7th pay Commission: Pressure pays off as government announces enhanced pension, puts more money in staff pockets

ZeeBiz WebTeam | Dec 11, 2018, 06:58 AM IST

7th pay commission: Sustained pressure to raise salaries exerted by central government employees has brought a very good news on pensions. The NDA government has ordered increase in its contribution for its employees covered under the National Pension System to 14 per cent of the basic salary from the existing 10 per cent, revealed Finance Minister Arun Jaitley Monday. 


The decision to hike NPS contribution was taken by the Union Cabinet in its meeting on December 6, but official notification was released today. The new entrants to the central government service on or after January 1, 2004 are covered under the National Pension System (NPS). Image source: PTI


What is more, the minimum employee contribution to NPS will continue to remain 10 per cent. As many as 18 lakh central government employees will benefit through an increase in the eventual accumulated corpus, greater pension payouts after retirement. This will also ensure no additional burden that will augment old-age security at a time when life expectancy is rising. Image source: Reuters


Government revealed that the impact on the exchequer was estimated to be around Rs 2,840 crore for the financial year 2019-20, and will be in the nature of a recurring expenditure. Image source: Reuters


"The financial implications on account of provisions regarding payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012 would be in addition to the (said) amount," a government statement said. Image source: Reuters


7th Pay Commission had made several recommendations in 2015, including setting up of a Committee of Secretaries for streamlining the implementation of the pension system. It was later set up in 2016. Image source: PTI



"The committee submitted its report in the year 2018. Accordingly, based on the recommendations, draft cabinet note was placed before the cabinet for its approval," the statement said. Image source: PTI