No pension, gratuity for new recruits
NSDL To Be Central Record Keeping Agency, BOI Trustee Bank
Srinagar, Jan 25: The government employees recruited in Jammu and Kashmir on or after January 1, 2010 would not be entitled to pensionary benefits, including pension, family pension and death-cum-retirement gratuity, under the New Pension Scheme (NPS).
According to SRO 400 issued recently, the employees appointed or brought on regular establishment on or after January 1, 2010, would now be governed by Defined Contributory Pension Scheme (DCPS) according to which provisions regarding grant of gratuity and death-cum-retirement gratuity won’t be applicable to them and no family pension/death cum-retirement-gratuity services would be available to the family members of the employees.
“NPS was necessitated by the fact that the State’s pension bill has seen a quantum jump in past two decades. While JK’s pension bill was Rs 46 crore in 1992-93, it has jumped to Rs 1,400 crore in 2009-10,” a finance department official told Greater Kashmir.
The NPS envisages two tiers of contribution—Tier I and Tier II. Contribution to the former is mandatory for all the government employees appointed on or after January 1, 2010 while it would be optional under Tier-II and at their (employees) discretion.
Under Tier-I, the employees will have to make a contribution of 10 percent of his basic pay plus Dearness Allowance and NPA, wherever applicable, and the same would be deducted from his salary every month. “It will be deducted from the second month of his/her joining the government service. The government will be making an equal matching contribution,” official sources said, adding that Tier-II would be made operative in due course of time.
A government servant can exit from Tier-I on attaining the age of superannuation. On exit, it shall be mandatory for him to invest 40 percent of his pension to purchase an annuity (from an Indian Regulatory Development Authority approved life insurance company), which shall provide for pension for the employee’s lifetime. He shall receive a lump sum of the remaining pension wealth, which he shall be free to utilize in any manner.
Individuals would have the flexibility to leave the scheme before attaining the age of superannuation. However, in such a case, the mandatory annuitization shall be 80 percent of the pension wealth. In the event of an employee deciding to exit from Tier-I prior to his/her superannuation, official sources said, the employee would be required to invest 80 percent pension wealth in annuity purchases.
“The National Securities Depository Limited (NSDL) will function as the Central Record Keeping Agency for NPS. The Bank of India shall be the Trustee Bank and UTI Retirement Solutions, State Bank of India Pension Fund, Life Insurance Corporation of India Pension Fund shall be the Designated Pension Fund Managers under the scheme,” sources said.
However no deduction of salary would be made from the employee towards General Provident Fund since the scheme would not be applicable to them. On receipt of the prescribed information about the government servant governed by the NPS, the NSDL will allot a unique 12 digit Permanent Retirement Account Number to him/her.
On a government servant’s transfer, the drawing and disbursing officer shall clearly indicate in the Last Pay Certificate his unique PRAN to which the contributions under the scheme have been deducted and transferred to the Trustee bank.
Meanwhile, no withdrawal of any amount shall be allowed. According to the SRO, the provisions regarding terminal payments in the event of “untimely” death of an employee or in the event of his leaving government service, would be notified in due course.
The NPS is on the pattern of Central Government, which too has done away with the pension and set up a statutory body for the employees to avail themselves of pensionary benefits on their own. “It would be almost similar on the pattern of Contributory Provident Fund, which was binding on Public Sector Undertakings, limited companies and organizations employing more than 10 people,” officials in the Finance Department told Greater Kashmir.
The government has cited the ever-escalating cost of pensions, running into several crore rupees, which continued to go up every year with the retirement of its staff, as the reason for introducing the NPS. The centre and many other states have already switched over to the scheme.
Lastupdate on : Mon, 25 Jan 2010 21:30:00 Makkah time
Lastupdate on : Mon, 25 Jan 2010 18:30:00 GMT
Lastupdate on : Tue, 26 Jan 2010 00:00:00 IST
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