Restoration of Old Pension Scheme – Loksabha

Restoration of Old Pension Scheme – Loksabha Q & A

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
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LOK SABHA
UNSTARRED QUESTION NO:3569
TO BE ANSWERED ON JULY 15.07.2019

Restoration of Old Pension Scheme

Rakesh Singh
Rodmal Nagar

Will the Minister of FINANCE be pleased to state:-

(a) whether the demand is being made by trade unions/Government employees to restore the old pension scheme for the Central Government employees as the pension amount is lower and uncertain under the new pension scheme which was implemented in the year 2004;
(b) if so, whether the Government is considering the aforesaid demand of the employees; and
(c) if so, the details thereof and if not, the reasons therefor?

ANSWER

The Minister of State (Finance)
(Shri Anurag Singh Thakur)

(a) Yes, Sir.

(b) and (c) Due to rising and unsustainable pension bill, the Government had made a conscious move to shift from the defined benefit, pay-as-you-go pension scheme to defined contribution pension scheme now called as National Pension System (NPS). The transition also helped in freeing the limited resources of the Government for more productive and socio-economic sectoral development.

There is no proposal to replace the NPS with old pension scheme in respect of Central Government employees recruited on or after 01.01.2004.

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Source: Loksabha

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National Pension System MOF Letter

National Pension System MOF Letter

D.O. No.8/5/2018-PR

Arun Jaitley

Minister of Finance and Corporate Affairs

India

Dated the 03 January, 2019

Dear Shri Nitin Gadkari

This has reference to your D.O. letter dated 28.10.2018 regarding the National Pension System (NPS).

2. I would like to apprise you that due to fiscal stress on account of old defined benefit pension system, the Government of India made a conscious move to shift from the old pension scheme to a defined contribution pension scheme now renamed as the National Pension System (NPS). NPS was made applicable for all new entrants who joined Central Government service on or after 01.2004, except the Armed Forces. Subsequently, all State Governments excluding West Bengal have also switched to NPS for their employees.

3. NPS is being administered and regulated by Pension Fund Regulatory & Development Authority (PFRDA) in a professional manner. The investments of the accumulated corpus are made in a balanced proportion between equities, government securities and corporate bonds so as to reduce risk or spread risk whilst ensuring optimal returns. Three partial withdrawals, not exceeding 25% of the contribution made by the subscriber are also allowed under NPS for specific

4. The Union Cabinet has recently approved various proposals for streamlining NPS for Central Government employees which inter alia include enhancement of the Government’s contribution from the existing 10% to 14% of the employee’s pay + DA while keeping the employee’s contribution at the existing 10%, providing freedom of choice for selection of Pension Funds and pattern of investment to subscribers, payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012, providing tax deduction to the contribution made under Tier-II of NPS under Section 80 C for deduction up to Rs.1.50 lakh provided that there is a lock-in period of 3 years and increase in the tax exemption limit for lump sum withdrawal on exit from the existing 40% to 60% making the entire withdrawal exempt from income tax.

5. NPS is expected to provide old age income security to subscribers besides providing capital for the social and economic development of the economy.

With regards,

Yours sincerely,

(Arun Jaitley)

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