GConnect has published
an article titled,
‘NPS is far beneficial than Government Pension’
‘NPS is far beneficial than Government Pension’
GConnect has published an
article titled, ‘NPS is far beneficial than Government Pension’ – Comparison of
New Pension Scheme (National Pension Scheme) and Central Government Pension
A very popular website
among Central Government employees, GConnect, which began functioning more than
8 years ago, continues to be a strong line of communication between the Central
Government and its employees.
The article that was
published yesterday seeks to answer critics who claim that the new pension
scheme is outright bad. GConnect has made it very clear that the opinions
expressed in the article belong to its writer, Mr. Dorai, Deputy Director, ESIC
Model Hospital and that the website doesn’t necessarily subscribe to them.
The ‘study report,’
that compares the salient features of the old(Central Government Pension
Scheme) and new pension schemes, is bound to create controversies.
While various Central
Govt employees associations and federations are putting pressure on the
Government to withdraw the new pension scheme and enforce the previous one, we
believe that this article is going to make a huge impact.
The writer begins the
article by stating that those who are opposing the new pension scheme, with
more benefits than the old pension scheme, are doing so due to their ignorance.
The article also explains how the new pension scheme could create huge wealth.
The report gives as an
example, the case of an employee who joins the Central Government employment as
a Upper Division Clerk(UDC) in 2014 and retires after 35 years service, in
2049. The report gives a comparative study of how the pension fund grow each of
these 35 years. The study also assumes a regular dearness allowance of 6% every
six months, and an annual increment of 3%.
The study also assumes
that, at an interval of 10 years, the employee gets 3 promotions during his
service tenure. Most importantly, it is assumed that matching the employee’s
contribution, the Government’s contribution too would witness an 8.7% increase
per annum.
At the time of
retirement, the employee is likely to get Rs. 2,87,26,201, which is split into
two shares – 40% and 60%, which amounts to Rs. 1,14,90,481, and Rs.
1,72,35,720, respectively. 60% of the lumpsum pension wealth is given at the
time of retirement. The remaining 40% is invested in an annuity scheme.
It is stated that the
monthly pension will be a minimum Rs. 83,306. In addition to this, at the age
of 70, the employee gets the remaining 40% back. The article strongly claims
that this money could be the gift that the person leaves behind for his future
generation.
The article’s
highlight feature is the claim that if the Pay Commission recommendations are
taken into account, the amount could be much higher and that the UDC could get
as much as Rs. 5 crores at the time of retirement.
According to the old
Govt pension scheme, the employee’s monthly pension amount would be Rs.
1,00,934, and after his demise, his spouse would get Rs. 10,317 plus Dearness
Allowance. After his/her death, there are no more benefits for the family.
The article is
indirectly stating that the absence of gratuity and other such benefits is not
a huge issue. According to the old Govt pension scheme, at the time of
retirement, the employee would make only Rs. 38,32,550, which is Gratuity (16.5
months) + EL Encashment + Commutation.
While discussing the
General Provident Fund (GPF), the article assumes that since nobody leaves
anything much in this fund, its overall impact on the total pension fund would
be minimal.
The writer concludes
his article by declaring that those who oppose the new pension scheme lack
intelligence.
Click here to see the complete article referred above