Government to Guarantee Employees 45% Pension Under NPS Rules? How the Finance Ministry Puts It

 Government to Guarantee Employees 45% Pension Under NPS Rules? How the Finance Ministry Puts It

Currently in the middle of its discussions, a committee has not yet come to any decisions.

The finance ministry issued a clarification on Thursday, contradicting media claims that the central government is set to guarantee its employees a minimum pension of 40–45% of their last-drawn income under NPS. It stated that a committee is currently deliberating and has not yet come to any sort of findings.

The finance ministry tweeted, "This news report is false," in response to claims claiming to outline a particular percentage of pension being suggested by the government for employees under National Insurance.

This is in relation to a news story that claimed to provide details about a particular percentage of pension that the government was proposing for employees under the National Pension System (hashtag: #NPS). This news article is untrue.The Committee was formed...

The Committee is currently in the middle of its discussions and is in the process of consulting stakeholders. It was established under the chairmanship of the Finance Secretary in response to a statement made by the Union Finance Minister in the Lok Sabha during the most recent Budget Session. The Committee has not yet come to any decisions of any kind.

The government intends to change the NPS so that employees receive an assured pension equal to 40–45% of their last-drawn income while both staff members and the government continue to make contributions, according to a Reuters story that cited two officials.

Employees must contribute 10% of their base salary to the National Pension Scheme, while the government must contribute 14%. The final payout is based on how well that corpus, which is primarily invested in debt, performs in the market.

In contrast, the earlier pension system did not require workers to make any contributions during their working lives and guaranteed a set annuity of 50% of their last-drawn pay.

The Defined Benefit Pension System (DBPS), the previous pension programme, is based on the employee's most recent paycheck. The Defined Component Pension System (DCPS), also referred to as the NPS, allows both employers and employees to make deposits to a pension fund that is distributed at retirement by way of an annuity or lump sum withdrawal in accordance with regulations.

After retiring, the employee might take 50% of their last-drawn wage as a pension under the OPS.

In accordance with the NPS, an individual is permitted to withdraw 60% of the total corpus accrued over his or her lifespan at the time of your retirement age, which is tax-free. The remainder, or forty percent is transformed into an annuitized product, which at this time might offer the person a pension equal to 35% of their most recent paycheck.

All new employees who join the central government's workforce on or after January 1, 2004, including those joining central self-governing organisations (apart from the armed forces), are subject to the NPS. Numerous state governments have also embraced NPS architecture and implemented NPS as a requirement for hires made on or after a deadline.