In 2019, several changes were introduced in National Pension System (NPS) for the Central Government employees. Moreover, this was made effective through a Notification. Which dated to 31-01- 2019.Also, it was issued by the Department of Financial Services. As well as Ministry of Finance. After which the PFRDA had issued a new set of guidelines.

However, it is not clear whether they are applicable to State Governments, State Autonomous Bodies (SAB) & Central Autonomous Bodies (CAB) employees.

The Pension Fund Regulatory & Development Authority (PFRDA) issued a circular. It said that it has been brought to their notice. Some of the State Governments, SABs and CABs have either partially or wholly adopted the Notification F. No.1/3/2016-PR. Which dates to 31-01-2019 issued by Financial Authorities.However, others have been seeking clarifications on the same.

Firstly, a new PFRDA circular on 1st June, 2020 clarifies the guidelines. It talks about the choice of Pension Funds and Investment Pattern. In Tier I of NPS for the Government employed with State Governments, SABs and CABs.

Some of the NPS rules for central government employees are:

  • Enhancement in Government Co- Contribution

The monthly contribution of 10 % of the Basic Pay plus Dearness Allowance (DA) is to be paid. By the employee.Since, 14% of the Basic Pay plus DA by the Central Government.

  • Choice of Pension Fund and Investment Pattern in Tier-1 of NPS as under:

  • 1)  Choice of Pension Fund: The Government subscriber is allowed to choose any one of the pension funds. Since, it includes private sector pension funds. Also, they can change their option once in a year. The provision of a combination of Public Sector Pension Funds will be available. As a default option for existing as well as new Government subscriber.
  • 2)  Choice of Investment Pattern:   The following options for investment choices shall be offered to Government subscribers
    • (i) Default Scheme: The existing scheme in which funds are allocated. Among three Public Sector undertaking fund managers shall continue as default scheme for both existing and new subscribers.
    • (ii) Scheme G: Employees who prefer returns with comparatively less amount of risk. Shall be given an option to invest 100% of the funds in Govt. securities. Lastly, (Scheme G) under penal act will be under option. 
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