The State Government has introduced the Defined Contribution Pension Scheme (New Pension Scheme) for its employees who joined service from April 1, 2006.
About 1,600 State Government employees come under the new scheme in Dakshina Kannada, according to R. Alakananda Nadig, District Treasury Officer.
The monthly contribution under the NPS is 10 per cent of basic pay and Dearness Allowance and a matching contribution by the State Government, she said.
The contribution from the employees is mandatory and deducted from their salary.
Ms. Nadig said that the Government would transfer the money to one of the three fund managers: LIC Pension Fund Ltd., SBI Pension Fund Pvt. Ltd. or UTI-Retirement Solution Ltd.
The monthly deductions for the NPS will begin from this month. “All drawing officers in the district have been sensitised about the scheme in a two-day session recently. A comprehensive manual has been provided to them about the scheme,” she said.
A government note on the NPS said that the employees under the scheme should normally exit the scheme at the time of superannuation. At the time of exit, the employee will have to invest 40 per cent of the accumulated fund in an annuity. The annuity will be used to provide pension during the lifetime of the employee, his dependent parents and/or spouse, and minor children. The remaining 60 per cent of the corpus will be paid to the employee at the time of superannuation.he Government has adopted the NPS, which is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
Pension has generally been the main attraction for people to take up government jobs. With this factor undergoing a major shift, will there be any decline in the number of government job-seekers?
“I do not think so,” said Prabhulinga Kavalikatti, a Karnataka Administrative Service (KAS) officer who joined service in June 2006. “Even if there is a change in managing the pension, job security in government service still remains an attraction,” he said. Another government official said, “There are many investment options available, which can yield better returns at the time of retirement. The attitude of the youth has also changed,” he said. To a question, Ms. Nadig said that once the employees covered under the NPS retires, benefits of the hike in Dearness Allowance announced from time to time (post-retirement benefit) would not be applicable because the structure of NPS is entirely different from the family pension scheme applicable to employees who joined before April 1, 2006.
Keywords: Benefits of NPS