The Central Government has implemented the New Pension Scheme 2005 (NPS) in a new system for permanent employees who have joined government jobs after 2005.
Under which every employee will be paid gratuity equal to 16 months’ salary on retirement.
40 percent of the total deposit amount of the employee will be paid in cash and 60 percent will be deposited in the mutual fund and pension will be paid.
The Directorate of Pension and Provident Fund Office has ordered this amendment.
The above amendment is not acceptable to NPS holder employees. The Supreme Court has also issued an order on this and ordered the central government to stop NPS and implement old pension.
The central government had already made it clear
- The Central Government has already made it clear in its gazette that the State Government is not bound to implement the New Pension Scheme.
- Employees have demanded from all the state governments to implement the old pension scheme, which they have been doing for years.
- Because New Pension Scheme 2005 is being maintained by Accounts Maintenance Agency which is a Trust. And the future and pension of the employees are not secure through the trust.
Madhya Pradesh Karamchari Manch was at the forefront of the protest
The Madhya Pradesh Employees’ Forum had lodged a protest in front of the ministry by burning copies of the New Pension Scheme 2005 and the memorandum to withdraw the New Pension Scheme was submitted to the Chief Minister, along with a demand to implement the Old Pension Scheme.
From 29 November 2021, the Madhya Pradesh Employees Manch is running a nationwide signature campaign against the New Pension Scheme 2005, which is still going on.
Employees across the country have rejected the new amendment made by the government and have demanded the implementation of the old pension scheme.
Under the new pension scheme, only 1000 or 1500 rupees pension has been talked about.
State President of Madhya Pradesh Employees’ Forum, Ashok Pandey has told that only 1000 or 1500 rupees pension is made to the employees of the country on retirement through New Pension Scheme 2005.
Due to which the expenses of his family’s maintenance and medicines etc. There is no provision to withdraw any amount in the deposit amount in case of accidental accident.
What is new pension scheme
The purpose of the new pension plan is similar to the 401(k) plan offered to employees in the United States, however, there are some differences. NPS follows an exempt-tax-deductible (EET) structure similar to its global peer,
But the withdrawal amount after the age of 60 can neither remain invested nor can be withdrawn completely. Another important difference from the old pension plan is that premature withdrawal is not allowed in Tier I account but is allowed in Ti II account.
Official website related to pension- check here
Difference between new pension scheme and old pension scheme
| Properties | New pension scheme | Old pension scheme | Difference |
|---|---|---|---|
| Employee contribution | An employee has to contribute 10% of the total of his basic pay, special pay and other allowances which combine with dearness allowance to form his provident fund. | An employee has to contribute 10% of the total of his basic salary, special pay and other allowances which combine to form his provident fund (PF). | Dearness allowance is included in the new pension scheme. |
| Credit facilities | Not available | As per the guidelines set by individual banks, the loan can be availed within the prescribed limit for each purpose (of the loan). | You can take a loan under the old pension scheme. |
| Return retirement after service | Between 60 -70 years, minimum 40% of the pension money should be invested in the annuity and the balance can be withdrawn in installments or as a lump sum amount. | After retirement, the individual’s contribution along with accumulated interest will be paid back. But, the employer’s contribution along with interest will continue for payment of monthly pension to the employee for the rest of his life. | In the New Pension Scheme , 60% of the pension corpus can be withdrawn. And in the old pension scheme, the employer’s contribution along with interest is paid as monthly pension. |
| Tax benefits | Investments up to Rs 1 lakh can avail tax benefits under section 80-CCD(2) of the Income Tax Act, only if an employer contributes 10% of the salary to the NPS account. | For individual employees contributing to NPS, their investment is eligible for deduction under section 80-CCD(1). The limitation here is that all investment premiums under Section 80-C and A must be up to Rs 1 lakh per assessment year only in order to claim deduction on pension products under Section 80CCC. | Both have tax benefits on investments up to Rs 1 lakh. |
| Recovery of fee | Certain charges may be levied under this new scheme. | No additional fees or charges are charged | The new pension scheme carries additional charges. |
Which grade of employees will get the benefit?
- Union Minister of State Dr. Jitendra Singh told the Parliament that after the Supreme Court’s decision, the Central Government had put the matter under the Law Ministry.
- He said that the Department of Financial Services, Department of Pension and Pensioners’ Welfare (DoP&PW) may take appropriate decision regarding exclusion of those employees from the purview of NPS for whose recruitment the advertisement was issued on or before January 01, 2004 and they would be given the old age limit. Can cover under Pension Scheme (OPS).
- If the matter is resolved, then a big benefit can be seen in the pension.
Benefits of old pension will not be available in CAPF
- Recently, Union Minister of State for Home Nityanand Rai had given a statement in Parliament that there is no idea to give the benefit of Old Pension Scheme in the Central Armed Police Force.
- He was asked whether the soldiers who came to paramilitary after January 1, 2004 would get the benefit of OPS or not? According to him, the paramilitary staff are getting pension and other benefits under the Central Civil Services Pension Rules, 1972. However, they will have to stay in the New Pension Scheme.
