The National Pension Scheme (NPS) will be reviewed under the chairmanship of the Union Finance Secretary, for which a committee will be constituted. The committee will find a solution to the pension problem.
Nirmala Sitharaman In Parliament
Finance Minister Nirmala Sitharaman announced on Friday that the National Pension Scheme (NPS) will be reviewed under the chairmanship of the Union Finance Secretary, for which a committee will be formed. The committee will find a solution to the pension problem. Addressing the Lok Sabha, he said that many such reports have been received that there is a need to reform the National Pension Scheme for government employees.
He has decided to set up a committee under the Finance Secretary to look into the issue of pension. The committee will put forward such an approach on pension which can meet the needs of the employees while maintaining fiscal prudence. This approach will be equally designed for both the central and state government.
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When was NPS implemented
The existing National Pension Scheme, or New Pension Scheme, was launched in 2003 and came into force on January 1, 2004. Unlike the old pension scheme, NPS was based on a contributory system on which the pension amount was provided by the government. It was introduced to provide old age income security and convert small savings into investments in a financially stable manner.
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60% lump sum and 40% annuity
In NPS, a percentage of basic salary and dearness allowance (DA) is compulsorily deducted from the salary of the employee, and the government adds an equal amount to the pension fund. During retirement, 60 per cent of this fund is given to the employee in lump sum and the remaining balance 40 per cent has to be mandatorily invested as annuity for pension. Employees of many states are demanding changes in NPS. Some states including Rajasthan, Chhattisgarh, Punjab and Jharkhand have returned to OPS. Protest for the same is currently happening in Haryana.
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