Tier-I account in your name.

11. 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.

12. 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 basic+DA+DP.

13. What will happen if I am transferred to another city or country?

The PPAN number will stay the same and you will be able to use the same accounts from anywhere in the world.

14. 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.

15. What if I die or become permanently disabled during my service?

Pl.refer Office Memorandum: Additional Relief on death/disability of Government servants covered by the NPS(New Pension Scheme) recruited on or after 1.1.2004 No.38/41/06/P&PW(A) Dated 5th May, 2009

16. Where will my savings be invested?

Each PFM will offer you a limited number of simple, standard schemes. You will be free to choose any of the following schemes for investing your savings:

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.

17. I am covered by the NPS. Do the old Pension Rules apply to me?

No. The Central Civil Service Pension Rules (1972) do not apply to you. You are covered only by the New Pension System Rules framed for the NPS.

18. I am covered by the NPS. Can I contribute to the GPF?

No. The General Provident Fund (Central Service) Rules, 1960 also do not apply to you. You will not be permitted to contribute towards GPF.

19. Who will be responsible for the NPS and for protecting my interests?

The Government is setting up a new dedicated regulatory authority. This will be named the Pension Fund Regulatory and Development Authority (PFRDA). The PFRDA will be responsible for the NPS and for protecting your interests in the NPS.

20. When will my contributions start?

Your contributions (and the matching contribution by the Government) towards your Tier-I pension account will begin only from the month following the month in which you join Government service. During the first month of your service, you will be allotted the PPAN.(PRAN)

21. Who in the Government will issue me a PPAN open my accounts and be responsible for the deductions?

When you join 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.

22. 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 earn an interest and grow over time.

23. Which agency will serve as a PFM?

The PFRDA will appoint a limited number of leading professional firms to act as PFMs. One of these PFMs will be a public sector agency.

24. Who will decide which PFM manages my contributions and savings?

You will select a PFM to manage your contributions and savings.

25. Will I be permitted to select more than one PFM 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.

26. Will I be permitted to change my PFM preference?

Yes. If you wish, you will be free to change the PFM and move all your savings to another PFM of your choice.

27. Where will my savings be invested?

Each PFM will offer you a limited number of simple, standard schemes. You will be free to choose any of the following schemes for investing your savings:

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

28. Will I be able to select more than one scheme?

Yes. You will be free to spread your savings across these three schemes. Whenever you decide, you will also be free to switch your savings from one scheme to another.

29. How will my contributions be transferred to the PFM and scheme selected by me?

You will specify the PFM and scheme to your DDO. The DDO will arrange for transfer of your contributions to the PFM(s) and scheme(s) that you have selected.

30. What rate of return will my contributions earn?

Your contributions will not earn any specified rate of return. The PFM will invest your savings in a scheme of your choice.The returns earned by the PFM on the scheme selected by you will be credited to your account.

31. Will I have to pay any fees or charges under NPS?

You will have to pay a fee to the Central Recordkeeping Agency (CRA) which will maintain your accounts and also to the PFM(s) which manage your savings. These charges will be deducted from your savings on a periodic basis. The fees and charges by the CRA and PFMs will be regulated by the PFRDA.

32. Can I contribute more than the 10 of basic+DA+DP into my TierI account at the moment?

No. You will be allowed to do so only when the PFRDA, CRA and PFMs are appointed.

33. What will happen to my contributions and earnings in my Tier-I account when the PFRDA CRA and PFMs etc. are appointed?

Your full contributions, matching contributions by the Government, and the interest earned on the same will be transferred in your name to the PFM and scheme selected by you.

34. Will I have the option of continuing with the current 8 percent rate of return?

No. Once your savings are transferred to the PFM, your savings will enjoy only the rate of return earned by the PFM on scheme you have selected.

35. When will I be permitted to withdraw from my Tier-I account?

You will be able to withdraw your savings in your Tier-I account at age 60.

36. 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.

37. Can I use more than 40 of my savings to purchase the annuity?

Yes.

38. 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.

39. 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.

40. 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.

41. 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.

42. What if I die or become permanently disabled during my service?

The Government is yet to issue any guidelines on this.

43. Will I have to pay any fees or charges under NPS?

You will have to pay a fee to the Central Recordkeeping Agency (CRA) which will maintain your accounts and also to the PFM(s) which manage your savings. These charges will be deducted from your savings on a periodic basis. The fees and charges by the CRA and PFMs will be regulated by the PFRDA.

44. 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 earn an interest and grow over time.

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