NPS To OPS: Major Change in NPS
Govt Contribution Raised to 14%
New Pension Scheme to Old Pension Scheme: As per the media news, the Union Cabinet approved on Thrusday (6.12.2018) to raise the contribution to National Pension Scheme (NPS) to 14 per cent.
Major Changes has been inititated by the Central Government in the exisiting National Pension Scheme applicable for the employees joined on or after 1.1.2004 in Central Govenment Services. The maximum contribution is now 10% of basic pay. The Government contribution may be raised to 14% of basic pay.
National Pension System (NPS) is a defined contribution pension system in place of existing defined benefit system, applicable for fresh entrants to Central Government Service from 1-1-2004 except the Armed Forces. The monthly contribution to be deducted amounts to 10% of the Basic Pay and DA to be paid by the employee and matched by the Central Government. The maximum limit of monthly contribution is 10%.
The Cabinet Committee also approved to increase the commutation percentage from 40% to 60%.
At present, there is only one default scheme for Tier I for Government employees. In the default scheme, the contribution is allocated to three PFMs, viz. SBI Pension Funds Private Limited, UTI Retirement Solutions Limited and LIC Pension Fund Limited in a predefined proportion.
With effect from 10.06.2015, each of the PFMs will invest the funds in the proportion of upto 50% in Government Securities and Related Investments, upto 45% in Debt Instruments and Related Investments, Upto 5% in Short-term Debt Instruments and Related Investments, upto 15% in Equities and Related Investments and upto 5% in Asset Backed, Trust Structured and Miscellaneous Investments.