Saturday, August 1, 2020

New Pension Scheme: Is it beneficial?

New Pension Scheme!

Some comrades asked me why not you write about NPS scheme?


When you join the scheme through your Bank, you might be provided with details of the scheme.  Also there is a detailed FAQ in Pension portal website.


As per my calculation if an employee ( Graduate clerk) on joining, the Bank  contribution, repeat, Bank contribution of Rs. 3350 per month (11 th BPS numbers) for 35 years, the return at the rate of  8% is= xx.xx lacs

 ( By recurring deposit calculation method)

Calculate the maturity amount yourselves.

This monthly subscription will vary

1.    1.  every 3 month due to increase in D.A,

2.   2.    by every year  as he will be getting one increment per year,

3.  3.    and by every 5 year, as there will be a wage revision.


Therefore the total return will be much much higher, even after taking into account
inflation over years.


Improvements are made in NPS from time to time as follows.

1.      Withrawals allowed during service period like P.F. .

2.      No Tax on maturity amount on retirement on par with P.F..

3.      Can encash 60% of the maturity amount instead of 40% earlier.

Remaining 40% may be invested towards pension.

4.      Contribution by Bank is increased from 14% from 10%  on Basic Pay +D.A 

Therfore benefit wise it is not a bad scheme.

Then why we oppose this scheme?

We have doubts about
1. Whether the funds will be stable and steady?
(i.e. whether our funds will be safe?)
2. Whether it will give minimum return of 8% i.e equal to P.F. ?

Now Central Govt., and State Govt., employees are fighting for reversal of this scheme and demand for converting all employees to old Pension Scheme.

(West Bengal is the only state that didn’t implement NPS)
In my view it is a distant possibility.

From 2004 lack of employees were recruited in Central, State Govt., and in PSBs.
Fund collected from these employees were deposited with Pension Funds , and in turn it has been invested in different instruments like Equity ,Debentures, and Govt., Bonds.
Taking out all these investments at a time and re-credit to respective departments and in turn crediting the individual employees is not possible.

Moreover It is a policy decision taken by the Govt.,

Both Congress and B.J.P support this in one voice.

 Then What will be the remedy?

My suggestion is to demand the Govt.,

1.      A.  to give Guarantee for our Principle amount and

2.     B.  for a minimum return say 8%.

 If we take the struggle towards this direction the Comrades under NPS will be benefitted.

Asking for total reversal from NPS to old Pension Scheme may not yield desired result, in my view.
Govt., at one stage on pressure from opposition parties come forward to give guarantee for minimum return %,
In the meantime Govt., changed.

The above is my view.

You may not accept it.

Opinion always differs.
Comrades may express their views.




Estimated starting new Basic pay and D.A for a Graduate clerk:

Basic Pay after merger of 47.85% D.A and loading of 2.5% thereon

=13075+6250=19325=>19808+(New D.A @0.07%on 297 slabs) 4118=23926

Bank contribution 14% on 23926=3350



Anonymous said...

If you are a union leader then explain your new pretence over 5 day banking..

Anonymous said...

One advantage is at any point of time one may leave the job and the fund will be remain with him. In case of pension, min 20 years service is required.

Unknown said...

NPS is giving me approximately 10 percent return. Much better than any other scheme. I am in favour of NPS.

Jai said...

This is at present when things are going well. The writer mentioned this fact only that when times go bad, this return may be below 8 percent. That's why he supports NPS but want a minimum guarantee of 8 percent return.