The pension has been one of the most attractive features of the government jobs. Many candidates want government job to get per month pension in their accounts after their retirement. But since 2004 the pension scheme for the central government employees has been changed. Central Government has introduced a new pension scheme to its employees in 2004.
Here in this article, we will give you the information about this new pension scheme.
What is the New Pension Scheme?
The national pension scheme is also known as NPS. The NPS is introduced in India by the central government to its employees. The NPS is a defined contribution based scheme. In NPS both the employee and the government pay a minimum contribution every month in the retirement fund of the employee.
At the time of retirement, the employee can withdraw 60% amount of his/her pension either in a lump sum or in installment. From the rest, 40% amount of accumulated pension he/she has to purchase the annuity plans from the Government authorized agencies to get a regular monthly pension. Now his/her regular monthly pension will depend on the market and the share price of that plan. So it may be possible that if one month the retired person got 10,000 as pension then in next month he/she may get 12,000 as a pension.
Who Comes Under NPS?
The central government employees who join their job on or after January 1, 2004, will get the pension benefits according to NPS rules. Those central government employees, that joined their job before January 1, 2004 will get the benefits according to the previous rule of the pension scheme.
In 2004 the NPS was only applicable for the employees working under the central government. But now most of the states have also adopted the same formula of pension. Like in Uttar Pradesh the government teachers who joined after 1st January 2014 will get the pension based on the NPS. Only West Bengal didn’t adopt the NPS else all the states in India has started to give pension according to NPS.
Who are Exempted from NPS?
- Every employee who joined the job under the central government before 2004 will get the pension under the defined benefits of a pension.
- Employees working in Indian armed forces will get the defined pension after retirement. They are exempted from NPS.
- State employees of the West Bengal government will also get the pension like earlier years as the state didn’t accept the NPS yet.
Difference Between Old and New Pension Schemes
Many government employees are not satisfied with the new pension scheme. Most government employees feel that now they will not get the pension after retirement but it’s not true. Still, they will get the pension but not a defined one. Earlier the government employees used to get a defined pension. The amount of the pension was based on the salary of the employee but now in NPS, the government employees will get an un-defined pension.
Here are the few other differences between old and new pension schemes.
- The old pension is calculated on the last drawn salary but in the new pension scheme, the pension amount is not defined.
- In the old pension scheme there was no deduction to be done from the employee’s salary but under NPS the employees have to give some amount of the salary for their retirement
- In the old pension scheme, the retired employees used to get the benefits of an increment in DA but now after the implementation of NPS new employees will not be able to get those benefits.
After the announcement of the new pension scheme, many employees aren’t happy with and doesn’t support it. But according to the experts and financial advisers, the NPS can offer good benefits to the retired employees. To conclude this, we can only say that only the time will reveal the benefits of NPS.