National Pension System (NPS) Streamlined
The new entrants to the central government service on 01.01.2004 are covered under the NPS. Which is the major impact and most Important current affairs of UPSC mains exam, this guidance is given by Himalai IAS coaching center in Bangalore .this coaching center is running from last 20 years and get ready with himalai for other competitive exams. NPS is being implemented and regulated by Pension Fund Regulatory and Development Authority in the country.
Proposals of NPS
- In Tier-I Enhancement of existing, 10% to 14% of tax is the mandatory contribution by the Central Government for its employees covered under NPS
- Pension Funds and pattern of investment was provided by the central government was changing by choosing the pension that depends on employees.
- NPS contributions during 2004-2012 for the payment of compensation for non-deposit or delayed deposit
- Lump sum withdrawal on exit has been enhanced to 60% on Tax at present 40% of the total accumulated corpus utilized for the purchase of an annuity which is a tax exempted. Out of 60% of the accumulated corpus withdrawn by the NPS subscriber at the time of retirement,
- The total tax of 40% is exempt and balance 20% is taxable
- In Tier-II of NPS will now be covered under Section 80 C for deduction up to Rs. 1.50 lakh for the purpose of income tax.
- The lock-in period of 3 years for the sectors like General Provident Fund, Contributory Provident Fund, Employees Provident Fund, and Public Provident Funda are deducted
Background of NPS
- The new entrants to the central government service on 01.01.2004 are coated below the National Pension System.T he Seventh Pay Commission (7th CPC), during its deliberations, examined sure concerns relating to NPS and created recommendations within the year 2015.
- Pan India gets the opportunity of NPS
- The 7th CPC suggested for putting in of a Committee of Secretaries in this regard. accordingly, the Committee of Secretaries was established by the govt to recommend measures for streamlining the implementation of NPS within the year 2016.
- The Committee submitted its report in the year 2018. accordingly, supported the recommendations of the Committee, draft cabinet Note was placed before the cabinet for its approval.
- Major Impact of NPS
- Greater pension payouts after retirement
- NPS Increases in the eventually accumulated corpus of all central government employees
- Total 18 lakh central government employees covered under NPS.
- The central govt employees having a freedom of choosing the pension
- Rising life expectancy for old-age security.
The estimated cost of Rs. 2840 crores for the financial year 2019-20, and will be in the nature of a recurring expenditure. The financial implications on account of provisions regarding payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012.
The beneficiary of 18 lakh central government employees covered under NPS.