Gazette Notification - NPS Contribution 14% of Basic Pay plus DA by the Central Government
“The monthly contribution
would be 10 percent of the Basic Pay plus Dearness Allowance (DA) to be
paid by the employee and 14 percent of the Basic Pay plus DA by the
Central Government”
Streamlining the Implementation of National Pension System (NPS)
MINISTRY OF FINANCE
(Department of Financial Services)
NOTIFICATION
New Delhi, the 31st January, 2019
F. No. 1/3/2016-PR. - In partial
modification of para 1(i) of Ministry of Finance’s Gazette Notification
No. 5/7/2003-ECB-PR dated 22nd December, 2003, based on the Government’s
decision on 6th December, 2018 on the recommendations of a Committee
set up to suggest measures for streamlining the implementation of
National Pension System (NPS), the Central Government makes the
following amendments in the said notification, namely :
(1) In para I (i) of the said
notification, for the words "The monthly contribution would be 10
percent of the salary and DA to be paid by the employee and matched by
the Central Government", the words "The monthly contribution would be 10
percent of the Basic Pay plus Dearness Allowance (DA) to be paid by the
employee and 14 percent of the Basic Pay plus DA by the Central
Government" shall be substituted.
(2) The following provisions shall be inserted after para 1(v) of the said notification, namely:
CHOICE OF PENSION FUND AND INVESTMENT PATTERN IN TIER-I OF NPS AS UNDER:
(vi) Choke of Pension Fund: As in the
cast of subscribers in the private sector, the Government subscribers
may also be allowed to choose any one of the pension funds including
Private sector pension funds. They could change their option once in a
year. However, the current provision of combination of the Public-Sector
Pension Funds will be available as the default option for both existing
as well as new Government subscribers.
(vii) Choice of Investment pattern: The following options for investment choices may be offered to Government employees:
(a) The existing scheme in which funds
are allocated by the PFRDA among the three Public Sector Undertaking
fund managers based on their past performance in accordance with the
guidelines of PFRDA for Government employees may continue as default
scheme for both existing and new subscribers.
(b) Government employees who prefer a fixed return with minimum amount
of risk may be given an option to invest 100% of the funds in Government
securities (Scheme G).
(c) Government employees who prefer higher returns may be given the options of the following two Life Cycle based schemes.
(A) Conservative Life Cycle Fund with maximum exposure to equity capped at 25% - LC-25.
(B) Moderate Life Cycle Fund with maximum exposure to equity capped at 50% - LC-50.
(viii) Implementation of choices to the
legacy corpus: Transfer of a huge legacy corpus of more than Rs. 1 latch
crore in respect of the Government sector subscribers from the existing
Pension Fund Managers is likely to impact the market. It may be
practically difficult for the PFRDA to allow Government subscribers to
change the Pension Funds or investment pattern in respect of the
accumulated corpus, in one go. Therefore, for the present, change in the
Pension Funds or investment pattern may be allowed in respect of
incremental flows only.
(ix) Transfer of legacy corpus in a
reasonable time frame: PFRDA may draw up a scheme for transfer of
accumulated corpus as per new choices of Government subscribers in a
reasonable time frame of say five years. Once PFRDA draws up this
scheme, change in the Pension Funds or investment pattern may be allowed
in respect of the accumulated corpus in accordance with that scheme.
COMPENSATION FOR NON-DEPOSIT OR DELAYED DEPOSIT OF CONTRIBUTIONS DURING 2004-2012:
(x) In all cases, where the NPS
contributions were deducted from the salary of the Government employee
but the amount was not remitted to CRA system or was remitted late, the
amount may be credited to the NPS account of the employee along with
interest for the period from the date on which the deductions were made
till the date the amount was credited to the NPS account of the
employee, as per the rates applicable to GPF from time to time,
compounded annually.
(xi) In all cases where the NPS
contributions were not deducted from the salary of the Government
employee for any period during 2004-2012, the employee may be given an
option to deposit the amount of employee contribution now. In case he
opts to deposit the contributions now, the amount may be deposited in
one lump sum or in monthly installments. The amount of installment may
be deducted from the salary of the Government employee and deposited in
his NPS account. The same may qualify for tax concessions under the
Income Tax Act as applicable to the mandatory contributions of the
employee.
(xii) In all cases where the Government
contributions were not remitted to CRA system or were remitted late
(irrespective whether the employee contributions were deducted or not),
the amount of Government contributions may be credited to the NPS
account of the employee along with interest for the period from the date
on which the Government contributions were due till the date the amount
is actually credited to the NPS account of the employee, as per the
rates applicable to GPF from time to time. Instructions to this effect
may be issued by the Department of Expenditure/ Controller General of
Accounts. All such cases of delay may be resolved within a period of
three months.
2. The above provisions shall come into force with effect from 1st April, 2019.
MADNESH KUMAR MISHRA, Jt. Secy.
