NPS is far beneficial
than Government Pension – Comparison of New Pension Scheme (National Pension
Scheme) and Central Government Pension
The Central Government
employees who have joined after 1/1/2004 and are put under National
Pension Scheme (NPS) have been demanding abolition of NPS and have
been persuading the Central Government to make the government pension scheme
applicable to them.
This only exhibits their ignorance of
the fact that the New Pension Scheme is highly lucrative and make the
government employees who joined after 1/1/2004 far richer than the government
employees who enjoy government pension scheme. By doing so they are in
the process of ruining the great fortunes that lies in store under New Pension
Scheme. Let me compare both the scheme:
Benefits under NPS
Let me take a case of
Upper Division Clerk(UDC) who joins government service in 2014 at the age
of 25 and renders 35 years of service till attaining 60 years
of age. He / She gets 3% annual increment every year and gets one promotion
every 10 year under M.A.C.P. Although he / she is likely to get 14 to 20%
increase in D.A every year as per Consumer Price Index I just take 12%(assuming
6 + 6%) 2 times D.A in a year
(A) Therefore, the total pension wealth of a
government servant who joined in 2014 and retiring under New Pension
Scheme shall at the time of his retirement be Rs. 2,87,26,201/-
(B) 60% of the
lump-sum pension wealth which he / she will be getting on retirement:
Rs.1,72,35.720
Rs.1,72,35.720
(C) 40% invested in
an annuity scheme which he / she can receive before 70 years:
Rs.1,14,90,481
Rs.1,14,90,481
(D) Earned Leave
Encashment: Rs. 215625 x 10
months : Rs.
21,56,250
TOTAL of (A) (B)
(C) and (D) will be
Rs. 3,08,82,451
Death Gratuity:
Although not entitled
for retirement gratuity, but eligible for Death Gratuity If died during
the service
Monthly Pension:
At the assumed
Interest at the rate of 8.7% per annum on the other 40% of pension
wealth of Rs.1,14,90,481 invested in annuity shall fetch
monthly pension of at least : Rs.83,306/ –
monthly pension of at least : Rs.83,306/ –
Not only this, before
he / she attains the age of 70 he / she can withdraw the
remaining 40% of his pension wealth of Rs. 1,14,90,481/- which if
invested in Fixed Deposit of a nationalised bank can fetch interest and take
care of not only of his wife and children but his descendants also for
generations to come.
This is just a tip of
the iceberg. If we consider the other 4 pay commission benefits that
materialize on 1/1/2016, 1/1/2026, 1/1/2036 and 1/1/2046 which a NPS pensioner
who joins as UDC shall be getting before his retirement in 2049,his total
pension wealth will be undoubtedly double the above amount which comes to more
than Rs.5 crores. While a person who joins as U.D.C. gets this much, one will
be rocked out of stupor to know what a Group A officer who renders 35 years of
service may get – undoubtedly his total pension wealth will be more than Rs.10
crores.
Benefits under Central
Government Pension Scheme
Now let us see what
will be the retirement benefits of the above person if he / she is put in
government pension scheme:
1.Gratuity for 16.5
months :
Rs.2,15,625 x 16.5
months = Rs.35,57,812/- Restricted to Rs.10,00,000
2. Earned Leave
Encashment:
Rs. 215625 x 10 months
: Rs.21,56,250
3. Pension
Commutation:
Rs.17195 x 40% =
Rs.6878 x 12 x 8.194 years Rs 6,76,300
Total Benefits under
Central Government Pension
Scheme: Rs.38,32,550
4. GPF Balance:
As it is a general
tendency of the government servants to withdraw from GPF frequently, there will
be very little left at the time of retirement
5. Monthly pension
i) Rs.34390 /
2 = Rs.17195 (basic pension being 50% of pay and grade
pay Less 40% of basic pension towards commutation (Rs 6878) which will be
restored after 15 years
Balance basic
pension is Rs. 10317
ii) DA @ 527% of basic
pension of Rs.17195 = Rs. 90617 (subject to increase in DA every 6 months
based on consumer price index)
Total pension is
Rs.1,00,934 per month.
After the death of
government servant say after 67 years, spouse can take only 60% of the
basic pension i.e.Rs.17195 x 60% = Rs.10317 plus D.A.at the prevailing rates.
After spouse’s death children are unlikely to draw the pension as they would
have already crossed the age limit. Thus, unlike the dependents of NPS
pensioners, there will be nothing left for financial security of the
dependents of the government pensioners .
Thus it is unwise on
the part of government servants who have joined after 1/1/2004 to demand for
abolition of NPS scheme and grant of government pension.
Mr.M.Dorai
Deputy Director
ESIC Model Hospital,
Bangalore (Ministry of Labour, Government of India) is the author of this Article.
Deputy Director
ESIC Model Hospital,
Bangalore (Ministry of Labour, Government of India) is the author of this Article.
The views expressed in
this article are those of the guest author and are not intended to represent
the views of GConnect.
- See more at:
http://www.gconnect.in/nps-2/nps-cg-employees/nps-far-beneficial-government-pension.html
http://www.gconnect.in/nps-2/nps-cg-employees/nps-far-beneficial-government-pension.html