Govt. raised its contribution in National Pension System to 14% from 10%


Union Cabinet has decided to raise contribution of Central Government to National Pension System (NPS) corpus of its employees from 10% to 14%. This will increase in eventual accumulated corpus of all central government employees covered by NPS. There are 18 lakh central government employees at present.

  • The change in contribution was recommended by Committee of Secretaries (CoS), thus resulting in a total corpus of 24% from the previous 20%.
  • Out of the 24%, 14 per cent would be contributed by the government and the remaining 10 per cent by the employees.
  • Furthermore, he also made entire withdrawal amount tax free at the time of retirement by enhancing the tax exemption limit for lump sum withdrawal on exit to 60%.
  • At present, 40 per cent of the total accumulated corpus utilised for purchase of annuity is already tax exempted, and of 60 per cent of the accumulated corpus withdrawn by the NPS subscriber at the time of retirement, 40 per cent is tax exempt and balance 20 per cent is taxable.
  • This would benefit 18 lakh employees.
  • Apart from this, 3-4 investment options have been made available due to these changes. They are: Investment up to 25 per cent of the corpus in equity, Investment up to 50 per cent of fund could be invested in equity and Investing 100 per cent in government securities.
  • Contribution by the government employees under Tier-II of NPS will now be covered under Section 80 C for deduction up to Rs 1.50 lakh.