Showing posts with label NPS. Show all posts
Showing posts with label NPS. Show all posts

Pension - Implementation of National Pension System to employees joining service with effect from 01.04.2013 - Orders issued.

GOVERNMENT OF KERALA
Abstract

Pension - Implementation of National Pension System to employees joining service with effect from 01.04.2013 - Orders issued.

FINANCE (PENSION-A) DEPARTMENT

G.O.(P) No. 20/2013/Fin. Dated, Thiruvananthapuram, 07. 01.2013

Read: G.O(P) No. 441/2012/Fin dated 08.08.2012

ORDER

   In accordance with the national pattern adopted by the Central Government and various State Governments, Government vide G.O read above, decided, in principle, that the National Pension System (NPS) shall be introduced with effect from 01.04.2013 which shall be applicable to all appointments made thereafter.

   2. Government, after having examined the matter in detail, are pleased to implement National Pension System in the State with effect from 01.04.2013 and issue the following further orders:

   i. The NPS would be mandatory for all appointments made on or after 01.04.2013.

   ii. The NPS will work on a defined contribution basis and will have two Tiers. viz. Tier I and Tier II. Contribution to Tier I will be mandatory for the employees whereas Tier II will be optional and at the discretion of the Government servants.

   iii. In Tier I, the Government servant shall make a contribution of 10% of his / her Basic Pay + Dearness Allowance which will be deducted from his/ her salary every month by the Treasury Officer / Drawing and Disbursing Officer concerned. Government will also make a matching contribution. The amount so deducted from the salary of the Government servant and the amount of matching contribution will be transferred to a pension account in order to invest the same as per the provisions of Government of India / Pension Fund Regulatory and Development Authority (PFRDA), a statutory body constituted by the Government of India. The entire amount under Tier I (Government servant contribution + matching Government contribution + investment returns) will be kept in a non withdrawable pension Tier I account.

   iv. Tier II contribution will be kept in a separate account that will be made available at the option of the Government servant. Government will not make any contribution to Tier II account.

   v. The pension funds of the Government servants will be managed by Pension Fund Managers (PFMs) nominated by the PFRDA and the records will be maintained by the National Securities Depository Ltd. (NSDL) that functions as the Central Record keeping Agency (CRA) of the Scheme.

   vi. A Government servant can exit at the retirement age from Tier I of the Scheme. At exit, it would be mandatory for him/ her to invest 40% of pension wealth to purchase an annuity which will provide for pension for the lifetime of the individual and his/ her spouse/ dependent parents. The Government servant would receive a lump sum of the remaining pension wealth, which the individual would be free to utilize in any manner. In case of Government servants who leave the Scheme before attaining the retirement age the mandatory annuitization would be 80% of the pension fund.

   vii. The Scheme will apply to all employees to whom Part III, KSR is applicable.

   viii. It will apply to all PSUs where pensionary benefits as per Part III, KSR are granted.

   3. The guidelines, detailed accounting procedure to be followed in the Scheme and necessary amendments to KSR will be issued separately.

By Order of the Governor,

Dr.V.P.JOY
Principal Secretary (Finance)

Source:www.finance.kerala.gov.in

Implementation of NPS.

   The New Pension System (NPS) has been implemented for various sectors like Central Government, State Government, Private Sector and NPS-Life.  The status of NPS in these sectors as on 10th November, 2012 is as under:-

Sector

No. of Subscribers (Figures in lakhs)

Assets under Management (Rs. In crores)

Central Government  

10.62

14,846

State Government    

14.67

7,445

Private Sector  

1.64

835

NPS-Life           

13.05

344

Total    

39.98

23,470

   The number of subscribers is increasing every year in all the sectors.

PFRDA to appoint auditors for pension fund managers.

   To keep a tighter check on investments, the pension regulator has decided to appoint auditors for the pension fund managers (PFMs) and schemes of the National Pension System (NPS). Fund managers will also be expected to make full disclosure of scheme-wise investments on their websites.

   “As the NPS gets more subscribers, there is a need to keep a tighter check on investments being made by the fund managers... That is why we have made the reporting and audit norms more stringent,” said a senior PFRDA official.

   The auditors, for which the Pension Fund Regulatory and Development Authority (PFRDA) has recently issued guidelines, will review the performance of schemes under the NPS as well as investments made by the fund managers. They will also be expected to audit prepare financial and annual reports of schemes managed by each of the fund manager.

Frequently Asked Questions on New Pension Scheme.

1. What is the New Pension System (NPS)?

   The NPS is a new contributory pension scheme introduced by the Central Government for employees joined in Government Service on or after 1.1.2004. During the year 2009, the NPS was kept open for public.

2. Who is covered by the NPS?

   a. Employees who have joined central government service on or after 01 January 2004 including Railways, Posts, Telecommunication or Armed Forces (Civil), Autonomous Body, Grant-in-Aid Institution, Union Territory or any other undertaking whose employees were eligible to a pension from the Consolidated Fund of India., earlier.

   b. This contribution pension scheme is also open to any Indian citizen between the age of 18 and 55.

3. I am covered by the NPS. Can I contribute to the GPF?

   No. The General Provident Fund ( Central Service) Rules, 1960 is not applicable for employees covered by NPS.

4. I Am covered by the NPS. Am I eligible to Gratuity?

   No. You will not be eligible to Gratuity.

5. How does the NPS work ?

   When you join Government service, you will be allotted a unique Personal Pension Account Number (PPAN). This unique account number will remain the same for the rest of your life. You will be able to use this account from any location and also if you change your job. The PPAN will provide you with two personal accounts:

   1. A mandatory Tier-I pension account, and

New Pension Scheme : Official amendments to the PFRDA Bill, 2011.

   Official amendments to the Pension Fund Regulatory and Development Authority Bill, 2011

   The Union Cabinet today approved the introduction of certain official amendments to the Pension Fund Regulatory and Development Authority Bill, 2011. These official amendments have been necessitated in view of the recommendations of the Standing Committee on Finance which has examined the Bill. Based on the recommendations of the Standing Committee on Finance, the Government has decided to accept the following:

   1. that the subscriber seeking minimum assured returns shall be allowed to opt for investing his funds in such schemes providing minimum assured returns as may be notified by the Authority;

   2. withdrawals not exceeding 25 per cent of the contribution made by subscriber will be permitted from the individual pension account subject to the conditions, such as, purpose, frequency and limits, as may be specified by regulations by the Pension Fund Regulatory Authority and Development Authority (PFRDA)

3. the foreign investment ceiling in the pension sector at 26 per cent or such percentage as may be approved for the Insurance Sector, whichever is higher may be incorporated in the present legislation;

   4. to establish a vibrant Pension Advisory Committee with representation from all major stakeholders to advise PFRDA on important matters of framing of regulations under the PFRDA Act.

   5. the membership of the PFRDA will be confined to professionals having expertise in economics, finance or law only.

   The New Pension Scheme (NPS) has been made mandatory for all the Central Government employees (except Armed Forces) entering service with effect from 1.1.2004. 27 State / UT Governments have notified NPS for their employees. NPS has been launched for all citizens of the country including unorgnised sector workers, on voluntary basis, with effect from 1st May, 2009. Further, to encourage people from the unorganised sector to voluntarily save for their retirement, Government has launched the co-contributory pension scheme titled "Swavalamban Scheme" in the Budget of 2010-11. As on 7th September, 2012 the number of subscribers under NPS is 37.45 lakh with a corpus of Rs. 20535.00 crore.

   In order to effectively invest and manage such huge funds belonging to a large number of subscribers and to ensure the integrity of the NPS, creation of a statutory PFRDA with well defined powers, duties and responsibilities is considered absolutely necessary and would benefit all NPS subscribers.

   The official amendments to the Bill will be moved in the next session of the Parliament.

   Background:

The following recommendations of the SCF have not been accepted:

   • As regards the recommendation of SCF for compulsory insurance of the funds of subscribers by pension fund managers, a provision has already been made in the PFRDA Bill, to protect the interest of the subscribers by ensuring safety of contribution of subscribers and also by keeping the operational costs in check,

   • As regards the selection of pension fund managers in such a manner that one third of all such fund managers are from the public sector, since a provision has already been made in the PFRDA Bill that at least one of the pensions fund shall be from the public sector which sets a floor, the ceiling can be any number based on objective criteria.

   The Pension Fund Regulatory and Development Authority Bill, 2005 was initially introduced in the Lok Sabha in March, 2005 to provide for a statutory PFRDA. However, since the Bill and the official amendments, based on the recommendations of the Standing Committee on Finance, could not be considered by the Lok Sabha, and the Bill lapsed on dissolution of the 14th Lok Sabha. The Government had announced in the Budget 2011-12 that the revised PFRDA Bill would be moved in Parliament. Accordingly, the PFRDA Bill, 2011 was introduced in the Lok Sabha on the 24th March, 2011 to provide for a statutory regulatory body, the Pension Fund Regulatory and Development Authority (PFRDA) under the provisions of the Bill. The legislation sought to empower FRDA to regulate the New Pension System (NPS). The PFRDA Bill, 2011 was referred to the Standing Committee on Finance on the 29th March, 2011 for examination and report thereon. The Standing Committee on Finance gave its Report on 30th August, 2011. Based on the recommendations of Standing Committee, a Cabinet Note, to introduce additional recommendations of the Standing committee on Finance was moved on 19th December, 2011. Since the PFRDA Bill, 2011 was deferred in the Winter Session of the Lok Sabha, therefore the Cabinet Note was withdrawn.

Source: PIB

New Pension Scheme for Workers without benefit of Formal Pension.

   There are 6.92 crores members under Employees’ Pension Scheme, 1995 as on 31.03.2012. However, to ensure the welfare of the workers who are not benefited by any formal pension scheme, the Government has announced a co-contributory pension scheme the ‘Swalalamban’ whereby the Central Government would contribute a sum of Rs.1,000 per annum in each New Pension System (NPS) account opened having a savings of Rs.1,000 – Rs.12,000 per annum. The Scheme commenced in 2010-11. The Government will provide contribution for 5 years to the beneficiaries who register in the year 2010-11, 2011-12 and 2012-13 and therefore, the scheme has been extended up to the year 2016-17.

Kerala to introduce contributory pension scheme for government staff.

   The employees would be required to contribute 10 per cent of their pay and dearness allowance to the pension fund. The government would also make a contribution to the fund.

   The government has issued orders approving, in principle, the proposed contributory pension plan for government employees. The plan is proposed to apply to new recruits joining service from next year.

   The employees would be required to contribute 10 per cent of their pay and dearness allowance to the pension fund. The government would also make a contribution to the fund.

   Pensions would be available to employees who contribute to the fund for a specified number of years. Payment of full pension by government would be discontinued.

NPS performed better that GPF in the last year.

   The three NPS managers handling the pension funds of Central and state government employees have delivered average returns of 9.33% in the past one year, outperforming the state-run government provident fund (GPF), employees provident fund (EPF) and the public provident fund (PPF). The three-year annualised returns are also quite decent at 8.47%, though not as spectacular as in the past one year.

   More than 16 lakh central and state government employees have almost Rs 8,500 crore invested in the NPS. This money is managed by three pension fund managers - SBI Pension Funds, LIC Pension Fund and UTI Retirement Solutions. Each of the three funds manages roughly one-third of the NPS corpus.

   Though three years is a very short time to judge long-term instruments such as pension funds, the impressive performance is likely to silence the criticism that NPS is not allocating enough to growth assets. Central and state government NPS funds can invest a maximum of 15% in equities. Even in NPS for the general public, where investors can choose their own asset allocation, a maximum of 50% can be put in equities.

PFRDA Issues Revised Set of Guidelines for Registration of Pension Fund Managers to Manage National Pension System for the Non-Government and Private Sector.

   The Pension Fund Regulatory and Development Authority (PFRDA) today issued a revised set of guidelines for registration of Pension Fund Managers (PFMs) to manage the National Pension System (NPS) for the non-government and private sector.

   The revised guidelines, available on PFRDA’s website www.pfrda.org.in, have done away with the earlier bidding process, wherein a pre-determined number of slots were bid for by the PFMs, and the fees charged by them for managing the pension funds had to be uniform for all players. The earlier process has now been replaced by a system which lays down the eligibility criteria for registration as PFMs, and all interested players desiring to enter the pension industry, can register as PFMs subject to their fulfilling the eligibility criteria. There is no limitation on the number of PFMs. Further, the PFMs are now allowed to prescribe their own fee charges, subject to an overall ceiling to be laid down by PFRDA. It is expected that this would provide for an economically viable business model for the PFMs attracting a fresh set of entrants into the pension industry, and the resultant competition would ensure market driven fee structures, which would work to the advantage of the pension subscribers.

New Pension Schemes

   The Government has implemented the New Pension System (NPS) for Government employees who join Central Government (except armed forces) on or after 1st January, 2004.

   The NPS and the old defined benefit (DB) pension system are two different pension systems. Therefore, there can not be any comparison between the two in so far as the benefits to employees are concerned. The Pension benefits under the DB system are defined, however, under NPS the amount of pension would depend on the investment returns, the accumulation upto the age of retirement and level of annuitisation and type of annuity chosen.

   Some representations of Employees’ Associations have been received by the Government. The major reasons for its opposition by the Employees’ Associations are minimum pension, safety and returns on investment. Many measures have been taken to protect the interests of the NPS subscribers, like prescribing a flexible investment pattern, establishing a regulator in the form of the Interim Pension Fund Regulatory and Development Authority and creating the modern institutional architecture of NPS, which is low cost.

  There is no proposal from the Government to reconsider the NPS.

   This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Lok Sabha today.

PIB

Pension to Retired Employees.

   The Government had introduced the New Pension System (NPS) from 1st January, 2004 through a Notification dated 22nd December, 2003 for new entrants to Central Government service, on mandatory basis, except to Armed Forces, joining service on or after 01.01.2004 replacing the existing system of defined benefit pension system. NPS has also been extended to autonomous bodies, State Governments and un-organised sector. The employees working in Central Public Sector Enterprises (CPSEs) are not covered mandatorily under NPS. However, three CPSEs, viz Konkan Railway Corporation Ltd. Manganese Ore (India Ltd. ) and NALCO have adopted NPS on voluntarily basis with effect from 01.01.2004, 01.07.2011 and 01.01.2007 respectively.

   This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Lok Sabha today.

PIB

Management of Funds Under NPS.


   The investment of pension funds of Government employees, who are covered as subscribers to the New Pension System (NPS), was hitherto being made through a pooling arrangement whereby the funds of such employees were credited to a pool account (pending reconciliation of subscribers’ contribution details) from which such funds were allocated to pension fund managers for immediate investment in the best interest of the subscribers. These funds of the Government employees are being managed based on the investment Pattern prescribed by the Government.

   The pension funds of the Government employees, who are covered by NPS, are managed by three pension fund managers, namely, SBI Pension Funds (Pvt.) Limited, UTI Retirement Solutions Limited and LIC Pension Fund Limited.

   The Pool account is proposed to be discontinued from 1st May, 2012. Thereafter, it would be possible for the individual subscribers to exercise their individual choices regarding investment pattern and the pension fund manager.

   NPS is a defined contribution based pension system where the actual returns would be determined by the market based returns.

   This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Rajya Sabha today.

PIB

Pension Scheme in Ordnance Factories.


   The new pension scheme has been implemented in all the ordnance factories including Jabalpur based ordnance factories.

   HVF NPS Reformation Association, Avadi filed an OA before CAT Madras Bench challenging the implementation of New Pension Scheme introduced by the Government of India as unconstitutional and violative of Article 14, 16 & 21 of the Constitution of India contending, inter alia, that new pension scheme does not guarantee any minimum return on investment of employees. A strike had been called on 28.2.2012 by All India Defence Employees Federation, Indian National Defence Workers Federation and BharatiyaPratirakshaMazdoorSangh jointly demanding to scrap the new pension scheme.

   No proposal for considering the implementation of old pension scheme in ordnance factories is under consideration

   This information was given by Minister of State for Defence Shri MM PallamRaju in a written reply to Shri Rakesh Singh in Lok Sabha today.

Source: PIB