Lok Sabha Question No. 5486 (UNSTARRED), answered on 2018-03-28
Subject: Scrapping of New Pension Scheme
Ministry: PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS
Asked by: Raghu Sharma, MOHANBHAI KALYANJIBHAI KUNDARIYA, SUKHBIR SINGH JAUNPURIA, BHAIRON PRASAD MISHRA

## GOVERNMENT OF INDIA MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS (DEPARTMENT OF PENSION AND PENSIONERS' WELFARE)

## LOK SABHA UNSTARRED QUESTION NO. 5486

(TO BE ANSWERED ON 28.03.2018)

## SCRAPPING OF NEW PENSION SCHEME

## †5486. DR. RAGHU SHARMA:

SHRI KUNDARIYA MOHAN BHAI KALYANJI BHAI: SHRI SUKHBIR SINGH JAUNAPURIA: SHRI BHAIRON PRASAD MISHRA:

Will the PRIME MINISTER be pleased to state:

- (a) whether  the  Government  has  received  requests  for  scrapping  the  New  Pension Scheme;
- (b) if so, the details thereof and the response of the Government thereto;
- (c) whether  the  Government  proposes  to  re-introduce  old  pension  scheme  in  place  of New Pension Scheme (NPS);
- (d) if  so,  the  details  thereof  and  whether  the  Government  has  received  request  for  the same, if so, the details thereof; and
- (e) whether the NPS is more beneficial to the employees than the old pension scheme and if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS AND MINISTER OF STATE IN THE PRIME MINISTER'S OFFICE (DR. JITENDRA SINGH)

(a)  to  (d):    Representations  have  been  received  regarding  the  implementation  of  National Pension System (NPS) which, inter alia, include demand that NPS may be scrapped and the Government may re-introduce old defined benefit pension system.

Government has made a conscious move to shift from the defined benefit pay-as-yougo pension scheme to defined contribution pension scheme, now called as National Pension System (NPS), after considering the rising and unsustainable pension bill. The transition also has the added benefit of freeing the limited resources of the Government for more productive and socio-economic sectoral development.

There is no proposal to replace the NPS with old pension scheme in respect of Central Government employees recruited on or after 01.01.2004.

(e):      National  Pension  System  (NPS)  had  been  designed  giving  utmost  importance  to  the welfare of the subscribers. There are a number of benefits available to the employees under NPS. Some of the benefits are enlisted below:

-  NPS is a well designed pension system managed through an unbundled architecture involving intermediaries appointed by the Pension Fund Regulatory and Development Authority  (PFRDA)  viz.  pension  funds,  custodian,  central  record  keeping  and accounting agency, National Pension System Trust, trustee bank, points of presence and  Annuity  service  providers.  It  is  prudently  regulated  by  PFRDA  which  is  a statutory  regulatory  body  established  to  promote  old  age  income  security  and  to protect the interest of subscribers of NPS.
-  Dual benefits of Low Cost and Power of Compounding- The pension wealth which accumulates over a period of time till retirement grows with a compounding effect. The all-in-costs of the institutional architecture of NPS are among the lowest in the world.
-  Tax  Benefits-  Contribution  made  to  the  NPS  Tier-I  account  is  eligible  for  tax deduction under the Income Tax Act, 1961. An additional tax rebate of Rs.50000 is also allowed for contributions made to NPS Tier-I under Section 80CCD (IB) of the Income Tax Act, 1961.
-  Transparency and Portability is ensured through online access of the pension account by the NPS  subscribers, across all geographical locations and portability of employments.
-  Partial  withdrawal- Subscribers can withdraw up to 25% of their own contributions before attaining age of superannuation, subject to certain conditions.

The amount of monthly annuity payable to a Government servant on exit from NPS depends  upon  various  factors  such  as  accumulated  pension  wealth  of  the  Government servant, portion of accumulated pension wealth utilized for the purchase of annuity and the type of annuity purchased.

Under  the  defined benefit  pension  system applicable  to  Government  servants appointed before 01.01.2004, pension is calculated based on qualifying service and the last pay drawn by the Government servant.

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