It would be applicable to Government employees covered under NPS who resign to take up with proper permission, another appointment in the Central / State Government or Central / State Autonomous body or a PSU

No.7/5/2012-P&PW(F)/B
Ministry of Personnel, Public Grievances and Pensions
Department of Pension and Pensioners Welfare

Lok Nayak Bhavan, Khan Market,
New Delhi, Dated the 12th February, 2020.

OFFICE MEMORANDUM

Subject: Counting of service on joining new service in State Government / Central Government / autonomous body for the benefit of gratuity in respect of Central Govt Employees covered under National Pension System (NPS)

The undersigned is dated to say that vide this Department’s O.M. No. 38/41106-P&PW(A) dated 05.05.2009, in the event of death /disability during service, the benefits of Invalid / Disability pension, Family pension and. retirement / death gratuity were provisionally extended to NPS employees at par with the employees appointed before 01.01.2004. Subsequently, the benefit of retirement gratuity and death gratuity has been extended to all Central Government employees covered under National Pension System (NPS) vide this Department’s OM No. 7/5/2012·P&PW(F)/B dated 26.08.2016 on the same terms and conditions, as are applicable to employees recovered by CCS (Pension) Rules, 1972.

2. References have been received in the Department seeking clarification with regard to the benefit of retirement gratuity on mobility from one organization to another organization. This matter has been considered in consultation with Department of Expenditure. It has been decided that the grant of retirement gratuity and counting of service for gratuity on mobility of an NPS Government employee may be regulated in the following manner:

Also check: NPS: Extension of benefits of Retirement Gratuity and Death Gratuity to the Central Government employees covered by New Defined Contribution Pension System (National Pension System)

• On mobility from a Central Government service to another Central Government service, the service rendered in the previous Department in the Central Government shall be counted for the purpose of grant of gratuity. There shall be no sharing of gratuity liability between the two Departments of Central Government.
• On mobility from a Central Government service to a State Government service having National Pension System with provision for Retirement / Death Gratuity for its employees similar to those in Central Government, the service rendered in the Central Government shall be counted for the purpose of grant of gratuity. Same provisions shall apply ‘on mobility of an NPS employees of the State Government to Central Government Department. There shall be no sharing of gratuity liability between the Central and State Governments.
• On mobility from Central Government service to a Central or State Autonomous Body service having National Pension System with provision of retirement / death gratuity for its employees similar to that in the Central Government, the service rendered in the Central Government would be counted for grant of gratuity. The Government will discharge its gratuity liability by paying the amount of retirement gratuity for the service rendered in the Government to the Central or State Autonomous body. This procedure shall be followed mutatis mutandis in respect of NPS employees going over from one autonomous body to another autonomous body or from an autonomous body to Central Government Department / organisation both having National Pension System with provision of retirement / death gratuity for its employees similar to that in the Central Government.
• On mobility from Central Government service to a Central or State Autonomous Body or to a State Government where the provision for grant of gratuity similar to that in Central Government does not exist or to a Public Sector Undertaking, the NPS Government employees shall be granted retirement gratuity as per rule for the service rendered in the Central Government subject to the condition that the total gratuity admissible in respect of the service rendered under the Government of India and that under the later organization, shall not exceed the amount that would have been admissible, had Government servant continued in Government service and retired on the same pay which he/she drew on retirement from the later organization.

The above provisions would be applicable to Government employees covered under NPS who resign to take up with proper permission, another appointment in the Central / State Government or Central / State Autonomous body or a PSU.

3. This issues with the concurrence of Ministry of Finance, Department of Expenditure vide their U.O. Note No. 1(4)/EV/2006-II Dated 31.10.2019

4. In their application to the employees of Indian Audit and Accounts Department, these orders issued after consultation with the Comptroller and Auditor General of India, as mandated under Article 148(5) of the Constitution.

5. All the Ministries / Departments are requested to bring the above instruction to the notice of all offices / field formation working under their administrative control.

(Ruchir Mitttal)
Deputy Secretary to the Government of India

To
All Ministries / Departments of the Government of India.

The post Benefit of gratuity in respect of Central Government Employees counting of service on joining new service covered under National Pension System (NPS) appeared first on CENTRAL GOVERNMENT EMPLOYEES NEWS.

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

* MACP / Promotion Years

(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

(C) 40%   invested in an annuity scheme  which he / she can receive before 70 years:

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/ –

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 pensionwealth 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.

Source: http://www.gconnect.in

The post Comparison of New Pension Scheme (National Pension Scheme) and Central Government Pension appeared first on CENTRAL GOVERNMENT EMPLOYEES NEWS.