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NPS in a mess as governments fail to ensure employee participation

July 13, 2011 Leave a comment
    The New Pension Scheme (NPS), which should have become an important part of the country’s savings landscape, is dead, at least for the time being. This, more or less, is what a government committee set up to examine the NPS is saying.

The recommendations of the ‘Committee to Review Implementation of Informal Sector Pension’, (the Bajpai committee on NPS reforms) have been put up on the website of the Pension Fund Regulatory and Development Authority (PFRDA ), inviting comments.

The part of the report that has attracted the most attention is the recommendation that a 0.5% commission should be paid for selling NPS. While this itself is a huge departure from the original structure, it is actually not the most important part of what has been said.

In a cogent and lucidly-written report, the committee has said that practically everything about the current design of the NPS is flawed. No one is willing to buy it and no one is trying to sell it. Almost all the money that has flown into the NPS comes from government employees who are part of it. We’ve been hearing recently that only about Rs 100 crore has come into the NPS by choice.

However, the report reveals that even this sum is almost entirely due to two corporates shifting their pension system to the NPS. Direct participation by end-users is close to zero. In other words, the NPS has been a complete failure.

There’s one aspect that hasn’t attracted any comment, and that is the failure of the governments – both state and central – to properly implement the government employees part of the NPS. The way it was supposed to work was that government employees under the NPS were to have an account which they would be able to monitor and watch grow.

Starting 2004, these investments – with their equity allocations – would have given superb returns that would have been far superior to the plain fixed-income ones. What’s more important, we would have had about 12 lakh (the report’s number) government employees who would have had the personal experience of growing their future wealth through the NPS.

This never happened and the implementation of the NPS is in complete mess. The money wasn’t invested for years after 2004. Government employees don’t have personal accounts with the NPS’s CRA (central record-keeping agency). They don’t have any first-hand information of how the investments done in their name is being managed. They don’t know what is being earned, they don’t know which fund manager is doing well and whose performance is poor.


Read more in economics times

Categories: NPS

Defeat the new pension bill.

April 1, 2011 Leave a comment

    The UPA-II Government has presented the New Pension Bill in the Parliament. CPI (M) Lok Sabha Leader, Com. Basudev Acharya, MP demanded voting. Both UPA and NDA MPs Voted in favour of introduction of the bill in Parliament. Only left party MPs opposed. Thus it is once again made clear that when it comes to economic policies there is no difference between NDA and UPA. 

    Even before passing the bill in Parliament the New Pension Scheme called “Contributory Pension Scheme” has already been made applicable to those employees who joined Central Govt. Services on or after 01.01.2004, through an executive order by the NDA Government. 10% of the pay and DA is being recovered from every employee who joined service on or after 01.01.2004, in each month towards Contributory Pension Scheme. On passing the bill by Parliament Pension Fund Managers will be appointed. Multi –national Corporate houses are waiting for their chance to become Fund Managers so that the accumulated huge amount in the Pension Scheme is share market oriented the Pension Fund will flow to the share market. If share market booms, the Pension Fund Managers can accumulate huge profit. If share market crashes, the Pension Fund will collapsed and the entire savings of the employees will be lost. The recent world economic crises has witnessed many such Pension Fund collapses and lacs and lacs of workers are deprived of their Social Security at old age. 

    The New Pension Scheme is a product of the globalization policy pursued by both NDA and UPA Government. UPA-I Government could not pass the bill as the Supporting left parties had made it clear that they will withdraw support to the Government and vote against the bill. Government tried to make consensus by convening a meeting of all Chief Ministers. Out of 22 Chief Ministers only three Left Front Chief Ministers viz. West Bengal, Kerala and Tripura, opposed the New Pension Scheme. Now as UPA and NDA have joined together, the bill is likely to be passed in this Session of the Parliament. The New Pension Scheme can be made applicable to all including public and private sector employees. 

    There is a perception that the New Pension Scheme can be made applicable to the new entrants only. This is not correct. The Work Study Group appointed by Sixth Central Pay Commission has been asked to examine and submit report on the following terms of reference: 

(i) to workout the existing and future pension liability of the Central Govt. Employees who are in service prior to 1.1.2004. (ii) to work out the pension liability of those Central Government Employees appointed prior 1.1.2004 and whose age profile is between 30 years and 40 years. 

 (iii) to examine the feasibility of establishing a self –reliant Pension Fund with initial corpus fund provided by Government for the employees who are in service prior to 1.1.2004 and thus reduce the expenditure on pension. 

   The Sixth CPC has already made some observations regarding introduction of Contributory Pension Scheme to the employees who are in service prior to 1.1.2004. 

    Thus a serious threat looms large over the head of the entire Central and State Government Employees and section of the workers. Nationwide sustained campaign and united action by the entire working class is the need of the hour. The Confederation of Central Government Employees & Workers and the All India State Government Employees Federations has already given a call for nationwide campaign and protest demonstration. The question of organizing higher forum of trade union action including strike in under serious considerations. 

  NFPE calls upon the entirety of the Postal and RMS Employeesto organize effective campaign against the ill effects of the New Pension Bill and be ready for direct action if situation warrants.

 

M.Krishnan
Secretary General NFPE 

( SOURCE ) 

Categories: NPS

Swavalamban Benefit for NPS Account Holders – Eligible Account Holders are Required to Submit Declaration form to the PoPs

December 30, 2010 Leave a comment



   Under the Swavalamban guidelines approved by the Govt. of India, all NPS accounts opened in 2009-10 will be entitled to the benefit of Government co-contribution of Rs. 1,000 subject to fulfilling the prescribed eligibility criteria. A list of eligible account holders is available on the Website of Pension Fund Regulatory & Development Authority (PFRDA) as well as the concerned PoPs.

   The PFRDA has requested the concerned NPS account holders to submit the requisite declaration form to the PoPs at the earliest to avail of the Swavalamban benefit. A copy of the Swavalamban declaration form can be downloaded from the website of the PFRDA / PoPs / NSDL.

Source -pib



Categories: NPS

PFRDA increases incentive to PoPs to boost NPS

December 19, 2010 Leave a comment
   
   Interim regulator PFRDA has decided to enhance incentives to distributors from Rs 50 to Rs 150 for each subscriber for the current financial year, a move aimed at popularising the citizen pension plan, which has received lukewarm response.

   “With a view to boost the Points of Presence (PoPs) efforts to enroll more subscribers in NPS, the PFRDA has decided to enhance, with immediate effect, the monetary incentive for subscriber acquisition from Rs 50 to Rs 150 for the current financial year,” Pension Fund Regulatory and Development Authority (PFRDA) said in a statement.

   Currently, there are 35 PoPs, including major banks like State Bank of India and ICICI Bank , which act like contact and collection points for customers wanting to be part of New Pension System (NPS).

A low incentive to PoPs has been viewed as one of the reasons for the lukewarm response of the NPS.

   PFRDA further said that the incentive is meant to help PoPs in capacity building for promotion of NPS and redouble their efforts to popularise NPS and bring a large number of subscribers to the NPS.

   Initially, the government launched the New Pension System for central government employees joining service from January 1, 2004, but it was extended to all citizens from May 1, 2009.

   However, the citizen pension scheme received a lukewarm response and only around 30,000 subscribers joined the scheme in 17 months.

   In August, PFRDA had set up a committee headed by former SEBI chairman G N Bajpai to overhaul the structure of pension scheme.

   The committee is considering if there is a need to alter the present incentive structure of various stakeholders, and to suggest a viable economic incentive model.

    It is also examining whether it is desirable to have differentiated incentive structures for the government and non-government segments. The committee is likely to submit its report next month


Source - ET

Categories: NPS

Frequently Asked Questions Related to NPS – New Pension Scheme

November 24, 2010 Leave a comment
 
1.
 
   The benefit of encashment of leave salary is not a part of the retirement benefits admissible under Central Civil Services (Pension) Rules, 1972. It is payable in terms of CCS (Leave) Rules which will continue to be applicable to the government servants who join the government service on after 1-1-2004. Therefore, the benefit of encashment of leave salary payable to the governments/to their families on account of retirement/death will be admissible.
 
2.
 
   This provision has been made in the New Pension Scheme with an intention that the retired government servants should get regular monthly income during their retired life.
 
3.
 
   Exit from Tier-I can only take place when an individual leaves Government service.
 
4.
 
   As per the New Pension Scheme, the total Dearness Allowance is to be taken into account for working out the contributions to Tier-I. Subsequently, a part of the “Dearness Allowance” has been treated as Dearness Pay. Therefore, this should also be reckoned for the purpose of contributions.
 
5.
 
   Yes. Since the contribution is to be worked out at 10% of (Pay+ DP+DA), it needs to be revised whenever there is any change in these elements
 
6.
 
  The PAO should calculate the interest.
 
7.
 
   As in the case of other recoveries, the recovery of contributions towards New Pension Scheme for the full month (both individual and government) will be made by the office who will draw salary for the maximum period.
 
8.
 
   Yes. Ministry of Health & Family Welfare has clarified vide their O.M. no. A45012/11/97-CHS.V dated 7-4-98 that the Non-Practising Allowance shall count as ‘pay’ for all service benefits. Therefore, this will be taken into account for working out the contribution towards the New Pension Scheme.
 
9.
 
   In cases where Government servants apply for posts in the same or other departments and on selection they are asked to render technical resignation, the past services are counted towards pension under CCS (Pension) Rules, 1972. Since the Government servant had originally joined government service prior to 1-1-2004, he should be covered under the CCS (Pension) Rules, 1972.

Source – Pensioners Portal
Categories: NPS

Additional Relief on Death/Disability of Govt. servants (Civilians) Covered under New Defined Contribution Pension System NPS: Procedures to be adopted for submission of claims.

November 23, 2010 Leave a comment

Circular No.79
No.GI/C/Misc/NPS-I/Tech
O/O the Pr. C.D.A. (P)
Allahabad- 211014
Date: 29/10/2010

Subject: – Additional Relief on Death/Disability of Govt. servants (Civilians) Covered under New Defined Contribution Pension System NPS: Procedures to be adopted for submission of claims.

Reference: – Govt. of India, Min of PPG & P, Deptt. of P&PW New Delhi OM No. 38/41/06/P&PW (A) dated 05 May 2009..

1.  The Govt. of India, Ministry of PPG & P, Deptt of P&PW in their OM No.38/41/06/P&PW (A) dated 05 May 2009 (copy enclosed) have extended the benefits of Invalid Pension/Disability pension and Family Pension/Extra ordinary Family Pension/Liberalized Pension awards on Provisional basis to the Govt. employees appointed on or after 01-01-2004 and covered by the New Pension Scheme who are discharged on invalidation disablement and by the families of such employees who have died during service since 01-01-2004. Now, it has been decided that to submit the claims of above beneficiaries the following procedures shall be adopted by HOO and Pay Audit Controllers:- 01. H.O.O will prepare pension papers in case of NPS beneficiaries in accordance with the same procedure as prescribed for Defence Civilian Personnel appointed before 01-01-2004 and will submit the same along with Service Book. and all the relevant documents (which is required in case of pre-01-01-2004 Cases) to PAO concerned i.e. LAO/RAO. The Permanent Retirement Account No. (PRAN) of the Concerned Government Servant Allotted by National Security Depository limited (NSDL) will also be indicated.

02. PAO will carry out the necessary checks with reference to the entries in Service Book and as admissible under the OM No. 38/41/06/ P&PW (A) dated 05-05-2009. After signing and affixing the seal the PAO will pass on the claim to the Pr. CDA (P) Allahabad. The Service Book will be returned by PAO to
HOO concerned.

03. The HOO will also obtain in duplicate undertaking (in Annexure- ‘A’) from the pensioner/family pensioner to the effect that he/she has understood the provisions of Para 6, 7 and 8 of Deptt. Of P&PW OM No. 38/41/06/P&PW (A) dated 05-05-2009 and that any payment found to be in excess of his/her
entitlement will be refunded to Government/adjusted out of his/her final entitlement and forward one copy of the same along with the pension papers.

04. HOO will also maintain a separate register and entries will be recorded there in as PRAN No; Name of Govt. servant, PPO No. and awards notified provisionally and at the time of processing of final claim the same will be mentioned in the claim for final adjustment.

05. After receipt of PPO from Pr. CDA (P) Allahabad, HOO will check the same and after recording the entries in the register retransmit PDA’s copy to PDA, Pensioner copy to pensioner and
retain HOO copy for their own record.

06. Other procedures prescribed for pre-1-1-2004 pensioners will also be followed by the HOO in case of NPS beneficiaries.

(S.C. Jain)
A C.D.A (P)

Enclosure: – As above

Copy to: -
1.The CGDA, Ulan Batar Road Palam, Delhi Cantt-10
2.All Pr.CsDA/CsDA/C of F & A (Fys)/ CDA (Funds)
3.All G.M. Fys
4.All CE/Nodal CE of various commands.

-sd\-
(A.K. Banerjee)
Sr. Accounts Officer

Click here to view the complete order

NPS–Two-thirds of States yet to remit pension scheme contributions – PFRDA

October 28, 2010 Leave a comment

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    Two-thirds of the State Governments and a couple of Union Territories have not remitted the pension contributions of their new employees to Bank of India, which is the trustee bank for the accumulated monies under the New Pension Scheme (NPS), sources in the Finance Ministry and the Pension Fund Regulatory and Development Authority told Business Line.

   This is despite all these Governments signing up for the NPS as early as 2003. The NPS covers all Government employees. Their pension entitlement is based on their own ‘defined contributions’ with a matching amount from the Government concerned.

    The employees will, therefore, not be able to get pension benefits that their fund would have entitled them to earn, had the contributions been invested in the instruments which they had asked for.
Lackadaisical approach

    Due to the lackadaisical approach of these Governments, the trustee bank is unable to accumulate the contributions and transfer these to Pension Fund Managers such as SBI, UTI and LIC, who, in turn, would invest the money in equity or debt instruments.
 
    The investment portfolio depends on the choice exercised by the States/UTs. (This could include investment pattern notified by the Finance Ministry and the subscriber’s risk appetite.)

However, the employees will certainly have a claim to demand returns on the contributions to their pension account retrospectively (from the date of signing up) till their date of retirement/superannuation and that too, at the average rate (currently 12-14 per cent) earned by NPS funds, the sources claimed.

Liability strain

They added that the liability on this account would have to be borne by the State Governments themselves.

    “This increasing liability can put a strain on the finances of these Governments. In fact, the difficulty in paying up a huge amount is one of the reasons why these Governments are delaying the completion of formalities,”   an official said.

    In other words, on the date when an employee demands the returns on his/her pension amount as per the NPS rate of return on a compounded basis, the State Government concerned will have to either pay up or face litigation, the sources pointed out.

    A worried Finance Ministry has taken serious note of the failure of these states/UTs and its fiscal implications. The Ministry has called a meeting with the States on November 1 to address the issue, the sources said.

    However, five States — Chhattisgarh, Jharkhand, Madhya Pradesh, Bihar and Haryana (interestingly, all but Haryana, being run by non-Congress Governments) — have completed all the formalities after joining the NPS including uploading of the contributions.

    Among the big States that have not completed the formalities, including making remittances, are Tamil Nadu, Rajasthan, Uttar Pradesh and Maharashtra. They have not signed the contract with the NPS Trust and the Central Recordkeeping Agency. They have neither set up a Nodal Office nor registered its subscribers. They have also not uploaded and remitted the contributions.

   Andhra Pradesh has registered 58,195 subscribers, but has uploaded the contributions and made remittances of just six of them. Karnataka has registered 73,898 subscribers, and has completed most of the formalities, but it has uploaded and remitted their contributions only from January 19.

    But Karnataka had joined the NPS from as early as April 1, 2006 and has not uploaded the contributions from that date till January 19, 2010.

    The total registered NPS subscribers from the 26 States and UTs is 4,03,819. States such as Kerala, West Bengal, Tripura and Sikkim are yet to join NPS.

Source – The Hindu Business line

Categories: NPS