Lok Sabha Question No. 4075 (UNSTARRED), answered on 2018-08-10
Subject: Reintroduction of Old Pension Scheme
Ministry: FINANCE
Asked by: RAKESH SINGH

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

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## LOK SABHA UN STARRED QUESTION NO. 4075 TO BE ANSWERED ON AUGUST 10, 2018/SHRAVANA 19, 1940 (SAKA) REINTRODUCTION OF OLD PENSION SCHEME

4075. Shri Rakesh Singh

Will the Minister of FINANCE be pleased to state

- (a) the details of drawbacks of the New Pension Scheme (NPS) introduced for the Government officials;
- (b) whether the NPS is not as beneficial monetarily as the Old Pension Scheme (OPS) and if so, the details thereof;
- (c) whether the Government employees are disgruntled with the NPS and if so, the details thereof; and
- (d) whether the Government proposes to reintroduce the OPS replacing the NPS, if so, the details thereof and the action taken by the Government in this regard?

## ANSWER

## The Minister of State in the Ministry of Finance (Shri Shiv Pratap Shukla)

(a)  &  (b)  National  Pension  System  (NPS)  has  been  designed  giving  utmost  importance  to  the  welfare  of  the subscribers.  Government  has  made  a  conscious  move  to  shift  from  the  defined  benefit  pension  scheme  to  defined contribution pension scheme i.e. NPS, due to rising and unsustainable pension bill. 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.
-  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.
-  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 (1B) of the Income Tax Act, 1961.
-  Subscribers can withdraw up to 25% of their own contributions before attaining age of superannuation, subject to certain  conditions.  Further,  PFRDA  vide  'PFRDA  (Exits  and  Withdrawals  under  the  NPS)  (First  Amendment) Regulations, 2017' dated 10.08.2017 has liberalized norms for partial withdrawals which also include reduction of requirement of minimum years of being enrolled under NPS from 10 years to 3 years from the date of joining.
-  PFRDA has increased the maximum age limit from 60 years to 65 years for joining NPS-All Citizen Model and Corporate Sector Model, vide 'PFRDA (Exits and Withdrawals under the NPS) (Second Amendment) Regulations, 2017' dated 06.10.2017.
-  PFRDA  vide  'PFRDA  (Exits  and  Withdrawals  under  the  NPS)  (Third  Amendment)  Regulations,  2018'  dated 02.02.2018 has facilitated easy exit & withdrawal in case of disability and incapacitation of the subscriber covered under NPS.
-  Transparency  and  Portability  is  ensured  through  online  access  of  the  pension  account  by  the  NPS  subscribers, across all geographical locations and portability of employments.

(c) & (d) Representations have been received which inter alia also include the demand that the Government may revert to old defined benefit pension system. However, due to rising and unsustainable pension bill and competing claims on the  fiscal,  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.

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