Contributions by Government Employees in National Pension System (NPS): Key Guidelines

The Ministry of Personnel, Public Grievances and Pensions has released an important update regarding contributions to the National Pension System (NPS) for Central Government employees covered under NPS. This update emphasizes compliance with the Central Civil Services (Implementation of National Pension System) Rules, 2021 and provides specific guidelines regarding contributions, suspension, deputation, probation, and more. Here are the major points explained in an easy-to-read manner.

Also read: Government Contribution to National Pension System (NPS) for Central Employees: Key Highlights

Defined Contribution Basis for NPS

According to Rule 6 of the Central Civil Services (Implementation of National Pension System) Rules, 2021, the NPS operates on a defined contribution basis. Under this rule:

• Government employees are required to contribute 10% of their emoluments towards NPS every month. This percentage is subject to changes as notified by the Government.
• The contribution amount will be rounded off to the next higher rupee.

Contribution During Suspension

During suspension, employees may opt to make contributions towards NPS. However, if the suspension period is later treated as duty or leave eligible for salary, the contribution is calculated based on the emoluments entitled during that period. Additionally:

• Any difference between contributions made during suspension and the amount payable will be credited to the subscriber’s Individual Pension Account, including applicable interest.
• The interest rate will be as specified by the Government, following the same rate used for Public Provident Fund deposits.

Contribution During Absence or Deputation

• No contributions will be made during periods of absence where no salary or leave salary is payable.
• Employees transferred on deputation to departments or organizations under the Central or State Government are required to continue their contributions to NPS in the same manner.

Contribution During Probation or Foreign Service

• During probation, employees must continue to contribute towards NPS.
• Contributions during foreign service, including deputation to international organizations like the United Nations or the International Monetary Fund, must be made in accordance with instructions issued by the Government and the Pension Fund Regulatory and Development Authority (PFRDA).

Deduction Process for Contributions

The Drawing and Disbursing Officer (DDO) is responsible for deducting contributions from employee salaries and sending the details to the Pay and Accounts Officer or Cheque Drawing and Disbursing Officer by the 20th day of each month.

Further actions include:

• The Pay and Accounts Officer or equivalent will generate a Subscription Contribution File and a Transaction ID by the 25th day of each month.
• The contribution must be remitted to the Trustee Bank by the last working day of each month. For the month of March, contributions are remitted on the first working day of April.
• Any delay in crediting contributions due to factors beyond the subscriber’s control will result in an interest being credited for the delayed period.

Request for Strict Compliance

The Department of Pension and Pensioners’ Welfare has requested all Ministries and Departments to ensure these provisions are strictly followed. This information must be brought to the attention of personnel dealing with NPS matters for effective implementation.

Conclusion

These new guidelines aim to bring clarity and consistency to how contributions under the National Pension System are managed for Central Government employees. Compliance with these rules is crucial for ensuring the correct handling of contributions during various employment situations, such as suspension, deputation, or probation.

Also read: Government Contribution to National Pension System (NPS) for Central Employees: Key Highlights

Check out the Original OM for complete instructions: