GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
RAJYA SABHA
UN STARRED QUESTION NO. 2130
TO BE ANSWERED ON MARCH 21, 2017/PHALGUNA 30, 1938 (SAKA)
RESTORATION OF OLD PENSION SYSTEM IN PLACE OF CONTRIBUTORY PENSION SYSTEM
2130. Shri T. G. Venkatesh
Will the Minister of FINANCE be pleased to state:
(a) whether it is a fact that the newly introduced Contributory Pension
System is not beneficial to the employees and so the employees unions
are requesting Government to re-introduce the old pension system in its
place, if so, the details thereof; and
(b) whether any representation has been received in this regard by
Government, if so, the details thereof and the stand of Government in
this regard?
ANSWER
The Minister of State in the Ministry of Finance
(Shri Santosh Kumar Gangwar)
(a) & (b) National Pension System (NPS), which is a contributory
pension system, has, inter alia, the following features which benefit
the employees:
- NPS
is a well designed pension system managed through an unbundled
architecture involving intermediaries appointed by the Pension Fund
Regulatory and Development Authority (PFRDA) viz. Pension Funds,
Custodian, Central Recordkeeping and Accounting Agency, National Pension
System Trust, Trustee Bank, Points of Presence and Annuity Service
Providers. It is prudently regulated by PFRDA which is a statutory
regulatory body established to promote old age income security and to
protect the interests of subscribers of NPS.
- Dual
benefit of Low Cost and Power of Compounding– The pension wealth which
accumulates over a period of time till retirement grows with a
compounding effect. The all-in-costs of the institutional architecture
of NPS are among the lowest in the world.
- Tax Benefits– Tax benefits are available to the NPS subscribers under various provisions of the Income- tax Act, 1961.
- Transparency
and Portability is ensured through online access of the pension account
by the NPS subscribers, across all geographical locations and
portability of employments.
- Partial
withdrawal– Subscribers can withdraw up to 25% of their own
contributions towards their pension account, before attaining
superannuation age for certain specified purposes subject to certain
conditions.
Representations have been received from certain quarters regarding the
implementation of NPS which, inter alia, include the demand that NPS may
be scrapped and the Government may revert to old defined benefit
pension system. However, there is no proposal to replace the NPS with
old pension scheme in respect of Central Government employees recruited
on or after 01.01.2004.