7th pay commission: Christmass has come early for central government employees! They have been demanding a big pay hike through an increase in fitment factor and bringing back of the defunct old pension scheme. The Modi government yesterday took action on their demands regardung pension. Rather than bringing back the old pension system, Modi government has ordered that in the NPS, government contribution will be raised to a whopping 14 per cent!
7th Pay Commission: PM Narendra Modi led Cabinet on Thursday increased the government’s contribution on National Pension Scheme (NPS) to 14% of basic salary from teh current 10 per cent. At the moment it is 10 per cent. Government employees contribution however, has been retained at 10 per cent. So, while the minimum employee contribution remains at 10 per cent, the government contribution has been increased from 10 per cent to 14 per cent.
7th Pay Commission: Not just NPS windfall, Modi government also ordered that tax incentives under 80C of the Income Tax Act for government employees’ contribution to the extent of 10 per cent be provided to them.
7th Pay Commission: Prime Minister Narendra Modi led government had many other gifts in its bag. Modi government also allowed government employees to commute 60 per cent of the fund accumulated at the time of retirement, up from 40 per cent at present.
7th Pay Commission: Government employees will also have the option to invest in either fixed income instruments or equities. As per the decision by the Modi government, if the employee decides not to commute any portion of the accumulated fund in NPS at the time of retirement and transfers 100 per cent to annuity scheme, then his pension would be more than 50 per cent of his last drawn pay, sources said.
7th Pay Commission: When the the date of notification of the new scheme will be has been left undecided as yet. However, government employees should not get disappointed as changes like these usually come into effect from April 1, 2019, which is the beginning of a financial year.
7th Pay Commission: What was the new NPS formula based on? According to Finance Ministry sources it was based on the recommendations of a government-appointed panel.
Source:- ZEE NEWS