You are here: Home » Economy & Policy » News
Business Standard

Govt contribution to National Pension Scheme raised to 14% of basic salary

Minimum employee contribution will, however, remain at 10 per cent

Topics
National Pension Scheme  |  Nps  |  Economy

Press Trust of India  |  New Delhi 

PFRDA may issue foreign investment guidelines for pension sector

In a bonanza for government employees, the Cabinet Thursday raised the government's contribution to (NPS) to 14 per cent of basic salary from the current 10 per cent, sources said.

Minimum employee contribution will, however, remain at 10 per cent.

The Cabinet also approved tax incentives under 80C of the Income Tax Act for employees' contribution to the extent of 10 per cent, they added.

Presently, the government and employees contribute 10 per cent of basic salary each to

While the minimum employee contribution remains at 10 per cent, the government contribution has been increased from 10 per cent to 14 per cent.

The Cabinet, headed by Prime Minister Narendra Modi, also allowed government employees to commute 60 per cent of the fund accumulated at the time of retirement, up from 40 per cent at present.

ALSO READ: Is the Old Pension System for state government employees a feasible idea?

Also, employees will have the option to invest in either fixed income instruments or equities, sources said.

As per the Cabinet decision, if the employee decides not to commute any portion of the accumulated fund in at the time of retirement and transfers 100 per cent to annuity scheme, then his pension would be more than 50 per cent of his last drawn pay, sources said.

ALSO READ: Forced to fund half their pension by themselves, govt employees up in arms

The government did not announce the decision in view of the ensuing polls in Rajasthan Friday.

While the government is yet to decide on the date of notification of the new scheme, sources said such changes usually come into effect from the beginning of a financing year, meaning April 1, 2019.

This formula for changes in the was worked out by the Ministry based on the recommendation of a government-appointed committee.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, December 06 2018. 22:45 IST
RECOMMENDED FOR YOU
.