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Third Pension Conference on Implementation of National Pension System (NPS) 

Ministry of Finance

Press Information Bureau

27-April, 2017 19:18 IST

The Minister of State (MoS) for Finance Shri Santosh Gangwar says that there is a need for creating awareness on pension at the grassroots level; expresses satisfaction that the National Pension System (NPS) is gaining recognition

NPS has more than 1.57 crore subscribers with total Asset under Management (AUM) of more than Rs.1.72 lakh crores 

The Minister of State (MoS) for Finance Shri Santosh Gangwar said that there is a need for creating awareness on pension at the grassroots level and expressed satisfaction that the National Pension System (NPS) is now gaining recognition. He was speaking on the occasion of the “Third Pension Conference on Implementation of National Pension System (NPS)” of the Pension Fund Regulatory and Development Authority (PFRDA) in New Delhi today. The conference was organised with the theme of ‘Towards a Pensioned Society: The Road Ahead’.

After inaugurating the event, the MoS for Finance released a report titled “Financial Security for India’s Elderly” prepared by PFRDA in association with CRISIL. The report brings to the fore the concerns of demographic transition, existing pension provisions, need to expand the voluntary pension coverage through awareness and developing annuity market and alternatives.

During the function, the top three performing Points of Presence (POPs) under NPS and Atal Pension Yojana – Service Providers (APY- SPs) were awarded for their contribution in bringing subscribers under the social security net of NPS and APY.

Shri Hemant Contractor, Chairman, PFRDA, in his key note address stressed on the need to provide old age income security through mass awareness and training programmes and increase financial literacy among the population of India, especially among the informal sector, which is largely out of the social security net.

NPS has been uniquely designed in a manner to cater to both the organised and heterogenous unorganised sector characterised with seasonal /sporadic employment with migration, uncertain level of income and limited capacity to save. During his address, Shri Hemant Contractor informed that PFRDA is also considering an auto enrolment programme/system under National Pension System. He further assured that PFRDA will ensure to take all steps to increase the outreach of NPS and APY to meet the mandate under PFRDA Act.

Dr. B. S. Bhandari, Whole Time Member (Economics), PFRDA, in his address, highlighted the need to expand the coverage of NPS in an efficient and sustainable way and also informed the participants about the new initiatives undertaken during last financial year including the launch of two new life cycle funds and eNPS – an online platform for registration. He also informed about the growth of 47% in Asset under Management (AUM) and 25% in number of subscribers in the last financial year. He also threw light on the investment pattern and NPS architecture.

During the course of the event, Shri Suchindra Misra, Joint Secretary, Department of Financial Services, stressed that pension was not just about old age security but also about old age dignity.

The conference was followed by discussion on topics related to pension annuities financial literacy, financial behaviour studies, researches, market performance & challenges, risk mitigation strategies to safeguard market anomalies and old age income security through technical sessions.

The technical sessions were graced by panellists including Mr. Leo Puri (MD, UTI AMC), Mr. C Parthasarthy (Group Chairman, Karvy), Mr. Ashwin Parekh (Trustee, NPS Trust) Mr. Sandeep Ghosh (Director, NISM), Prathit Bhobe (Sr. GM, ICICI Bank), Mr. Mukul Asher (Professor) and Mr. Sandeep Bakshi (MD, CEO ICICI Prudential life insurance). Senior representatives and dignitaries from various financial institutions, Banks and NBFCs also graced the conference.

Currently, the National Pension System (NPS) has more than 1.57 crore subscribers with total Asset under Management (AUM) of more than Rs.1.72 lakh crores.

Press Information Bureau

Government Of India

Ministry Of Defence

Dated: 11-04-2017

Tax on NPS

The provision that the withdrawal from National Pension Scheme is taxed to the extent of 60 per cent has been introduced into the Income Tax Act, 1961 (‘Act’) vide Finance Act, 2016 by inserting clause (12A) in Section 10 of the Act.

Prior to Finance Act, 2016, National Pension Scheme (NPS), referred to in section 80CCD, was under Exempt, Exempt and Tax (EET) regime i.e., the monthly/periodic contributions during the pension accumulation phase were allowed as deduction from income for tax purposes; the returns generated on these contributions during the accumulation phase were also exempt from tax but the terminal benefits on exit or superannuation, in the form of lump sum withdrawals, were taxable in the hands of the individual subscribed or his nominee in the year of receipt of such amounts unlike PPF and EPF which have been enjoying EEE regime i.e. Exempt, Exempt, Exempt.

In order to rationalize the taxability of receipts from pension plans, vide Finance Act, 2016, section 10 of the Act was amended to provide that any payment from National Pension Scheme to an employee on account of closure or his opting out of the NPS shall also be exempt from tax, to the extent it does not exceed forty percent of the total amount payable to him at the time of closure or his opting out of the scheme. Further, Finance Act, 2017 has amended section 10 of the Income-tax Act to exempt partial withdrawals by employees (to the extent of 25% of the employee’s contribution) from their NPS accounts in accordance with the guidelines prescribed under Pension Fund Regulatory and Development Authority Act, 2013.

This was stated by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Rajya Sabha today.

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF FINANCIAL SERVICES

RAJYA SABHA

UN STARRED QUESTION NO. 2130

TO BE ANSWERED ON MARCH 21, 2017/PHALGUNA 30, 1938 (SAKA)

RESTORATION OF OLD PENSION SYSTEM IN PLACE OF CONTRIBUTORY PENSION SYSTEM

01 March 2017

1. As per the extant guidelines, subscriber can change his/her existing Pension Fund the investment option(Active or Auto choice) as well as asset allocation ratio (allocation among asset class-Equity/Corporate Bonds/Government securities/ Alternative investment ) once in a financial year. This scheme preference is applicable to the existing pension corpus as well as to the prospective subscriptions. Similarly in the NPS-Corporate Model where the choice of Pension Fund and Investment Options is exercised at Corporate level. the Corporates also have the option to change the pension fund and investment option and also asset allocation ratio once in a financial year,

2.In order to provide more choices in terms of investment option and asset allocation, the following has been decided:

(i) The subscribers/corporates will have the choice for change of the investment option (Active or Auto choice) as well as asset allocation ratio (allocation among asset class-Equity/Corporate Bonds/Government Securities/ Alternative Investment) two times in a financial year.

This scheme preference will be applicable to the existing pension corpus as well as to the prospective subscriptions, The option will be available separately for Tier I and Tier accounts,

(ii) The choice Of change Of pension Fund shall remain once in a financial year.

4, The changes will come into effect from 01st April 2017.

Yours faithfully

Withdrawal of NPS or exemption from NPS was one of the most important demand of the NJCA in the 11th July 2016 deferred indefinite strike. In the statement issued by NJCA on 06-07-2016 after deferring the indefinite strike, it stated as follows:

“The NJCA particularly notes that the Government has set up a separate committee for reviewing the New Pension Scheme, which has been a matter of concern to all employees and workers who are recruited to Government service on or after 01-01-2004”.

It is true that Government has constituted an NPS Committee under the Chairmanship of Secretary (Pension). This created a lot of hope among the younger generation employees as they have been made to believe that the committee will consider the demand of NJCA to scrap the NPS or at least exempt Central Government employees from NPS. But to the dismay of all, in the agenda notified by NPS Committee for discussion with staff side (JCM) on 10- 02-2017, the main issues such as (1) Scrapping of NPS (2) Guaranteed minimum pension to NPS subscribers ie; 50% of the last pay drawn should be guaranteed by Government as minimum pension, even if the returns from the annuity insurance scheme is less than 50% and (3) exemption of Central Government employees from the purview of NPS, are not included as agenda for discussion in the meeting. During the discussion with staff side on 10-02-2017, Additional Secretary (Pension) informed the following:

(1) Withdrawal of NPS is not within the purview of NPS Committee.

(2) There are three sub committees constituted on NPS (i) Committee chaired by Joint Secretary, Department of Financial Services to look into investment, benefit and taxation, (ii) Committee chaired by Joint Secretary (Expenditure), Finance Ministry, with regard to finalising the accounting, implementation procedure and grievance redressal. (iii) Committee chaired by Additional Secretary (Pension) to formulate Rules and Regulations with regard to various benefits from NPS.

Thus it is made clear without any ambiguity that NPS Committee is constituted by the Government for further strengthening NPS and not for scrapping NPS or exempting from NPS as demanded by NJCA. Everybody knows that whether it is pay commission or NPS Committee, it cannot and will not make recommedations on any issue which are not included in the terms of reference of the Commission/Committee, specifically by the Government. Submitting memorandum to the NPS committee demanding scrapping of Page 2 of NPS or exemption from NPS may not serve any purpose, unless Government give clear mandate to the Committee to examine such a demand also. Thus, NDA Government has rejected the demand of NJCA either to scrap NPS or exempt from NPS. This is the real fact and there need not be any confusion in the mind of the employees. In order to compel the Government to accept the demand, there is no short-cut, other than reviving the indefinite strike.

Railway Federations demand also rejected: Railway Federations have demanded exemption of Railway employees from the purview of NPS. Railway Ministers of UPA and NDA Government had forwarded the demand to the Government with their recommendations stating that Railways is second line of defence and as Military Personnel are already exempted from NPS, Railway employees should also be exempted from NPS. Earlier in a letter dated 15th May 2015 addressed to Railway Board, the Ministry of Finance, Department of Financial Services has informed as follows:-

“It may kindly be noted that, earlier a proposal to exempt paramilitary forces (ie. CRPF, BSF etc.) from the ambit of NPS was referred to a Group of Ministers (GoM) and was finally not approved by the Government………… You will agree that moving away from the earlier defined benefit based pension system was a concious decision of the Government taken in view of the unsustainable pension liability of the Central Government……. In view of the above, request of the recognised Federations (AIRF & NFIR) for seeking exemption of the Railway Servants appointed on or after 01-01-2004 from the application of the NPS does not seem to be a feasible proposition.”

From the above reply, it is clear that Government is not going to exempt Railway employees or other Central Government employees from the purview of NPS, unless NJCA revive the indefinite strike and compell the Government to negotiate and settle the demand.

03-May-2013 16:54 IST

Death-cum-Retirement Gratuity is paid to Central Government employees under New Pension System (NPS) as it is paid under the old pension scheme. The monthly annuity under the New Pension System (NPS) is only a replacement of pension on retirement and family pension of death after retirement. The benefits of Death cum Retirement Gratuity (DCRG) and pension/family pension have been provisionally allowed, vide the Office Memorandum of Department of Pension and Pensioners’ Welfare No. 38/41/06-P & PW(A) dated 5.5.2009 in respect of Central Government servants covered under NPS in cases where a Government Servant is retired on invalidation/disability and in the case of death of a Government servant in service on the same rates as are applicable under the old pension scheme Central Civil Service (Pension) Rules, 1972. The retirement gratuity is payable to the retiring Government servant. A minimum of 5 years’ qualifying service and eligibility to receive service gratuity/pension is essential to get this one time lump sum benefit. Retirement gratuity is calculated @ 1/4th of a month’s Basic Pay plus Dearness Allowance drawn before retirement for each completed six monthly period of qualifying service. The maximum retirement gratuity payable is 16½ times the Basic Pay, subject to a maximum of Rs. 10 lakh. If the Government Servant dies while in service, the death gratuity shall be paid to his family at rates furnished in the table below:

Maximum amount of Death Gratuity admissible is Rs, 10 lakh with effect from 1.1.2006.

This was stated by Minister of State for Finance, Shri Namo Narain Meena, in written reply to a question in the Lok Sabha today.

Source: PIB News

31st January. 2017

National Pension System (NPS) Service Fortnight (February 1 — February 15, 2017) : Updation of AADHAR no. in PRAN of Subscribers.

In continuation of our earlier communication dated 07.01.2016, we have decided to include ‘updation of Aadhar number’ also as one of the activities for NPS service fortnight. Therefore, Nodal offices of Central State Governments are advised to guide and encourage the subscribers for updation of their AADHAR no., in addition to mobile app download and other activities during the fortnight.

2. In this regard, subscribers may be advised for login in the CRA website www.cra-nsdl.com through their login id & password and further update AADHAR no. under the ‘update details’ tab. The request for updating AADHAR no. will have to be authorized by the associated nodal office. PFRDA has already advised NSDL/CRA for providing all necessary assistance to the Nodal Offices and subscribers. Based on numbers of such updation, PFRDA will recognize various State governments and Central Ministries in the same way it has announced for Mobile App download.

3. In case of any assistance/clarificatlon required, nodal offices may contact Shri Sachin Joneja, Manager, PFRDA at sachin.joneja@pfrda.org.in or Sh. Bibhas Outta, NSDL at 022-24994558 / bibhasd@nsdl. co.in or Abhishek Dhuri, NSDL at 022-24004266/abhishekd@nsdl.co.in.

Yours Sincerely