Lok Sabha Question No. 187 (UNSTARRED), answered on 2022-07-18
Subject: Negative Returns of NPS
Ministry: FINANCE
Asked by: Raja Amareshwara Naik, Bhola Singh, Rajveer (Raju Bhaiya) Singh, Vinod Kumar Sonkar, Sukanta Majumdar

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

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## LOK SABHA UNSTARRED  QUESTION  NO. 187 TO BE ANSWERED  ON 18th JULY,2022 (MONDA\)/ ASHADTTA 27,1944 (SAKA)

## NEGATIVE RETURNS OF NPS

187. Shri Raja Amareshwara Naik, Shri Bhola Singh, Shri Rajveer Singh (Raju  Bhaiya), Shri Vinod Kumar Sonkar,

Dr. Sukanta  Majumdar

## Will the Minister  of Finance be pleased  to state:

- (a) whether  the Government is aware that the New Pension Scherne  (NPS) has given negative returns on its corpus  in this financial year;
- (b) if so, whether the Govemment  is aware of the fact that there is huge anger and unrest among the Govemment onployees due to uncertainty and decline  in their pension  corpus and ifso, the remedial  action taken  thereon;
- (c) whether the Govemment  has received complaint against the fund managers  of NPS rcgarding comrptior/ malpractices  in NPS and if so, the details thereof along with the action taken thereon;
- (d) whether the Govemment is considering to devise a mechanism  for guarantee of minimum pension to the Central Government  category ofNPS  subscribers; and
- (e) if so, the details thereof  and along with the other steps being taken  by the Government  in this regard?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (DR. BHAGWAT  KARAD)

(a)  & (b) Pension is a long-term  financial  product and its performance  and retums are assessed  on long term basis. Retums on NPS are market  determined  and annually evaluated by PFRDA. On the basis of retums,  fund allocation is done amongst  the three fund managers  by  pFRDA.  For the financial year 2021-22,  the retums under NPS for Govemment employees have been 6.91%. Nps retums in respect of Government employees  since inception ue 9.33%:o. These retums are compounded annual growth  rate of corpus invested  in various assets classes viz. Government securities, Corporate  debt instruments,  Money  market  instruments  and equity  market. For financial year 2021-22 NPS retums are better than most debt instruments.

The investrnent  guidelines of NPS are framed by the Pension Fund Regulatory and Development Authority (PFRDA) and adequate safeguards are placed  while framing these guidelines.  The Pension Fund managers registered  with PFRDA  make investments  under NPS in various asset classes i.e. Govemment securities, Corporate debt instruments,  Money market instruments,  Equity  market  etc., as per the investment  guidelines  and the amendments  thereto issued  by PFRDA.  Pension is a longterm financial  product. Investrnents are done by Pension funds  in such a way that the investments yield better retums in long term.

Government of India has taken a number of steps for streamlining NPS for Central Govemment onployees. These include enhancement  of Government's contribution from the earlier 10% ofPay + DAto l4%o of Pay + DA, freedom of choice for seiection of Pension  Funds and pattern of investment to subscribers,  payment ofcompensation for non-deposit  or delayed  deposit ofNPS contributions for any period during  2004-2012,  tax exemption  under Section  80C of the Income Tax Act, 1961 and increase in tax exemption limit for lump sum withdrawal on exit from earlier 40Yo to 60% of the amount due, making  the entire withdrawal  exempt from income tax.

- (c) The Pension Funds are monitored by PFRDA and are bound  by the regulations to undergo  periodic audits and inspections.  ln case  of complaint  against  fund maragers, the same  is dealt  with in terms  of PFRDA's  guidelines.
- (d) & (e) The overall  architecture of NPS is such that the benefits under NPS depend  on the accumulated  corpus of the subscriber at the time of Exit. To protect  the interest  of the subscribers, the Govemment in20l9,  enhanced Government's contribution  from the earlier 10Yo of Pay + DA to 74o/o  of Pay + DA, freedom  of choice  for selection  of Pension Funds and pattem of investment  to subscribers, payment  of compensation for non-deposit  or delayed deposit ofNPS contributions for any period during 2004-2012,  tax exemption  under Section  80C of the Income Tax Act, 1961, and increase in tax exemption limit for lump sum withdrawal on exit from earlier 40Yo to 60% of the amount due, making  the entire withdmwai  exernpt  from hcome tax.