Good news for central government employees! The cabinet has raised the government’s matching contribution to the National Pension Scheme (NPS) to 14 per cent of the basic salary as against 10 per cent earlier, according to official sources. Currently, both the government and employees contribute 10% of an employee’s salary to the NPS scheme. This latest move by the Narendra Modi government is expected to benefit over 3 million central government employees. The latest changes in the NPS scheme were recommended by a government-appointed committee. Other than this, the Cabinet announced A couple of decisions on Thursday.
Five things you need to know about the Cabinet meeting on Thursday
1. In a major development, central government employees are allowed to withdraw up to 60 per cent of their NPS corpus at the time of retirement. At present, employees can withdraw up to 40 per cent of their NPS retirement fund. The mandatory annuity corpus will be 40 per cent of the retirement fund.
2. While the Cabinet hiked the government’s contribution to the NPS scheme, the minimum employee contribution remains unchanged at 10 per cent.
3. If the government employee transfers the entire accumulated fund in the NPS scheme to an annuity, his/her pension will be more than 50 per cent of the last drawn salary, according to sources.
4. The date of notification is yet to be decided. According to a news agency, amendments to the NPS scheme will come into effect from April 1.
5. The government has also proposed to provide tax breaks for the employee contribution to NPS, according to sources.