Govt Employees Are Up in Arms About the New Pension Scheme

What is the new pension scheme and the way is it completely different from the outdated one?

The National Pension System (NPS) is an outlined contribution scheme obligatory for all new recruits to the Central authorities (besides armed forces) becoming a member of on or after January 1, 2004. All state governments, besides West Bengal, have additionally made it obligatory.

In 2009, the scheme was prolonged to all Indian residents from 18-60 years of age, nevertheless, the 10% authorities contribution is just for authorities staff. An impartial Pension Fund Regulatory and Development Authority (PFRDA), arrange in 2013, regulates the NPS.

The NPS has two tiers – Tier 1 is obligatory for all authorities staff and has a set lock-in interval. Subscribers can solely withdraw the gathered wealth after they retire, i.e., are 60 years outdated. A current modification permits them to withdraw 25% of the worker contribution in case of emergencies.

Even at the time of retirement, subscribers can withdraw solely 60% of the whole quantity, which is taxable, and it’s obligatory to take a position the relaxation 40% to purchase a lifelong annuity scheme by way of an IRDA-regulated insurance coverage firm. If they go away the scheme or retire earlier than attaining the age of 60, 80% of the pension wealth needs to be invested in the annuity scheme.

Tier 2 is a voluntary account, extra of an alternative choice to the GPF the place one can withdraw any quantity at any time. The authorities doesn’t contribute something in the tier 2 account.

Unlike the pension and GPF in the outdated scheme, the NPS doesn’t assure any mounted returns as it’s market-linked.

Teething troubles or discriminatory by design?

Since the NPS covers staff recruited after December 2003 and the age of retirement is 60, most staff are but to avail the new pension advantages.

On being requested why they have been protesting greater than a decade after the outdated scheme was changed, the staff say they initially had little understanding of the scheme as there have been no energetic efforts to teach them or elevate consciousness about it.

They have been informed that NPS was higher as the authorities was additionally matching their contributions. “Many employees have been protesting from the start but NPS was forced on us nevertheless. Such large-scale movements take time. We were fewer in number and it took time to organise,” Manjeet Singh Patel, Delhi state president of the National Movement for Old Pension Scheme (NMOPS), informed The Wire.

Many consultants and supporters of the scheme argue that similar to a normal Systematic Investment Plan, long-term capital positive factors below NPS can be higher than earlier than. However, protesting staff argue that for these retiring after 10-12 years below NPS, the gathered wealth is simply too much less to supply substantial quantity as pensions.

“The total accumulated wealth in my NPS account on retirement was Rs 3.25 lakhs even when I got 13% interest rate on it. After 60% of it was paid to me on retirement, I am receiving less than Rs 700 every month as pension through the annuity scheme,” R.P. Bhatia, a former worker of the Haryana electrical energy board, informed The Wire.

Bhatia was made everlasting in November 2006 and retired in 2013. NPS was enforced in Haryana from 2006 itself. He says his colleagues who have been recruited not lengthy earlier than him are receiving over Rs 15,000 as pension below the outdated scheme.

To ensure, staff didn’t have to contribute something to avail pension in the earlier scheme. Under NPS, staff should fund half of their pension themselves.

If they need a GPF-like choice the place there’s no strict lock-in interval, they should moreover deposit cash in the tier 2 account. They say this leaves them with much less disposable earnings and even then, they reside in fixed anxiousness of shedding their cash in the fairness market.

“If the government wanted to encourage us to invest in mutual funds, we should have been educated about it and it should be optional for those willing to risk it. The government is forcing us into it instead of providing a safety net,” Patel added.

In addition to those points, authorities staff from many elements of Uttar Pradesh allege their contribution hasn’t even began being deducted from their salaries. “How will we get returns from the market when our money hasn’t even been deducted from our accounts to be invested,” Ajit Verma, a 32-year-old authorities worker from Lakhimpur Kheri in UP, informed The Wire. He provides that that is the case in many blocks of his district.

Speculative advantages as a substitute of security web

“The minimum pension amount under the old scheme is Rs 9,000 which has been calculated keeping in mind entry-level minimum wages. Real pension amounts are much higher as nobody retires on entry-level wages. In the new scheme, even those who have worked for a decade are getting as little as Rs 1,000-2,000. This is a disastrous policy,” Tapan Sen, common secretary, Center of Indian Trade Unions, informed The Wire.

Sen additionally alleges that each the Congress and BJP governments, by way of this scheme, have been utilizing public cash to assist those that revenue by way of hypothesis in the share market at the value of weak authorities staff.

In addition to nervousness due to a distrust in market-linked schemes, the staff additionally really feel they’re being discriminated in opposition to as armed forces recruits are nonetheless coated below the outdated scheme and so they really feel their fellow colleagues coated below the outdated scheme are getting a greater deal.

Clearly outlined pension quantities and a security web in the type of mounted rates of interest on GPF have been the principal points of interest for a authorities job for these staff who usually spend their entire working lives in the public sector.

Current state of financial system including to woes

The present state of the financial system does nothing to encourage confidence in these staff as they see their rates of interest dip in the aftermath of occasions like demonetisation and Goods and Services Tax.

“We were told that our money in the market would also help avoid a 2008-like economic slowdown. How are we to trust this logic when people like Vijay Mallya and Nirav Modi run away with thousands of crores of public money? When even our pension fund managers like SBI goes into massive losses?” Vijay Kumar, nationwide president of the NMOPS, informed The Wire.

A uncommon second of unity amongst authorities staff

As phrase spreads of an organised motion in opposition to the new pension scheme, staff from varied authorities departments and states are becoming a member of in. Leaders of the motion say that is one in every of the uncommon points that has united authorities staff from very numerous sectors and geographical places.

Workers from the banking sector are additionally lending their voice to the protest. A constitution of calls for submitted to the Indian Banks’ Association by the All India Bank Officers’ Confederation additionally calls for scrapping of the NPS.

“Either we go to the old scheme or this scheme can itself be converted into an assured pension scheme. We have also given a workaround on how it can be done. If invested properly, it is possible to guarantee assured income. Instead of investing in the market, the fund can be used in lending activities. Retail lending can alone fetch 12-15% interest and we can avoid the whims of the market,” Thomas Franco, former common secretary of AIBOC, informed The Wire. Even whereas suggesting how one can ease anxieties relating to market volatility, Franco’s choice stays going again to the outdated scheme.

Since no concrete motion was taken to handle their considerations even after a number of appeals to all involved authorities, the NMOPS has deliberate to mobilise lakhs of presidency staff from throughout India and march to the parliament on Monday.

SOURCE

What is National Pension System

What is National Pension System?

National Pension System (NPS) is a pension cum investment scheme launched by Government of India to provide old age security to Citizens of India. It brings an attractive long term saving avenue to effectively plan your retirement through safe and regulated market-based return. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA).National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under NPS.

What are different sectors in NPS?

  1. Government Sector:
    1. Central Government:
      The Central Government had introduced the National Pension System (NPS) with effect from January 1, 2004 (except for armed forces). All the employees of Central Autonomous Bodies who have joined on or after the above mentioned date are also mandatorily covered under Government sector of NPS.Central Government/CABs employee contributes towards pension from monthly salary along with matching contribution from the employer.
    2. State Government:
      Subsequent to Central Government, various State Governments adopted this architecture and implemented NPS with effect from different dates. A State Autonomous Body (SAB) can also adopt NPS if the concerned State Government/UT have adopted the NPS architecture and initiated implementation of the same. State Government/SABs employees also contribute towards pension from monthly salary along with matching contribution from the employer.
  2. Private Sector (Non-Government Sector):
    1. Corporates:
      NPS Corporate Sector Model is the customized version of NPS to suit various organizations and their employees to adopt NPS as an organized entity within purview of their employer-employee relationship.
    2. All Citizens of India:
      Any individual not being covered by any of the above sectors has been allowed to join NPS architecture under the All Citizens of India sector from May 01, 2009.

Why should I open NPS Account?

Opening NPS account has its own advantages as compared to other pension product available. Below are few features which make NPS different from others:

  1. Low cost product
  2. Tax breaks for Individuals, Employees and Employers
  3. Attractive market linked returns
  4. Easily portable
  5. Professionally managed by experienced Pension Funds
  6. Regulated by PFRDA, a regulator set up through an act of Parliament

Who can join NPS?

Any individual citizen of India (both resident and Non-resident) in the age group of 18-65 years (as on the date of submission of NPS application) can join NPS

How NPS works?

Upon successful enrolment, a Permanent Retirement Account Number (PRAN) is allotted to the subscriber under NPS. Once the PRAN is generated, an email alert as well as a SMS alert is sent to the registered email ID and mobile number of the subscriber by NSDL-CRA (Central Record Keeping Agency).Subscriber contributes periodically and regularly towards NPS during the working life to create the corpus for retirement. On retirement or exit from the scheme, the Corpus is made available to the Subscriber with the mandate that some portion of the Corpus must be invested in to Annuity to provide a monthly pension post retirement or exit from the scheme.

Frozen Company Pension – The Options!

You can hardly have failed to notice that the prediction for UK pensions is not good. Like many European countries, the UK has an aging population and a decreasing birth rate. Whilst the workers are currently funding the old aged pensioners, it remains unclear how the next generation of old aged pensioners will be funded. Simply put, we are getting older and the pension scheme currently in place is not able to accommodate this.

As society's attitude towards work has also undergone a major transformation whereby a job for life no longer seems to be the norm, the number of employees with a frozen company pension scheme is also on the increase. In fact, many people are changing their job so often that they have accumulated a number of frozen company pensions. So, what are the options available for those with a frozen company pension?

Pension plans can become frozen if you have been part of a company pension plan and you then decide to leave the company. Normally this happens when you have been working for the company for two years. This pension plan is known as a frozen company pension as you are unable to then pay any contributions into it. If you have a frozen company pension you will not be able to simply draw money out of it as the money will have be paid before tax. This means that the Inland Revenue have strict regulations as to how to deal with a frozen company pension. Although this may seem as though it is fairly final you will still have a few options available to you. These frozen company pensions options can be summarized as follows:

oTransferral – Transfer the frozen company pension to another company pension scheme. Allowing you to then make new contributions

oAcceptance – Leave the frozen company pension with your previous employer and accept that you will not be able to pay into it again

oConversion – Convert the frozen company pension over to a Personal Pension Plan, allowing you to start making contributions again

ouy Out – Transfer the frozen company pension to a Section 32 Buy Out Policy

It is always advisable to discuss these four options in more detail with a financial adviser to ensure that you are fully-informed about your future possibilities for your frozen company pension. By having a full understanding of the implications of freezing plans and investment approaches when evaluating the requirements of a frozen company pension plan, you can rest assured that you will be making the best decision for your retirement.



Source by Elizabeth Grant

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