Central Government Employee covered-National Pension System

 Benefits available in the case of death of a Central Government Employee covered under National Pension System during service 

• Central Government employees covered under National Pension System have been given option under rule 10 of CCS(Implementation of NPS) Rules, 2021 to choose benefits either from old pension scheme or accumulated pension corpus under NPS in the event of their death. Family of deceased Government employee cannot exercise this option.

 • In the case, the Central Government employees could not furnish his option in this regard, there is default option of benefit under old pension scheme for first 15 years of service and thereafter, default option would be benefits under NPS. At present default option of old pension scheme is in vogue till March, 2024 in accordance with these rules even if Government Employee has completed 15 years of service.

 • Following benefits are available in the event of in-service death of a Central Government Employee covered under NPS: (i) Family pension under CCS(Pension) Rules, 1972 as per option exercised by Government servant or default option or In case, Government servant has opted for benefits under NPS, family would get benefits from his accumulated pension wealth under NPS. (ii) Death Gratuity (iii) Leave Encashment (iv) Benefits from CGEGIS, (v) CGHS facilities

 • As per rule 20 of CCS (Implementation of NPS) Rules, 2021, if the Government servant had opted for benefits under old pension scheme (or if no option was exercised, then default option applicable in his case) the concerned office would take action to sanction family pension to eligible member(s) of the family of the deceased Government servant, as done for Government servants covered under old pension scheme (i.e. as applicable to those joined service before 01.01.2004).

• Simultaneously, they would start process to close PRAN under NPS of the Government servant and Government contribution (and return thereon) would be transferred into the Government account. Remaining amount would be paid to the nominee or legal heir as per PFRDA regulations in lump sum.

 • However, those Government servants who had opted for benefits from NPS in the event of their death or if no option exercised, then in whose case default option is benefits under NPS, concerned office would take action to close PRAN under NPS of the deceased Government servant and grant benefits of lump sum (maximum of 20% of accumulated pension wealth) and annuity from the remaining pension wealth to eligible member from annuity service provider registered with PFRDA in accordance with PFRDA (Exits and Withdrawals under NPS) Regulations, 2015.

 • Other benefits viz. Death gratuity, leave encashment, CGEGIS and CGHS would be available in both the cases.

Old pension to new pension to old pension

Revision of NPS to Old Pension Scheme – Reply in Rajya Sab

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
RAJYA SABHA
QUESTION NO 1506
ANSWERED ON 29.11.2016

Revision of NPS employees to Old Pension Scheme

1506 Shri Neeraj Shekhar

Will the Minister of FINANCE be pleased to state :-

(a) whether Central Administrative Tribunal, Ernakulam bench has ordered the Central Government to revert the employees who had joined after 1st January, 2004 under NPS to Old Pension Scheme and has observed that date of vacancy should be the basis for inclusion under NPS or Old Pension Scheme instead of date of joining, if so, details thereof;

(b) whether Government has reverted them to Old Pension Scheme, if so, details thereof, if not, reasons therefor; and

(c) whether Government would issue notification for all Central/State Governments and Autonomous Organizations employees in this regard, as per the above orders, if not reasons therefor?

ANSWER

The Minister of State in the Ministry of Finance

(a) The Hon’ble Central Administrative Tribunal (CAT) in its judgment has declared that the applicants of Original Application No. 20/2015 are deemed to have been appointed from the date of vacancy arose and they shall be included in the CCS (Pension) Rules, 1972.

(b) No Sir. It has been decided to file a petition before the Hon’ble High Court of Kerala against the orders of Hon’ble CAT in Original Application No. 20/2015.

(c) No Sir, as it has been decided to file a petition before the Hon’ble High Court of Kerala against the orders of Hon’ble CAT in Original Application No. 20/2015.

regret about transition from OPS to NPS

7th Pay Commission expressed its regret about transition from OPS to NPS

7th Pay Commission expressed its regret about transition from Old Pension Scheme to New Pension Scheme in its report.

2004-2011 Entrants : Government employees who have joined service between 2004 and 2011 have suffered due to delay in finalizing the structure of the NPS and the issue of detailed instructions. Although they have made regular contributions, in many cases, this money and/or counterpart contributions were not deployed in the market. In the case of AIS officers, some states are yet  to release counterpart contributions or pay interest on delayed contributions. This has led to a situation where the accumulated corpus even after 11 years of service could be meagre. It is necessary that this situation which arose during the transition from OPS to NPS be addressed.

The Commission therefore recommends that Central Governments and State Governments should, in a time bound manner, ensure that all the due contribution along with compounded interest, where contributions have been delayed, be deposited in the accounts of the beneficiaries. Advisories should be issued to the State Governments to deposit amounts, if not already done, in respect of NPS beneficiaries belonging to All India Services.

Many Association have pointed out that unlike the facility under GPF, it is not possible to make withdrawals under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere.

The Commission notes that under the NPS Tier-I account, a subscriber is permitted to make partial withdrawal of twenty five percent of the contributions made to his/her individual pension account for certain specified purposes. Such withdrawals are permitted a maximum of three times during the entire tenure of subscription and a period of at least five years should have elapsed between two such withdrawals.

The Commission further notes that there exists a voluntary Tier-II account. Under this account, a subscriber can, at any time, withdraw the accumulated wealth either in full or part and there is no limit on such withdrawals provided the account has sufficient balance of accumulated pension wealth to cover the amount being withdrawn. However, the Tier-II account is yet to be made operational. The Commission therefore recommends that PFRDA should take steps to make the Tier-II accounts operational as early as possible to enable the NPS subscribers the facility of withdrawals from their accounts in case of requirement.

Transparency under NPS : Many associations and individuals have complained that the information relating to the NPS is inadequate, resulting in high degree of uncertainty in the minds of contributors about post-retirement benefits. The Commission noted that PFRDA sends a communication to every participant each month with the current pension wealth and the latest contribution that has been credited. The Commission recommends that focused efforts be made to capture email addresses and mobile numbers of subscribers so that seamless communication is ensured for all subscribers. The Commission recommends that consultation with stakeholders should also be held periodically in different parts of the country.

The Commission notes that no department of Government of India is taking ownership of the NPS. The Commission recommends that a Committee consisting of Secretary, Department of Financial Services, Secretary, Department of Pensions and Pensioners Welfare and Secretary, Department of Administrative Reforms and Public Grievances may be constituted to review the progress of implementation of NPS. The Commission also recommends that steps should be taken for establishment of an Ombudsman for redressing individual grievances relating to NPS.

Tax Treatment under the NPS : NPS is under the Exempt–Exempt – Tax (EET) regime while the General Provident Fund under the OPS is under Exempt–Exempt–Exempt (EEE) dispensation. Under the NPS, while the contributions and the accumulations are tax-exempt, withdrawals are taxable. As such, this is an inferior tax treatment when compared to other pension programmes such as General Provident Fund, Contributory Provident Fund, Employees Provident Fund and Public Provident Fund wherein contributions, accumulations and withdrawals are tax-exempt.

The Commission feels that tax neutrality should be ensured across various avenues for long term savings for post retirement incomes so that the employees covered by NPS are not at a disadvantage. The Commission therefore recommends that withdrawals under the NPS should be tax-exempt to place NPS at par with other pension schemes. The Commission also recommends that the service tax levied at the time of annuity purchase by NPS subscribers should be exempted.