NPS is not better than Central Government Employees Pension

NPS is not better than Central Government Employees Pension – No DA increase for Pension under NPS – Provision has to be made by employee from the cash in hand on retirement to get pension equivalent to Government Pension

Paliyam, a junior member in GConnect Discussion Board (Click here to view his post in GConnect Discussion Board) has given his views on the guest article recently published in GConnect with regard to NPS which is titled as “NPS is far beneficial than Government Pension”

Click here to read the previous guest article on NPS titled as NPS is far beneficial than Government Pension

Paliyam Says

“Read an article saying NPS is better than Old Pension. Even though the author has taken pain in doing the calculation, I feel he has forgotten that the basic will change with pay commissions.

I have given here the calculations for the following”

NPS:

Cash in hand on retirement, Balance in Annuity, Leave Encashment amount, Total in Hand, and Pension to be received per month.

Central Government Employees Pension:

Gratuity, Leave Encashment amount, Commutation, Total in hand and Pension to be received per month.

(Same pay in pay band as on 2014 that was taken in the earlier article on NPS (Click here)

YEAR	DA	PAY+GP	DA	TOTAL	NPS	YEARLY	INTEREST	NPS-Wealth
2014	107	9910	10604	20514	4103	49236	2320	51,556
2015	119	10210	12150	22360	4472	53664	7008	112,228
2016	131	10520	13781	24301	4860	58320	12505	183,052
2017 7CPC – DA MERGED	0	24301	0	24301	4860	58320	18667	260,039
2018	12	25030	3004	28034	5607	67284	25786	353,109
2019	24	25780	6187	31967	6393	76716	34326	464,151
2020	36	26550	9558	36108	7222	86664	44454	595,269
2021	48	27350	13128	40478	8096	97152	56355	748,776
2022	60	28170	16902	45072	9014	108168	70227	927,171
2023	72	29020	20894	49914	9983	119796	86294	1,133,261
2024	84	31630	26569	58199	11640	139680	105159	1,378,100
2025	96	32580	31277	63857	12771	153252	127098	1,658,450
2026	108	33560	36245	69805	13961	167532	152159	1,978,141
2027 8CPC – DA MERGED	0	69805	0	69805	13961	167532	179972	2,325,645
2028	12	71900	8628	80528	16106	193272	211415	2,730,332
2029	24	74060	17774	91834	18367	220404	247898	3,198,634
2030	36	76280	27461	103741	20748	248976	289983	3,737,593
2031	48	78570	37714	116284	23257	279084	338288	4,354,964
2032	60	80930	48558	129488	25898	310776	393488	5,059,229
2033	72	83360	60019	143379	28676	344112	456326	5,859,667
2034	84	90860	76322	167182	33436	401232	528649	6,789,548
2035	96	93590	89846	183436	36687	440244	611382	7,841,174
2036	108	96400	104112	200512	40102	481224	704800	9,027,198
2037 9CPC – DA MERGED	0	200512	0	200512	40102	481224	807984	10,316,406
2038	12	206530	24784	231314	46263	555156	923620	11,795,181
2039	24	212730	51055	263785	52757	633084	1055936	13,484,201
2040	36	219110	78880	297990	59598	715176	1206739	15,406,116
2041	48	225680	108326	334006	66801	801612	1378008	17,585,735
2042	60	232450	139470	371920	74384	892608	1571912	20,050,255
2043	72	239420	172382	411802	82360	988320	1790823	22,829,398
2044	84	260970	219215	480185	96037	1152444	2040323	26,022,165
2045	96	268800	258048	526848	105370	1264440	2323357	29,609,962
2046	108	276860	299009	575869	115174	1382088	2641025	33,633,074
2047	120	285170	342204	627374	125475	1505700	2996845	38,135,620
2048	132	293730	387724	681454	136291	1635492	3394667	43,165,779
2049	144	302540	435658	738198	147640	1771680	3838692	48,776,151

Estimation of Amount receivable by an employee who is covered by NPS:

Cash in hand on retirement (60% of Total NPS Wealth)	2,92,65,690
Leave Encashment Amount (Rs.7,38,198 x 10)	73,81,976
Total in Hand	3,66,47,666
Balance in Annuity (40% of Total NPS Wealth)	1,95,10,460
Monthly Pension (Annuity for 40 Years @ 8.7 %)	1,46,005

Estimation of Pension and Retirement Benefits applicable for an employee who is eligible to receive Central Government Pension:

Gratuity (17 times of Total Pay of Rs.7,38,198 on Retirement) limited to	10,00,000
Leave Encashment Amount (Rs.7,38,198 x 10)	73,81,976
Monthly Commutation 40% of (50% of Final Basic Pay of Rs. 302540)	60,508
Total Commuted Amount	59,49,631
Total in Hand	1,43,31,607
Monthly Pension (50% of Final Basic Pay of Rs. 302540)-Monthly Commutation	3,08,591

Comparison of Monthly Pension and Cash in hand on retirement in the case of NPS and Government Pension

	Govt Pension	NPS
Total Cash in hand on Retirement	1,43,31,607	3,66,47,666
Monthly Pension (in the case of NPS pension to be received from 40% of NPS wealth which has to be deposited as Annuity)	3,08,591	1,46,005
Additional Pension required to in the case of NPS to get pension equivalent to government Pension		1,62,586
Additional Annuity (principal) required to get amount equivalent to government pension		2,23,16,060
Remaining cash in hand in the case of NPS after making provision for Additional Pension		1,43,31,606
No DA in the case of Pension under NPS. In the case of Government Pension, increase in DA would be applicable