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PFRDA

New Norms for Withdrawal of National Pension System (NPS)

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New Norms for Withdrawal of National Pension System (NPS)

“Minimum period for partial withdrawal has been reduced from 10 years to 3 years from the date of joining w.e.f. 10th August, 2017”

NPS Withdrawal Norms

The Pension Fund Regulatory and Development Authority (PFRDA) has changed the norms for withdrawal of National Pension System (NPS) subscribers.

Keeping in view the possibility of sudden financial needs of the subscribers, the requirement of minimum period under National Pension System (NPS) for availing the facility of partial withdrawal from the mandatory Tier-I account of the subscriber has been reduced from 10 years to 3 years from the date of joining w.e.f. 10th August, 2017.

The minimum gap of 5 years between two partial withdrawals has also been removed w.e.f. 10th August, 2017.

A subscriber is eligible for three partial withdrawals during the period of subscription under NPS, each withdrawal not exceeding twenty-five percent of the contributions made by the subscriber and excluding contributions made by the employer. There is, however, no restriction on withdrawals from the Tier-II account of the subscriber.

The extent and purpose for which partial withdrawals from the Tier-I account under NPS are permissible are as under:

Purpose
(i) for higher education and marriage of his or her children including a legally adopted child;

(ii ) for the purchase or construction of a residential house or flat in his or her own name or in a joint name with his or her legally wedded spouse.

In case, the subscriber already owns either individually or in the joint name a residential house or flat, other than ancestral property, no withdrawal under these regulations shall be permitted;

(iii) for treatment of specified illnesses: if the subscriber, his legally wedded spouse, children, including a legally adopted child or dependent parents suffer from any specified illness, which shall comprise of hospitalization and treatment in respect of the following diseases:

(a) Cancer;

(b) Kidney Failure (End Stage Renal Failure);

(c) Primary Pulmonary Arterial Hypertension;

(d) Multiple Sclerosis;

(e) Major Organ Transplant

(f) Coronary Artery Bypass Graft;

(g) Aorta Graft Surgery;

(h) Heart Valve Surgery;

(i) Stroke;

(j) Myocardial Infarction;

(k) Coma;

(l) Total blindness;

(m) Paralysis;

(n) Accident of serious/ life threatening nature.

(o) Any other critical illness of a life threatening nature as stipulated in the circulars, guidelines or notifications issued by the Authority from time to time.

Towards meeting the expenses by subscriber for skill development/re-skilling or for any other self-development activities.

Towards meeting the expenses by subscriber for establishment of own venture or any start-ups.

To meet medical & incidental expenses arranging out of disability or incapacitation suffered.

Limits: The subscriber should have been in the National Pension System at least for a period of three years from the date of his or her joining; The subscriber shall be permitted to withdraw accumulations not exceeding twenty-five per cent of the contributions made by him or her and standing to his or her credit in his or her individual pension account, as on the date of application for withdrawal;

Frequency: The subscriber shall be allowed to make partial withdrawals for a maximum of three times during the entire tenure of subscription under the NPS. There is, however, no minimum time gap now stipulated between two partial withdrawals.

This was stated by Shri Ship Pratap Shukla, Minister of State for Finance in a written reply to a question in Lok Sabha today.

Source: PIB

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NPS Latest News: Processing of Partial Withdrawal Request

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NPS Latest News: Processing of Partial Withdrawal request

Public Notice – Processing of Partial Withdrawal requests in system latest by 31.12.2018 National Pension System Trust (NPS Trust)

Are you an NPS subscriber who has applied for partial withdrawal from PRAN but has yet to receive the funds?

If yes, please read and act upon the following message immediately:

An NPS subscriber is permitted to make partial withdrawal for specified purpose after three years of joining. If the subscriber has applied for partial withdrawal, the completed hard copy form and documents are also required to be submitted to the concerned nodal office for verification and authorization.

In absence of submission of the hard copy form and documents to the nodal office, the online partial withdrawal request will remain pending in the system and the subscriber will not receive the funds.

As per advisories issued by the Pension Fund Regulatory & Development Authority (PFRDA) on 06 December 2018, in case of all partial withdrawal requests captured in the system till 30 November 2018, the required forms, information and documents need to be submitted to the respective nodal offices immediately so that verification and authorization can be completed
latest by 31 December 2018.

The nodal offices will be: Pay & Accounts Office (PAO) / District Treasury Office (DTO) / Drawing & Disbursing Office (DDO) for the government sector subscribers and Points of Presence (PoPs) for subscribers in other sectors.

If a request for partial withdrawal is not authorized in the system by 31 December 2018, it will be treated that the subscriber is no longer interested to seek partial withdrawal and the application / request will be considered as withdrawn.

You are therefore requested to liaise with your nodal office to ensure your online partial withdrawal request, supported by hard copy application and other documents, is duly processed by them well before 31 December 2018.

In case you face any issues with your nodal office in the above matter, you can approach NPS Trust (along with your Permanent Retirement Account Number – PRAN and your own & your nodal office’s contact details) via email: [email protected]

Source: NPS Trust

NPS to OPS: New Pension Scheme Demand To Scrap it

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NPS to OPS: New Pension Scheme Demand To Scrap it

New Pension Scheme Demand To Scrap it

NEW PENSION SCHEME (NPS): The New Pension Scheme is made compulsory for Government employees was brought into effect 2004, this has effected them a lot, lot of agitations are being carried out on scrapping the New Pension Scheme, this agitations has forced many State Governments such as Karnataka, Kerala, Andhra Pradesh, Delhi State Governments to reconsider this New Pension Scheme and formed an expert committee to review this New Pension Scheme.

This New Pension Scheme was not implemented by West Bengal State Government. In this angle an analysis is made all about New Pension Scheme and ways to scarp or modify the New Pension Scheme to benefit the Government employees at large is suggested.

Need for Pension : The Pension System thus started in India was finalized by the Indian Pension Act of 1871. It appears that the British Government had the conception of providing its pensioners increase in their pensions to neutralize the effect of inflation.

Pension is a reward for past service. It is undoubtedly a condition of service but not an incentive to attract new entrants, the Pension is paid for past satisfactory service rendered, and to avoid destitution in old age as well as a social welfare or socio-economic justice measure, the fact that the cost of living has shot up and correspondingly the possibility of savings has gone down and consequently the drop in wages on retirement.

That pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer and that it creates a vested right subject to 1972 rules which are statutory in character because they are enacted in exercise of powers conferred by the proviso to Art. 309 and clause (5) of Art. 148 of the Constitution; (ii) that the pension is not an ex-gratia payment but it is a payment for the past service rendered; and (iii) it is a social welfare measure rendering socio-economic justice to those who in the hey-day of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in lurch.

As on 01-01-2018 there were 51.96 lakh pensioners in the country, including from Central Civil Services, Railways, and Post, Defence and Defence civilians.

EVOLUTION OF NEW PENSION SCHEME (NPS) IN INDIA:

In 1991 Government of India as introduced diverse economic reforms to pull the country out of economic crisis and to accelerate the rate of growth. These reforms are often described as the New economic policy (NEP) or policy of LPG where L for liberalization; P for privatization; G for globalisation. The Congress Government under the Prime Ministership of Hon’ble Prime Minister Shri P. V. Narasimha Rao, the signed an agreement with the International Monetary Fund (IMF) to get the IMF loan in which the IMF had imposed various conditions to get the soft loan which includes pension reforms , which the Indian Government Congress Government had accepted it to reform in a 10 years period .

On the basis of the decision taken in the Eleventh Conference of State Finance Secretaries held in the Reserve Bank of India (RBI) during January 2003, a Group was constituted by the RBI in February 2003 to study the pension liabilities of the State Governments and make suitable recommendations.

The “Pension Fund” to be created under the proposed revised schemes should be kept completely outside the States’ Consolidated Fund and the Public Account
The pension systems, both for Civil Servants and other citizens, as evolved over the years have begun to show signs of financial stress in many countries, including India.

Since the pension benefits of Government employees are usually paid from the general revenue of the Governments, the steep rise in such liabilities adversely affect the fiscal soundness of the Government entities.

In India too, the increasing pension liabilities of the Central and State Governments have emerged as a major area of concern, especially in the wake of fiscal deterioration in recent years. About 20% of the state Government funds are spent on pension.

During the Hon‘ble Prime Minister Shri Atal Bihari Vajpayee of NDA was in power from 1998 to 2004 which implemented this agreement of IMF on pension reforms .

The NDA Government constituted two committees namely B.K.Bhattacharya committee headed by Shri B.K.Bhattacharya, Former Chief Secretary, Government of Karnataka as chairman and under the Chairmanship of Shri Biju Patnaik, Chief Minister of Orissa , both these committees recommended introduction of New Pension Scheme (NPS) & Hon‘ble Prime Minister Shri Manmohan Singh of Congress (UPA) was in power from 2004 to 2014 continued to accept these pension reforms.

The New Pension Scheme (NPS) was announced on December 22, 2003 by the NDA Government, for all new government employees excepting those in the Armed Forces.

This brand new system replaces the defined benefit system of pension and this includes GPF. Contributory pension scheme is for entrants who joined after 1st January 2004.

While the NPS is mandatory for the Central government employees, it has potentially a much wider reach. As of March 2007, 19 states which have decided to introduce similar schemes, mandating newly recruited civil servants to mandatorily join the NPS‐type scheme.

The NPS started with the decision of the Government of India to stop defined benefit pensions for all its employees who joined after 1 January 2004. While the scheme was initially designed for government employees only, it was opened up for all citizens of India in 2009. Over 15 lakhs Government employees are currently registered in NPS scheme.

The Department of Economic Affairs (DEA) at the Ministry of Finance, notified a new pensions regulator in August 2003, before the NPS commenced operations in January 2004. The PFRDA bill was presented in 2005, and was finally passed in Parliament in 2013.

Let us analyse why Government is adopting the pension reforms:

SLNO
INDIAN GOVERNMENT VIEW
EMPLOYEES VIEW
1
The ratio of retirees to workers is on continuous rise and further by
2030 the 25% of the population (200 million pensioners) will be above 60
years of age.
The large number of employees are effected by the New Pension reforms,
hence Government should keep it in mind the interest of the large
chunk   of employees
2
The Pension system shall put enormous financial pressure on the
Government and take away funds meant for social cause spending, this will
cause a drain on the state of economy.
About 80 % of employees are Group “C” workers, the pension amount is
ultimately spent by them for their daily needs and money flows into the
market and economy will not be effected , secondly Government is a model
employer and it has social responsibility towards its employees

After a decade of existence, there is need to examine the existing NPS and compare the performance of this system to the goals with which it was created.

*One of the key bottlenecks has been the lack of a sound regulatory framework, put in place by an empowered and independent regulator. The PFRDA Bill that had been pending since 2002 was finally passed in 2013. This enables the formal institutionalization of the PFRDA as the regulator of the NPS. The PFRDA can now take on the task of both the relatively short term agenda of closing the gap between the current NPS and the original design.

*Central government employees can invest in these assets only through their Tier II account which get higher returns on longer period.

  • After the enactment of the Pension Fund Regulatory and Development Act, 2013, it is not the exclusive liability of the government to pay the pension.”
    The Ministry of Finance will oversee and supervise the Pension Funds through a new and independent Pension Fund Regulatory and Development Authority.”

WHAT IS THE NATIONAL PENSION SCHEME?
Each Government employee contributes 10 % of his salary (Basic Pay + DA + DP) to the pension account , which is then matched by a Government contribution of an equal amount .

National Pension Scheme or New Pension scheme is a pension plan offered by the government. Investment in this scheme is via debt and equity market.

The invested amount is locked until retirement. At retirement age, you can withdraw 60% of the maturity amount while the balance 40% must be invested in annuity. The maturity amount is taxable.

The NPS is regulated by the PFRDA and fund management is by designated fund managers from the private and public sector. NPS has the lowest charges.

From our salaries and daily allowance, 10 per cent is cut towards pension and an equal amount is given by the government. This amount is invested into the share markets under the new scheme.

An NPS subscriber can withdraw 25% of his contribution to the corpus for emergencies before retirement. Instead of withdrawing the entire amount at retirement, you can withdraw Rs 25,000, or 25% of your contribution, earlier, without any tax incidence. The remaining Rs 1.75 lakh is withdrawn on retirement.

New Pension Scheme extension of benefits of Retirement Gratuity and Death Gratuity to the Central Government employees covered by New Defined Contribution Pension System (National Pension System)-regarding. All these condition would be equally applicable for grant of gratuity to employees covered under New Pension Scheme.

An individual can claim tax deduction of upto 10 percent of the salary contributed towards NPS under Section 80 C. For those contributing through the corporate scheme, an employee can claim tax deduction on contribution made by the employer, not exceeding 10 percent of his basic salary plus dearness allowance (if any) Under Section 80 CCD (2). This is above the overall limit of Rs.1 lakh offered under Section 80C.

How New Pension Scheme (NPS) is affecting the Government employees.

The New Pension Scheme is highly disadvantageous to the Government employees under the present situation the pension amount is invested into the share markets under the new scheme.

If the markets are doing well, the employees will get a good pension if the share market fails no pension is available to them. Under the old system, employees would get a fixed amount as pension that was 50 per cent of their last basic salary.

When the salary was hiked, the pension amount too would be revised. Under the present NPS system, there is no security as pensions depend on market conditions.

Secondly the NPS is highly disadvantageous if the length of the Government service is less if a employee serves for 20 years, he draws a pension of about Rs 3,000/- to Rs 5,000/ only.

If he completes 33 years of service he draws about Rs 12,000/- to Rs 15,000/- compared to Rs 15,000/- to Rs 20,000/- in the old pension system, this new pension system needs a deep study and its minimum pension should be at least 50% of the last pay drawn.

It is upto the Government how and where the money is invested, but a minimum guarantee of 50% of the last pay drawn should be assured by the Government to the employee.

Under New Pension Scheme is in reality much steeper than what the quantum of pension would indicate the differential treatment for those retiring under Old Pension scheme and New Pension Scheme, would be according differential treatment to pensioners who form a class irrespective of the type of retirement and, therefore, would be violate of Art. 14.

It was also contended that classification based on fortuitous circumstance of retirement in old or New Pension Scheme, fixing of which is not shown to be related to any rational principle, would be equally violate of Art. 14.

Pension Scheme around the Globe : The USA, Canada, United Kingdom, China , Germany etc. Governments have a scheme of a Defined Benefit (DB) pension is where you receive a specific amount of pay out that is guaranteed by employer, regardless of how their pension investment performs. Your defined benefit amount depends on how much is paid into the plan and your years of service with that employer.

CONCLUSION:The Indian Government should also have a similar Defined Benefit (DB) pension scheme like other major countries in the world have, as many state Governments are re thinking on the New Pension Scheme, hence this New Pension Scheme should be remodeled to suit the Government employees. The Government should take up more social responsibilities of protecting its employees.

We request the government to reintroduce the old pension system. For this a greater movement should take place amongst the New Pension Scheme employees forcing Central Government to rethink the new pension policy adopted after 2004.

P.S.Prasad
Working President
COC Karnataka

Source: http://karnatakacoc.blogspot.com/

NPS to OPS: Old Pension Scheme will be restored by AAP Govt. in National Capital

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NPS to OPS: Old Pension Scheme will be restored by AAP Govt. in National Capital

New Contributory Pension System (NPS)

As per the media news, Delhi CM Arvind Kejriwal announced that the old pension scheme will be restored by AAP government in national capital.

Confederation of Central Government Employees and Workers Secretary General M.Krishnan wrote an article recently regarding New Contributory Pension System (NPS).

Pension system was in vogue in India for a century or more and the British Government during the pre-independence era introduced Pension Rules for Government employees and thus made it statutory.

In the year 1982 Supreme Court in its landmark judgement in Nakara’s case declared that – “as per India’s constitution, Government is obliged to provide social and economic security to pensioners and that Government retirees had the fundamental right to pension….. Pension is not 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 service rendered. It is a social welfare measure, rendering socio-economic justice to those who in the hey days of their life, ceaselessly toiled for their employers on the assurance that in their old age, they would not be left in lurch.”

During the advent of globalisation policies in 1980’s the pension reforms also started simultaneously. IMF & World Bank started publishing so many reports and documents emphasizing the need for pension reforms.

They also started studying about the reforms to be undertaken in the pension sector in India. In 2001, “IMF work paper on pension reforms in India” and World Bank India specific report “India – the challenge of old age income security” were published.

Their work reports emphasized that “Pension obligations or promises made by the Governments which have potential of exerting pressure on Govt. finances, have been a subject of increased focus in assessing medium to long term fiscal sustainability.”

In tune with the dictates of IMF and World Bank BJP-led NDA Government appointed Bhattacharjee Committee in 2001 headed by Ex-Chief Secretary of Karnataka, to study and recommend pension reforms.

Thus after creating ground for pension reforms, under the pretext of implementing recommendations of Bhattacharyya Committee, the NDA Government introduced New Pension System called Defined Contributory pension system for all employees who join service on or after 01-01-2004.

The Congress-led UPA Government which came to power in 2004 continued with the reforms and promulgated an ordinance to legalise NPS. But UPA-I Govt. could not pass the Pension Bill in Parliament due to stiff opposition of Left Parties supporting it.

Later when UPA-II Government came to power the Pension Regulatory and Development Authority (PFRDA) Bill was passed in the Parliament with the support of BJP, the then opposition party.

Many State Governments governed by political parties other than Left Parties, introduced Contributory Pension System for their employees from various dates after 2004.

Left Front Governments of Kerala, West Bengal and Tripura refused to introduce the New Pension Scheme and they continued with the old defined benefit pension scheme.

Congress-led UDF Government introduced NPS in Kerala. After BJP coming to power in Tripura also Contributory Pension Scheme is introduced recently. In West Bengal old Pension Scheme continues even now.

Not only newly appointed Central and State Government employees, almost all new entrants of public sector and Autonomous bodies are also brought under the purview of NPS.

As per New Contributory Pension Scheme an amount of 10% of pay plus Dearness Allowance will be deducted each month from the salary of the employees covered under NPS and credited to their pension account. Equal amount is to be credited by the Government (employer) also.

Total amount will go to the Pension Funds constituted under the PFRDA Act. From the pension fund the amount will go to the share market. As per the PFRDA Act – “there shall not be any implicit or explicit assurance of benefit except (share) market based guarantee mechanism to be purchased by the subscribers”.

Thus the amount deposited in Pension Fund may or may not grow depending on the fluctuations in the share market. After attaining 60 years of age i.e., at the time of retirement, 60% of the accumulated amount in the Pension Account of the employee will be refunded and the balance 40% will be deposited in an Insurance Annuity Scheme.

Monthly amount received from the Insurance Annuity Scheme is the monthly pension i.e., Pension is not paid by Government, but by the Insurance Company and hence NPS is nothing but Pension Privatization..

Thus it can be seen that the growth of the accumulated amount in the Pension fund depends upon the vagaries of share market. If the share markets collapse, as happened during the 2008 world financial crisis, then the entire amount in the pension fund may vanish. In that case employee will not get any pension.

Every fluctuation in the share market will affect the future of pension of those employees who are covered under NPS. Uncertainty about pension and retirement life looms large over their heads.

Even if there is a stabilized share market the 40% amount in the annuity scheme is not enough to get 50% of the last pay drawn as pension, which is the minimum pension as per old pension scheme.

Many employees who entered in service after 01-01-2004 has retired in 2017 and 2018 after completing 12 & 13 years of service. They are getting Rs.1400- to Rs.1700- only as monthly pension from Insurance Annuity Scheme.

If they have entered service in 2003 i.e., in the old pension scheme, they would have got 50% of the last pay drawn as pension subject to a minimum of Rs.9000- as minimum pension, that too without giving any monthly contribution towards pension from their salary. In short, NPS is nothing but NO PENSION SYSTEM.

As per clause 12(5) of the PFRDA Act even the employees and pensioners who are not covered under NPS, can be brought under the Act by a Gazette notification by the Government. Thus NPS is a Damocles’ sword hanging over the head of all employees and pensioners.

Who is the beneficiary of this pension reforms? As in the case of every neo-liberal reforms, the ultimate beneficiary is the Corporates. The huge amount collected from the workers through pension fund is invested in share market by the Pension Fund Managers and this amount in turn can be utilized by the multi-national Corporate for multiplying their profit.

Amount deducted and credited to the Pension fund from each newly recruited employees plus the employer’s share amount will remain with the pension fund and share market for a period of minimum 30 to 35 years i.e., till the age of 60 years.

During this long period of 35 years crores and crores of rupees will be at the disposal of share market controlled by multinational corporate giants. Ultimate causality will be the poor helpless employee/pensioner.

Confederation of Central Government Employees and Workers and All India State Government Employees Federation (AISGEF) has been opposing the NPS from the very beginning and a one day strike was conducted on 30th October 2007.

It was one of the main demand in all other strikes during these period. The campaign and struggle against NPS continued and as of now the subjective and objective conditions for a bigger struggle against NPS has emerged as almost 50% of the total employees in Central, State, Public sector and Autonomous bodies are now covered under NPS and are becoming more and more restive and agitated.

7th Central Pay Commission Chairman Retired Supreme court Judge Sri. Asok Kumar Mathur has correctly pointed out that “Almost a whole lot of Government employees appointed on or after 01-01-2004, were unhappy with New Pension Scheme. Govt. should take a call to look into their complaint”.

As per the recommendations of 7th CPC, Central Government appointed a Committee called “NPS Committee” for streamlining the functioning of NPS. The Staff-side has demanded before this Committee to scrap NPS and guarantee for 50% of the last pay drawn as minimum pension subject to a minimum of Rs.9000-.

Even though, the Committee has submitted its report 18 months back, the Government has not yet disclosed the recommendations of the Committee.

Confederation and AISGEF has decided countrywide intensive campaign culminating in one day strike on 15th November 2018 demanding that the Defined Contributory Pension Scheme (New Pension Scheme – NPS) imposed on new entrants must be scrapped and the Government should reintroduce the Defined Benefit Pension Scheme (Old Pension Scheme – OPS) that was in vogue for a century or more.

We are also exploring the possibility of organizing an indefinite strike in the coming days exclusively on one demand i.e., SCRAP NPS, RESTORE OPS for which wider consultations are being made with all like-minded organizations.

Mob & whatsapp: 09447068125
e-mail: [email protected]

Source: Confederation