GConnect has published an article titled, ‘NPS is far beneficial than Government Pension’
GConnect has published an article titled, ‘NPS is far beneficial than Government Pension’ – Comparison of New Pension Scheme (National Pension Scheme) and Central Government Pension
A very popular website among Central Government employees, GConnect, which began functioning more than 8 years ago, continues to be a strong line of communication between the Central Government and its employees.
The article that was published yesterday seeks to answer critics who claim that the new pension scheme is outright bad. GConnect has made it very clear that the opinions expressed in the article belong to its writer, Mr. Dorai, Deputy Director, ESIC Model Hospital and that the website doesn’t necessarily subscribe to them.
The ‘study report,’ that compares the salient features of the old(Central Government Pension Scheme) and new pension schemes, is bound to create controversies.
While various Central Govt employees associations and federations are putting pressure on the Government to withdraw the new pension scheme and enforce the previous one, we believe that this article is going to make a huge impact.
The writer begins the article by stating that those who are opposing the new pension scheme, with more benefits than the old pension scheme, are doing so due to their ignorance. The article also explains how the new pension scheme could create huge wealth.
The report gives as an example, the case of an employee who joins the Central Government employment as a Upper Division Clerk(UDC) in 2014 and retires after 35 years service, in 2049. The report gives a comparative study of how the pension fund grow each of these 35 years. The study also assumes a regular dearness allowance of 6% every six months, and an annual increment of 3%.
The study also assumes that, at an interval of 10 years, the employee gets 3 promotions during his service tenure. Most importantly, it is assumed that matching the employee’s contribution, the Government’s contribution too would witness an 8.7% increase per annum.
At the time of retirement, the employee is likely to get Rs. 2,87,26,201, which is split into two shares – 40% and 60%, which amounts to Rs. 1,14,90,481, and Rs. 1,72,35,720, respectively. 60% of the lumpsum pension wealth is given at the time of retirement. The remaining 40% is invested in an annuity scheme.
It is stated that the monthly pension will be a minimum Rs. 83,306. In addition to this, at the age of 70, the employee gets the remaining 40% back. The article strongly claims that this money could be the gift that the person leaves behind for his future generation.
The article’s highlight feature is the claim that if the Pay Commission recommendations are taken into account, the amount could be much higher and that the UDC could get as much as Rs. 5 crores at the time of retirement.
According to the old Govt pension scheme, the employee’s monthly pension amount would be Rs. 1,00,934, and after his demise, his spouse would get Rs. 10,317 plus Dearness Allowance. After his/her death, there are no more benefits for the family.
The article is indirectly stating that the absence of gratuity and other such benefits is not a huge issue. According to the old Govt pension scheme, at the time of retirement, the employee would make only Rs. 38,32,550, which is Gratuity (16.5 months) + EL Encashment + Commutation.
While discussing the General Provident Fund (GPF), the article assumes that since nobody leaves anything much in this fund, its overall impact on the total pension fund would be minimal.
The writer concludes his article by declaring that those who oppose the new pension scheme lack intelligence.
Source: 7thpaycommissionnews.in
GConnect has published an article titled, ‘NPS is far beneficial than Government Pension’ – Comparison of New Pension Scheme (National Pension Scheme) and Central Government Pension
A very popular website among Central Government employees, GConnect, which began functioning more than 8 years ago, continues to be a strong line of communication between the Central Government and its employees.
The article that was published yesterday seeks to answer critics who claim that the new pension scheme is outright bad. GConnect has made it very clear that the opinions expressed in the article belong to its writer, Mr. Dorai, Deputy Director, ESIC Model Hospital and that the website doesn’t necessarily subscribe to them.
The ‘study report,’ that compares the salient features of the old(Central Government Pension Scheme) and new pension schemes, is bound to create controversies.
While various Central Govt employees associations and federations are putting pressure on the Government to withdraw the new pension scheme and enforce the previous one, we believe that this article is going to make a huge impact.
The writer begins the article by stating that those who are opposing the new pension scheme, with more benefits than the old pension scheme, are doing so due to their ignorance. The article also explains how the new pension scheme could create huge wealth.
The report gives as an example, the case of an employee who joins the Central Government employment as a Upper Division Clerk(UDC) in 2014 and retires after 35 years service, in 2049. The report gives a comparative study of how the pension fund grow each of these 35 years. The study also assumes a regular dearness allowance of 6% every six months, and an annual increment of 3%.
The study also assumes that, at an interval of 10 years, the employee gets 3 promotions during his service tenure. Most importantly, it is assumed that matching the employee’s contribution, the Government’s contribution too would witness an 8.7% increase per annum.
At the time of retirement, the employee is likely to get Rs. 2,87,26,201, which is split into two shares – 40% and 60%, which amounts to Rs. 1,14,90,481, and Rs. 1,72,35,720, respectively. 60% of the lumpsum pension wealth is given at the time of retirement. The remaining 40% is invested in an annuity scheme.
It is stated that the monthly pension will be a minimum Rs. 83,306. In addition to this, at the age of 70, the employee gets the remaining 40% back. The article strongly claims that this money could be the gift that the person leaves behind for his future generation.
The article’s highlight feature is the claim that if the Pay Commission recommendations are taken into account, the amount could be much higher and that the UDC could get as much as Rs. 5 crores at the time of retirement.
According to the old Govt pension scheme, the employee’s monthly pension amount would be Rs. 1,00,934, and after his demise, his spouse would get Rs. 10,317 plus Dearness Allowance. After his/her death, there are no more benefits for the family.
The article is indirectly stating that the absence of gratuity and other such benefits is not a huge issue. According to the old Govt pension scheme, at the time of retirement, the employee would make only Rs. 38,32,550, which is Gratuity (16.5 months) + EL Encashment + Commutation.
While discussing the General Provident Fund (GPF), the article assumes that since nobody leaves anything much in this fund, its overall impact on the total pension fund would be minimal.
The writer concludes his article by declaring that those who oppose the new pension scheme lack intelligence.
Source: 7thpaycommissionnews.in
1 comments:
Hi guys,
I agree with the author of the article ‘’NPS is far beneficial than Government Pension’’ for the following reasons:
1. One thing every one forget is under NPS scheme the government servant gets huge amount on retirement which is many times more than what a government servant under old pension scheme gets as per the comparison shown in the article' . Whatever be the salary increase or inflation factor after 35 years, but the proportion of variation between the retirement benefits of old defined pension scheme and the corpus in new pension scheme shall grow at same level because the mathematical principal can never get changed.
2. With this money a government servant can even acquire a residential property for his dependants which gets appreciated for generations to come and as well comfortably live on interest on the other 40% invested in annuity in Life Insurance etc from where the government servant, his spouse and parents can get pension till death . Thereafter the 40% annuity amount can be withdrawn fully by the children and the blood relations of the government servant if there are no children left. This will also be of immense help to the dependants in addition to a residential property left behind by the government servant..
3. Whereas with the very little retirement benefits paid in cash to government servant under old defined pension scheme he cannot think of acquiring a property. He has to depend on monthly pension which comes to an end after death and there afterwards no financial security available for the dependents.
4. One should know why a government servant under old pension scheme opts for commutation of 40% of basic pay for 8.154 years and is ready to take less pension for 15 years thus permanently losing his 40% of basic pension amount for almost 7 years towards interest adjusted against commutation of pension for 8.154 years.
Because having more money has its own advantage and is liked by all the government servants than depending on more monthly pension. If there is a provision for 100% commutation of basic pay, I am quite sure every one will be ready to opt for it. Even if government give option for Golden Hand Shake Scheme, more than 90% of government servants under old pension scheme may prefer it.
DEVENDAR PRASAD
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