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NEW PENSION SCHEME

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Government of India have introduced a new Defined Contribution Pension Scheme replacing the existing system of Defined Pension System vide Government of India, Ministry of Finance, Department of Economic Affairs Notification dated 22.12.2003. The New Pension Scheme comes into operation with effect from 01.01.2004 and is applicable to all new entrants to Central Government service, except to Armed Forces, joining Government service on or after 01.01.2004.

The system would be mandatory for all new recruits to the Central Government service from 01.01.2004 (except the Armed Forces). The monthly contribution would be 10 per cent of the Banned Pay, Grade Pay and DA to be paid by the employee and matched by the Central Government.

However, there will be no contribution from the Government in respect of individuals who are not Government employees. The contribution and investment returns would be deposited in a non-withdrawable pension Tier-1 account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the Central Government service.

In addition to the above pension account, each individual may also have a voluntary Tier-II withdrawable account at his option. This options is given as GPF will be withdrawn for new recruits in Central Government service. Government will make no contribution into this account. These assets would be managed through exactly the above procedures. However, the employee would be free to withdraw part of all of the second tier of his money any time. This withdrawable account does not constitute  pension investment, and would attract no special tax treatment.

Individual can normally exit at or after age 60 years for Tier-I of the pension system. At exit, the individual would be mandatorily required to invest 40 per cent of pension wealth to purchase an annuity (from an IRDA-regulated life insurance company). In case of Government employees, the annuity should provide for pension for the lifetime of the employee and his dependent parents and  his spouse  at the time of retirement. The individual would receive a lump-sum of the remaining pension   wealth, which he would be free to utilize in any manner. Individuals would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory  annuitization would be 80% of the pension wealth.

In order to implement  the Scheme, there will be a Central Record Keeping Agency and several  Pension  Fund Managers to offer three categories of Schemes to Government servants, viz., options A,B and C based  on  the ratio  of  investment  in fixed  income instruments and equities. An independent Pension Fund Regulatory and Development  Authority (PFRDA) will  regulate  and develop  the pension  market.

Subscription of the NPS subscribers will be invested in the default Schemes termed as ‘Scheme I’ of various Pension Fund Managers (SBI Pension funds Pvt. Ltd, UTI Retirement Solutions Limited & LIC Pension Fund Limited). Each PFM will invest 85% of the contributions received by it in fixed income instruments and 15% in equity and equity related instruments. Hence, in the application form for PRAN, the details of the schemes need not be mentioned. 

The DDOs/CDDOs will  prepare  separate  Pay Bill  Registers in respect of the  Government  servants joining  Government service  on or after 1.1.2004. The DDOs/CDDOs will  have to prepare separate  pay bills in respect of these Government  servants. Whenever  any  Government  servant is transferred  from one office to another either within the same accounting  circle  or to another  accounting circle, the DDO  should clearly indicate in the LPC of the individual the month up  to which Government servant’s contribution and Government’s contribution  have been recovered.

The Govt. of India  established Pension Fund  Regulatory  and Development  Authority(PFRDA) on 10th October 2003  to develop  and regulate  the Pension  Funds under the  NPS. PFRDA  has appointed  National Securities Depository  Limited (NSDL) as the Central  Record Keeping Agency(CRA) to  maintain the records of  contribution  and its deployment  in various  pension fund  scheme  for the employees. NSDL  is setting up a CRA system  for this purpose. The  record of the contribution  of each employee  will be kept  in an account known  as Permanent Retirement Account which will be identified by a Permanent Retirement Account Number(PRAN).

All Cs of  F& A(Fys.) under Factory Organization will function as Principal Accounts Officer(PrAO) in the CRA system for the  purpose  of the New Pension Scheme. All Br. Accounts  Office will function  as Pay  & Accounts Office (PAOs) and all Ordnance Factories, Inspection Organizations, Dte. Of Standardization, RTIs etc. will function as Drawing  and Disbursing Officer(DDO) in the CRA system. The P C of A(Fys.) , Cs of F & A(Fys.) and Br. A.Os will also be the DDOs for the DAD staff covered under the NPS.

The Principal Accounts Offices, Pay and Accounts Offices, Drawing and Disbursing Officer and Subscriber need to be registered under the NSDL system.

Principal Controller Office was  declared  as Nodal Office for all the 40 Branch Accounts Offices in factory  organization  alongwith AN-Pay, Pay Section  and  Pay ‘O’ Section of Main Office.
                Subsequently HQrs. Office  declare  C of F &A(Fys.)  of the Group  as Pr.AO  for the  Branch Accounts Offices  under the  group  except AO, OF Nalanda which  comes  under no group  at present.

Once  the registration of  Pr. AO  is completed  the process  of registration of PAOs, DDOs and Subscribers will start.

PC of A(Fys.)  and  All Group Controllers  will  submit  form  N1  to NSDL  for registration.  NSDL will allot Pr. AO registration no. and send I-PIN to PC of A(Fys.) and  Group Controllers concerned to access NPSCAN/NSDL system.

After  Pr. AO registration has been completed Branch Accounts Offices will forward the  form N2 to  NSDL for registration as a PAO through respective Pr.AO.  NSDL will send PAO registration number to Branch Accounts Offices and allot one single T-PIN and two user Ids and  two I-PIN.  Branch Accounts Office will log into NPSCAN.

After PAO registration the Branch Accounts Offices will forward DDO Registration form N3 to NSDL for Factory Management and forward S1 form for allotment of PRAN of the subscribers newly appointed after 01.01.2004 received from Factory Management.

Immediately on joining Govt. Service, the subscriber should fill the application for Allotment of PRAN (in duplicate) and submit it to DDO.

DDO should ensure that the duly filled applications are received from the subscribers within seven days of joining and forward it to the concerned PAO after necessary attestation. In order to enable the PAO to upload subscriber contribution record, it is necessary to ensure that Registration Forms are forwarded to CRA through the CRA-FCs for allotment of PRAN.

Subscribers who have been successfully registered at CRA will be allotted a 12 digit Permanent Retirement Account Number (PRAN). PRAN will be a unique identification number of the subscriber.

CRA shall print and despatch to the PAO, the PRAN Kit for the newly registered subscribers. The PRAN Kit will contain PRAN Card, Subscriber Master details, T-Pin and I-Pin and an Information Leaflet on CRA.

After completion of the Registration process the PAO will upload the NPS data  to the NPSCAN of  NSDL and  will deposit the  contribution amount into Trustee Bank positively on the date of  regular payment.

At the end of the financial year NSDL will issue  the IPA (Individual Pension Account) Statement to the concerned individual whose PRAN has been allotted by NSDL.

 

OFFICE OF THE PRINCIPAL CONTROLLER OF ACCOUNTS(FYS)
10-A, S K BOSE ROAD. KOLKATA – 700001

NPS Section

Questionnaire regarding New Pension Scheme :-

1.What is New Pension Scheme ?

A new defined contribution pension system in place of existing defined benefit system, applicable for fresh entrants to Central Government Service from 01-01-2004.

2. When it is started & for whom ?

The system is mandatory for all new recruits to the Central Government Service from  01-01-2004 except the Armed Forces.

3.What is the quantum of the Contribution ?

The monthly contribution to be deducted amounts to 10% of the Basic Pay, Grade Pay and DA to be paid by the employee & matched by the Central Government.

4.What will be the amount of Government Contribution?

It is equal to the individual’s subscription.

5.Is there any maximum limit of the subscription for an individual?

The maximum limit is 10%.

6.When does the NPS subscription start?

Recoveries towards Tier-I contribution start from the salary of the month following the month in which the Government Servant has joined the service. Therefore, no recovery is to be effected for the month of joining.

7.Whether GPF will be available to the subscribers of the NPS ?

The existing provisions of defined benefit pension & GPF would not be available to the new recruits in the Central Government service covered under NPS.

8.How many Tiers are there in the NPS ?

There are two Tiers in the NPS. Tier-I is compulsory & Tier-II is voluntary. Tier-II is a withdrawable account at subscriber’s option. The employee would be free to withdraw part or all of the Tier-II of his money any time. Government will not make any contribution to Tier-II account. Cont…….

9.When can the subscriber of NPS exit from the system ?

Individual can exit at the date of Superannuation i.e. at the age of 60 years.

10.What amount will be paid to the subscriber of the NPS at the time of retirement?

At exit, the individual would be mandatorily required to invest 40% of the pension wealth to purchase an annuity and balance pension wealth will be paid to him. Individual would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitization would be 80% of the pension wealth.

11.What is the Architecture of the New Pension Scheme ?

In order to implement the scheme there is a Central Record Keeping Agency (National Securities Depository Limited) & several Pension Fund  Managers. At this stage there are three PFMs viz. SBI Pension Funds Pvt.Ltd., UTI Retirement Solutions Ltd. & LIC Pension Fund Ltd.

An independent Pension Fund Regulatory & Development Authority (PFRDA) is to regulate and develop the pension market.

12.How & when an employee can contribute to Tier-II of the Scheme ?

An individual can open a Tier-II account with a Nationalized Bank and the contribution will be deposited to the Bank by the subscriber concerned. As Government will not make any contribution to Tier-II account no recoveries will be made from the salaries of the employees on this account.

13.How an employee be a member of the NPS ?

Immediately on joining Government service, the Government servant will be required to provide particulars such as his name, designation, scale of pay, date of birth etc. in the prescribed form viz. S-I form prescribed by the NSDL, Mumbai, and submitted to his DDO. The S-I form shall be submitted by the DDO to his Pay & Accounts Officer. The PAO will forward the S-I form to the NSDL, Mumbai. On receipt of the form, NSDL will allot 12 digit PRAN (Permanent Retirement Account Number) to the subscribers and a PRAN kit will also be forwarded to the subscribers by the NSDL.

14.How will the subscription recovered from the subscribers be remitted to the concerned authorities ?

The subscription of the NPS subscribers will be recovered from his regular pay by the PAO concerned. The PAO will upload the NPS data to the NPSCAN of NSDL & a cheque of the same amount will be remitted to the Trustee Bank appointed by the PFRDA viz. Bank of India after the data has been uploaded to the NPSCAN.

15.What is the investment plan of the NPS ?

The contribution towards pension will be invested in the default Schemes termed as ‘Scheme I’ of various Pension Fund Managers (SBI Pension Funds Pvt. Ltd., UTI Retirement Solutions Ltd. & LIC Pension Fund Ltd.) presently in the proportion of  33%, 32% & 35%, respectively. Each PFM will invest 85% of the contributions received by it in fixed income instruments and 15% in equity & equity related instruments.

16.Whether the individual is entitled for leave encashment after retirement ?

The benefit of encashment of leave salary is not a part of the retirement benefits admissible under Central Civil Services (Pension) Rules, 1972. It is payable in terms of CCS (Leave) Rules which will continue to be applicable to the Government Employees who join the Government Service on or after 01-01-2004. Therefore, the benefit of encashment of leave salary payable to the Government Employees/ to their families on account of retirement/death will be admissible.

17.What happens if an employee gets transferred during the month ? Which office will make deduction of contributions ?

As in the case of other recoveries, the recovery of contributions towards NPS for the full month (both individual & Government) will be made by the office who will draw salary for the maximum period.

18.Who will pay additional relief on death/disability of Government Servants covered by NPS ?

Additional relief on death/disability of Defence Civilians Personnel covered by the New Defined Contribution System (NPS) will be dealt with by PCDA (P) Allahabad.

19.What is the procedure for recovery of NPS contribution in the case of EOL/HPL ?

The subscription of the employee and the Government would be restricted  proportionately to the leave salary in case of HPL cases.

In case of EOL since no salary is drawn during this period, no contribution either from employee or from Government would be payable.

20.What is the procedure for recovery of NPS contribution in the case of Suspension cases?

Every subscriber shall subscribe monthly to the NPS when on duty or Foreign Service but not during a period of Suspension.

On exoneration or otherwise, the amount of subscription shall be the emoluments to which he was entitled on the first day after his return to duty.

If a subscriber elect to pay arrears of subscriptions in respect of a period of suspension, the emoluments or portion of emoluments which may be allowed for that period on re-instatement, shall deemed to be emoluments drawn on duty.

21.What is the Time Line of regular upload and Fund Transfer ?

The responsibility for timely remittance to the Trustee Bank is that of the PAO in respect of all the subscribers under his domain. After pre-audit of pay bill the PAO should upload the subscriber contribution details on NPSCAN and obtain the transaction ID by the 25th of each month.

If the remittance is through RTGS/NEFT then it may be ensured that the NPS contributions (Govt. & Employees) should be credited to the account of the Trustee Bank by the PAO on the last working day of each month for that salary month. If the remittance is through a cheque payable to the Trustee Bank, then  the same should be delivered to the local branch of the Trustee Bank by the PAO by the 26th of each month marked NPB for the last working day of the month.

Source: Principal Controller of Accounts (Ordnance Factories), Kolkata , Last Updated on 13-12-2017