7th Pay Commission latest updates: Big news on pension for central govt employees - Kashmir Student Alerts

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Sunday, 21 February 2021

7th Pay Commission latest updates: Big news on pension for central govt employees

7th Pay Commission latest updates: Big news on pension for central govt employees

A section of central government employees who joined after 1st January 2004, have been demanding the Old Pension Scheme (OPS) implementation for them instead of market-linked new National Pension System (NPS). To address the problems of these central government employees, the Finance Ministry on Friday said that the NPS would provide a comparable and decent replacement rate vis-a-vis Old Pension Scheme.

What did Central Government say?

The Finance Ministry said, "With a growing corpus, prudent investment norms and recent measures of the Government to streamline the NPS, it is expected that NPS would provide a comparable and decent replacement rate vis-a-vis Old Pension Scheme."
Comparison between pension under (NPS) and Old Pension Scheme (OPS)

The Ministry of Finance went on to add that with reference to the comparison between pension under NPS and Old Pension Scheme (OPS), it is mentioned that both the schemes are different in nature, structure and benefit, and hence, may not be compared. The OPS is a defined pension scheme of Govt. of India, whereas NPS is a contributory pension scheme without any defined benefits. The pension benefits under NPS depends on various factors like amount of contribution, entry age, period of subscription, type of investment pattern opted by the subscriber, investment income accrued, percentage of total corpus utilized for Pension, Annuity option chosen and other relevant factors.
NPS subsribers

Keeping in view the concerns of NPS subscribers, the Union government had constituted a high-level Committee of Secretaries for streamlining of NPS. Based on the recommendations, the government has taken various steps on NPS.

Shift from the Old Pension System to National Pension system

Due to the fiscal stress of the Old Defined Benefit Pension System, the Centre has decided to shift from the Old Pension Scheme to a Defined Contribution Pension Scheme, called the National Pension System (NPS).

As of 31.12.2020, there are 13.99 million subscribers and over Rs 5,34,188 crore of assets under management (AUM) under the NPS. The government employees, including both Central and State Government, account for more than half of the subscriber base and nearly 85 percent of the AUM.