Non-receipt of 50 percent of last pay pension from National Pension System i.e. NPS is a matter of concern among government employees. However, this concern only arises from people who left the scheme in the early days. According to the data, the maximum service of NPS exitees is a little over 18 years. However on average it is nine years.
According to government sources, contractual employees of many states, including Himachal Pradesh, were inducted as full-time government employees during their service and did not see full accrual from NPS while exiting the scheme.
A large proportion of government employees start working before the age of 30. He has been contributing to the pension fund for three decades. Their contribution comes from 10 percent of their basic salary and 14 percent from the employer. According to an official attached to the case, there are many people who later become part of the scheme. In such a situation, some of them may not get the full benefit after the court order. He also said that under the old pension scheme, some of these employees would not even be eligible for pension.
Ideal conditions for investment
According to officials, ideally one should invest for 30 years or more for good retirement benefits. A committee headed by Finance Secretary TV Somanathan is working on a formula to protect the interests of employees as well as the central and state governments. An analysis on the NPS Trust website shows how the tenure chosen by the contributor and the annuity deposited can make a difference even with a fixed contribution for the entire service period.
Refusal to apply old pension
So far, the Center has refused to introduce the old pension scheme i.e. OPS despite the demand and to bring it back in some states. However, many states ruled by opposition parties have adopted the popular route of old pension. The old pension had no employee contribution system and the government provided 50 percent of the last salary as pension.
It is adjusted twice a year for inflation and every 10 years it is linked to the benefits as recommended by the Pay Commission. Governments do not make annual budgetary allocations for expected retirement benefits for all employees and pensioners, resulting in what prudent policymakers and economists call an unfunded pension liability that is detrimental to the welfare and development of all citizens. capacity
Those who protest
According to an official, the opposition to the new pension system is mostly from those who exited the scheme without completing 20 years. Here a large part of the profit comes due to long term compounding. The central government made NPS mandatory for all employees joining the government service from January 2004. A few years later, during the tenure of the Manmohan Singh government, almost all states followed suit.
Average return of NPS: The average return among the three fund managers running the government NPS was between 9.37 and 9.6 per cent. According to government sources, many government employees who have moved out have used only 40 percent of the funds to buy annuities. This reduced his monthly income. Also, many of them have opted for the annuity option with purchase price return which gives the lowest return. In this the initial amount is returned to the survivor. This is in contrast to the old pension. It includes spousal pension and family pension i.e. 50% of full pension and hence does not include return of capital.
NPS will provide such pension
18 years later 37 years later 18 years later 37 years later
Date of Birth (1 January 1981) (1 January 2000) (1 January 1981) (1 January 2000)
Salary (per month) 20,000 20,000 70,000 70,000
Contribution 4800 4800 16,800 16,800
Total investment 10.4 lakh 21.3 lakh 36.3 lakh 74.6 lakh
Return (%) 9 9 9 9
Total Collection 25.9 Lakh 1.7 Crore 90.8 Lakh 6 Crore
Annuity Return (%) 5 5 5 5
Annual (% of collection) 40 40 40 40
Pension per month 4,323 28,589 15,130 1,00,066
Annual (% of collection) 100 100 100 100
Pension per month 10,807 71,447 37,826 2,50,066
Rupees and percentage figures