Friday, May 10, 2019

NPS Overview



     

1. Who are covered by the NPS?

NPS is applicable to all employees joining services of Central Government including Central Autonomous Bodies (except Armed Forces) on or after 1st January 2004. Many State Governments have adopted NPS architecture and implemented NPS mandatorily through Gazette Notifications for their employees joining on or after a cut-off date.

2. How does NPS differ from old pension?

The old pension scheme of Government of India, referred as Defined Benefit Pension System (DBPS) is based on the last pay drawn of the employee. NPS is referred as Defined Contribution Pension System (DCPS) in which the employer & employee contributes for building a pension wealth payable at the time of retirement by way of annuity/lumpsum withdrawal as per norms.

3. Is NPS applicable to employees of Central Autonomous Bodies?

Yes. In line with the decision of GOI to introduce NPS for new entrants joining central government services on or after 1/1/2004, it has been decided vide OM 1(13)/EV/2001 Dt 13/11/2003 Department of Expenditure, Ministry of Finance that all new entrants in all Autonomous Bodies under various Central Ministries/Departments recruited on or after 1/1/2004 will also be governed by the NPS.

4. How can the Central Autonomous Bodies (CAB’s) join NPS?

Department of Expenditure, Ministry of Finance , GOI vide its OM No 1(13)/EV/2008 Dt 30/1/2009 advised all Central Autonomous Bodies to submit Letter of Consent (LOC) indicating their formal commitment towards discharging their obligations under NPS through the Financial Advisors of the respective Ministries/ Departments.

5. Is transition from Contributory Provident Fund to Defined Contribution Pension System(NPS)permitted for the employees of Autonomous Bodies? What will be the date of effect in case of transition from CPF to NPS in case of employees who joined prior to 01.01.2004? What are the salient features of NPS?

Yes. The organizations are permitted to shift to NPS in respect of employees who have joined before 1/1/2004 vide OM dt 30/6/2009 No 1(2)/EV/2007 Department Of Expenditure, Ministry of Finance. Date of effect will be the date when such option is exercised by the concerned employee. The other detailed operational features are as follows:

The existing corpus of CPF (both employees’ and employers’) would be moved over to the trust fund accounts under NPS.

In order to facilitate the transition from CPF to NPS, the autonomous body would make in addition one time ex-gratia payment of 10% of the employer’s contribution for each of the employees opting to switch over to NPS.

Recurring monthly contribution by employee @ 10% of Basic Pay + DA and a matching contribution by the autonomous body would be payable.

The employer’s contribution would be payable from the month the organization/employee shifts over to NPS and would be limited to 10% of Basic Pay + DA.

6. What is the procedure for registration of CABs?

The Autonomous Bodies are required to submit duly authorized ‘Letter of Consent’ to PFRDA through the Financial Advisor of the respective ministry.

Subsequently, the CAB is required to submit the physical ‘Master Creation Form (MCF)’ along with other forms to CRA i.e Form N1 for PrAO, Form N2 for PAO/ CDDO and Form N3 for DDO.

Upon receipt of the ‘Letter of Consent’ from PFRDA and above mentioned forms are found to be in order, the CAB is registered in the CRA System.

7. What is the eligibility for State Governments to join NPS?

Various State Governments have adopted NPS architecture and implemented NPS with effect from different dates.

8. Is NPS applicable to employees of State Autonomous Bodies (SABs)?

Many State Governments have adopted NPS architecture and implemented NPS for the employees of State Government as well as for the employees of Autonomous bodies, State PSUs, Corporations, Boards, if notified in their respective gazette notifications.

9. What is the eligibility for SABs?

Various State Governments have adopted NPS architecture and implemented NPS for the employees of State Government as well as for the employees of Autonomous bodies, State PSUs, Corporations, Boards, Nigams etc. with effect from different dates.

10. What is the procedure for registration of SABs?

The Autonomous Bodies are required to submit duly authorized Letter of Consent to PFRDA through the designated Nodal offices/ Ministries/ Head of Department etc. as indicated in the NPS Notification of the respective State Government.

After registration of Designated office for interaction with CRA upon submission of Master Creation Form (MCF), the oversight offices & administrative day-to-day functioning offices shall be registered on the basis of submission of physical application forms to CRA i.e. Form N1 for DTA, Form N2 for DTO and Form N3 for DDO.

11. What are Nodal Offices under NPS architecture?

Nodal Offices for Central Government sector/ CABs are: PrAO, PAO/CDDO& DDO

Nodal Offices for State Government sector/ SABs are: DTA, DTO & DDO

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