Revisiting the National Pension System: Demand for Old Pension Scheme

The Ministry of Personnel, Public Grievances and Pensions in the Government of India has responded to a question in the Rajya Sabha regarding the demand for reintroduction of old pension schemes for general employees. The Minister of State in the Ministry of Personnel, Public Grievances and Pensions has stated that the National Pension System (NPS) was introduced for Central Government employees in 2003 and is mandatory for all new recruits to the Central Government service since 2004. Most of the State Governments have also adopted NPS for their employees. The government has taken several steps to streamline NPS for Central Government employees and protect the interest of the subscribers, including enhancing the government’s contribution and providing tax exemptions. The response did not indicate any plans for the reintroduction of old pension schemes.

Reintroduction of pension schemes

GOVERNMENT OF INDIA
MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS
(DEPARTMENT OF PENSION & PENSIONERS’ WELFARE)
RAJYA SABHA
STARRED QUESTION NO. 177
(TO BE ANSWERED ON 16.03.2023)

REINTRODUCTION OF OLD PENSION SCHEME

177 SHRI ANIL DESAI:
Will the PRIME MINISTER be pleased to state:

(a) whether it is a fact that there is a growing demand for reintroduction of pension schemes for the general employees;

(b) the response of the Central Government as more number of State Governments are going for the pension schemes for their employees; and

(c) the assessment of Government on closure of pension w.e.f. 2004 for its employees?

ANSWER
MINISTER OF STATE IN THE MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS AND MINISTER OF STATE IN THE PRIME MINISTER’S OFFICE (DR. JITENDRA SINGH)

(a) to (c): Representations have been received from time to time offering inputs on different aspects of National Pension System.

National Pension System (NPS) was introduced for Central Government employees by a Notification of Ministry of Finance (Department of Economic Affairs) dated 22/12/2003. NPS is mandatory for all new recruits to the Central Government service from 01/01/2004 (except the armed forces). Most of the State Governments adopted NPS for their employees.

Consequent to introduction of NPS w.e.f. 01.01.2004, the Central Civil Services (Pension) Rules, 1972 were amended and the benefits of old pension scheme under these rules are not applicable to Central Government employees appointed after 31.12.2003.

Government of India, after the assessment has taken many steps for streamlining of NPS for Central Government employees and to protect the interest of the subscribers. These include enhancement of Government’s contribution from the earlier 10% of Pay plus DA to 14% of Pay plus DA, freedom of choice of selection of Pension Funds and pattern of investment to subscribers, payment of compensation for non-deposit or delayed deposit of NPS contributions for any period during 2004-2012, tax exemption under Section 80C of the Income Tax Act, 1961 and increase in tax exemption limit for lump sum withdrawal on exit from earlier 40% to 60% of the amount due, making the entire withdrawal exempt from income tax.

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