NATIONAL UNION OF POSTAL EMPLOYEES GROUP - C, NATIONAL
UNION OF POSTAL EMPLOYEES POSTMAN & GROUP - D, NATIONAL
UNION OF GRAMEEN DAK SEVAKS, GUNTUR DIVISION (AP)
Thursday, 17 December 2015
THURSDAY, DECEMBER 17, 2015
DIFFERENCE BETWEEN NATIONAL PENSION SYSTEM (NPS) AND ATAL PENSION YOJANA (APY)
Recently Central Government launched one more pension scheme called Atal Pension Yojana. So what is the difference between existing National Pension System (NPS) and Atal Pension Yojana (APY)?
DIFFERENCE OF NPS AND APY
Let us point one by one.
1) Age of joining–
The age for joining the National Pension System (NPS) is 18-60 years. Whereas for Atal Pension Yojana (APY) the age eligibility is 18-40 years.
2) Who can join?
All Indian citizens can join NPS (whether they are resident or non-resident). Whereas for APY only Resident Indians are allowed to join.
3) Pension Slabs–
In case of NPS, there is no such standard pension slab. However, in APY the pension slabs are fixed like Rs 1,000/-, 2,000/-, 3,000/-, 4,000 and 5,000/- per month.
4) Types of Accounts–
In case of NPS, you have two types of accounts. One is Tier I and Tier II. Whereas, in case of APY there is no such differentiation.
5) Minimum and Maximum Contributions–
In case of NPS
For Tier I
You must contribute a minimum of Rs. 6,000 per annum. The minimum of Rs. 500 per contribution is required. In addition, you must contribute minimum 4 contributions per year. There is no maximum limit.
For Tier II
You have to contribute the minimum of Rs. 1,000 contribution at a time of account opening.
Subsequently, you have to contribute a minimum of Rs. 250 per subsequent contributions. Minimum Balance of Rs. 2,000 be maintained at the end of Financial Year (April-March). There is no maximum limit.
In case of APY
In case of APY, the minimum and range depends on the age. For example, the minimum monthly contribution for 18 years of age person is Rs.42 to get Rs.1,000 monthly pension. At the same time, the minimum monthly contribution for 40 years age person is Rs.291.
There is no upper limit of investment set for both NPS Tier I and Tier II Account. However, in case of APY, the maximum limit for 18 years of age is 210 to get a monthly pension of Rs.5, 000. At the same time, the maximum monthly contribution for 40 years of age person is Rs.1, 454.
6) Premature Withdrawal–
You can withdraw at age 60, 40% of accumulated amount be used to buy annuities from an IRDA approved insurance company, A phased withdrawal is also allowed, but the lump sum balance should be withdrawn before the age of 70 years.
To exit before 60 years age, only 20% of the lump sum to be cash withdrawal, 80% to be used to buy annuities from an IRDA approved insurance company.
On death before the age of 60, the nominee receives a lump sum.
There is no restriction and you can withdraw it at any point of time.
Once you attain the age of 60 years, then you have no option but to utilize 100% of the accumulated amount for a pension. No partial withdrawal is permitted.
You cannot withdraw in APY. Withdrawal is available only in case death or terminal diseases.
7) Choice of investment–
In case of NPS, you have primarily two choices. One is Auto Choice where the asset allocation among equity, Corporate Bonds, and Government Bonds are adjusted automatically based on age of a subscriber. Another is Active Choice, where you select your asset allocation (subject to the maximum of 50% in equity). In addition, you have a freedom to choose fund managers to manage your money.
In case of APY, there are no such options.
8) Tax Benefit–
The tax benefit in NPS will be available only in case of Tier I account, but not for Tier II account.
Employer contribution to the NPS on behalf of an employee will get a deduction from his income (i.e. employer’s income) an amount equivalent to the amount contributed or 10% of BASIC SALARY + DA of the employee, whichever is less. (Section 36 (1) (iv a) of the Income Tax Act 1961).
Employer’s contribution to NPS on behalf of the employee is treated as perquisite in the hands of the employees. However, it is deductible u/s 80CCD (2) of the IT Act, 1961 to the extent of 10% of basic salary. This deduction is over and above the limit of Rs.1.5 lac u/s 80 CCD (1). This will lessen the tax burden of the employee to the extent of amount deductible u/s80CCD (2) of the IT Act, 1961.
Contribution by an individual employee is eligible for a deduction from Income under Section 80CCD (1) of the IT Act 1961 up to Rs 1.5 Lakhs. However, investments under Section 80C Section 80CCC and 80CCD(1) should not exceed Rs.1.5 lakhs per assessment year to claim the deduction.
An additional tax benefit of Rs.50,000/- under section 80CCD (1B) per year (applicable from FY 2015-16/AY 2016-17) for NPS investments.
There are no such tax benefits of investing in APY.
While receiving pension–
Both NPS and APY pension is treated as taxable income under the head of a salary.
9) Where to open an Account?
In case of NPS, you have to open the account by visiting the nearest Point of Presence (POP) branch to open the account. This account could also be opened online through CAMS online, India Post etc.
In case of APY, you have to approach the bank/Post Office where your savings bank account is held.
10) Nomination facility-
In case of NPS, the nomination is not mandatory. However, you can nominate a maximum of 3 members. The total sum sharing of all these nominees must be equal to 100%.
In case of APY, the nomination is mandatory. You have to provide nominee details while opening the account.
11) How much return you can expect?
In case of NPS, returns are not guaranteed. It depends on the performance of the fund. Whereas, in case of APY, returns not disclosed. But set the fixed monthly pension.
12) Government contribution–
In case of NPS, the Central Government and State Government employee’s contribution are fixed at 10% of the Basic and Dearness Allowance (DA) per month which is matched by an employer contribution of the same amount. For the rest of the people, there is no Government contribution.
In APY, the Government will also contribute 50% of the total contribution or Rs. 1,000/- per annum, whichever is lower, to the eligible APY account holders who join the scheme during the period 1st June, 2015 to 31st December, 2015. The Government contribution will be for 5 years from FY 2015-16 to 2019-20. This contribution to APY will not be applicable to those members who are-
Income Tax Payers.
Employees’ Provident Fund & Miscellaneous Provision Act, 1952.
The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948.
Assam Tea PlantationProvident Fund and Miscellaneous Provision, 1955.
Seamens’ Provident Fund Act, 1966.
Jammu Kashmir Employees’ Provident Fund & Miscellaneous Provision Act, 1961.
Any other statutory social security scheme.
13) Who manages?
NPS is managed by PFRDA. The APY scheme is administered by the PFRDA/Government.
14) Permanent Account Number–
In case of NPS, you will get the unique Permanent Retirement Number (PRAN). By quoting this PRAN, you can operate NPS sitting across India. There is no such facility in APY.
15) How many accounts, one can open?
For both NPS and APY an individual can open only ONE account.
R K Chaturvedi appointed JS in 7th CPC implementation cell
Senior IAS officer R K Chaturvedi has been appointed as Joint Secretary in seventh Central Pay Commission's implementation cell as part of mid-level bureaucratic reshuffle effected today by the government.
As many as five new Joint Secretaries, three non-IAS officers, have been appointed to different Central government ministries.
Chaturvedi, a 1987 batch IAS officer of Madhya Pradesh cadre, has been appointed to the post under Department of Expenditure. He is presently working as Resident Commissioner in Madhya Pradesh Bhawan here.
Chaturvedi will hold the charge for five years, an order issued by Department of Personnel and Training said.
IPS officer Praveen Vashista has been appointed as Joint Secretary in Home Ministry. The order of Vashista, a 1991 batch IPS officer of Bihar cadre, regarding his appointment as JS in Mines Ministry has been cancelled, it said.
Subhash Chandra, a 1988 batch Indian Forest Service officer, will be new JS in the Mines Ministry.
Meera Swarup, an Indian Audit and Account Service officer, has been appointed JS and Financial Adviser in Department of Expenditure.
Senior IAS officer Deepti Umashankar, Joint Secretary in Cabinet Secretariat, has been moved to a newly created JS-level post within the same office, the order said without mentioning the further details of the post.
7th CPC pay hike 14.29% is very depressing for the employees those were given 40% in 5th and 6th Pay Commission
7TH CENTRAL PAY COMMISSION’S RECOMMENDATIONS ARE DETRIMENTAL TO LARGE SECTION OF EMPLOYEES: Ajay Maken
The Chairman of Seventh Central Pay Commission Justice Ashok Kumar Mathur has since presented voluminous recommendation consisting of 875 pages to Hon’ble Finance Minister. When we go through the recommendations it appears that it anti low paid employees and failed to improve their financial condition, short of suggesting measures for better and encouraging working conditions for them. It is tilted towards higher level officers.
2.The following important issues on which recommendations are made show the negative approach of the commission towards low level employees, which may be due to anti employee actions ofthe present Government. After independence seven Pay Commissions have been constituted all by Congress or Congress led Governments. NDA Government during the year 2003 was in power but refused to constitute 6th Pay Commission in spite of recommendation of 5th CPC to constitute 6th Pay Commission on 1st Jan, 2003 so that its recommendations could be implemented wef 1st Jan, 2006. This proves beyond doubt that the present BJP Government too is not serious to improve working condition and in financial up gradation of majority of employees. Brief details of main recommendations are:-
Fitment: For fixation of pay effective from 1st Jan, 2016, fitment factor of 2.57 has been proposed for application uniformly for all the employees. It includes a factor of 2.25 is on account of Dearness Allowance neutralisation, assuming that DA would be 125 percent at the time of implementation of the new scale out of 2.57 of fitment formula recommended. The hike will only be 14.29 percent.
The enhancement of pay by 14.29% is very depressing for the employees in past after submission of 5th and 6th Pay Commissions report the minimum hike given was 40%.
(A) It has been our consistent demand to reduce gap between the lowest paid and the highest paid employees from 1:12, recommended by 6th CPC to 1:8 but instead of reducing the gap it has been further increased by the 7th Pay Commission to 1 to 14.
(B) As per para 5.1.27 of the report, “it is proposed that fitment factor of 2.57 is being applied uniformly for all employees.” Whereas at Table 5 : Pay Matrix (Civilian Employees) for level 1 to 5 it is 2.57 and in respect of remaining higher levels except level 13 it ranges between 2.62 to 2.81. It proves that senior officers have been favoured by the Commission in fitment process.
(C) 6th Pay Commission had recommended annual Increment between 3 to 4% of Pay plus Grade Pay whereas Seventh Pay Commission has restricted it to 3% only.
(D) The 7th Pay Commission has proposed to withhold annual increments of those employees who are not able to meet the benchmark either for MACP or regular promotion within first 20 years of service, under the given condition an employee will be left with no option but to leave the job and seek retirement.
(E) Recommendation to withdraw some benefits which employees are already availing:
(i) In the name of parity in the rank of Assistants, between the field staff and headquarter staff grade pay of Rs 4,600 of Asstts of CSS has been placed in the new pay matrix in Level 6, the level corresponds to pre-revised GP of Rs 4200. Similarly the corresponding posts in the Stenographers cadre willalso follow same parity and thus will be deprive of GP of 4600.
(ii) Non-functional selection scale with the GP of 4200 was granted to 30% Upper Division Clerks in CSS and Allied Offices, which is now being withdrawn at the cost of UDCs awaiting grant of NFSS.
(iii) At present two additional increments are granted at the time of promotion to Under Secy/PPS in CSS/CSSS it is suggested to abolish the benefit.
(F) Recommendation to abolish Allowances, reduce percentage, de-link benefit of DA:
(i) The quantum of percentage based allowances has been reduced, the 6th CPC had doubled it whereas 7th Pay Commission has suggested rationalisation by a factor of 0.8 (para 8.2.3). This will reduce present percentage based allowance for example House Rent Allowance which is at present 30, 20 and 10% in respect of Class X, Y and Z category of cities will come down to 24, 16 and 8% .In the same pattern percentage of other allowances will also be reduced.
(ii) All non-interest bearing Advances viz Festival etc have been abolished.
(ii)Motor Car, Motor Cycle/Scooter/Moped advances have been abolished.
(iii) 52 Allowances presently available to employees will discontinue.
(iv) Identities of 36 allowances have been abolished as separate and proposed to be subsumed with existing or newly introduced allowances.
(v) Transport Allowance which is at present linked with DA, with release of every additional instalment of Dearness Allowance, TA is also proportionally increases, this will be done away.
(G)Rates of contribution by various levels of employees towards insurance coverage have been exorbitantly increased, the details are:
Level of Employee Present Monthly Deduction Proposed Monthly Deduction
10 and above Rs 120/-Rs 5,000/-
6 to 9 Rs 60/-Rs 2,500/-
1 to 5 Rs 30/-Rs 1,500/-
(H) Process of Cadre Review has been made very difficult.
In short Central Government Employees are frustrated and disappointed with the major recommendations of the Commission. It is unfortunate that the employees, who were given 40% hike in their respective pay has now been recommended only 14.29%. This is unjust and humiliating for the beneficiaries.
We have decided to express our resentment and demand at least 40% hike in the pay of various categories of employees.
7th Pay Commission – Government may not accept all the recommendations of 7th pay commission
Reacting to news that the government may look to soften the financial impact of the recommendations of the 7th Pay Commission by pushing out some payments into future fiscal years, the panel’s chairman Justice Ashok Kumar Mathur said he wouldn’t be surprised with such a move and added that the practice existed even during implementation of previous pay commissions’ reports.
It is widely reported that the government may not implement all the recommendations of the Commission and that some payouts, such as house rent allowance, may pushed out beyond fiscal year 2017.
In an exclusive interview, Justice Mathur admitted that the cost of panel’s recommendations may exceed the forecast of about Rs 74,000 crore for the Union Budget and Rs 28,000 crore for the Railway Budget, and added that payments of allowance could result in higher payouts.
“But I am happy that the government may be intending to release salary and pension payments immediately [as per sources quoted by the CNBC-TV18 report],” he said, adding that he had had no communication with the government post submission of his report.
The Pay Commission, which issues recommendations for a payments hike for government employees once every 10 years, has in its 7th report sought a 16 percent hike pay, 138.71 percent hike in house rent allowance and a 26.63 percent hike in pension, resulting in an overall hike of 23.55 percent.
Sources say the government is looking to absorb payment hikes to the tune of Rs 50,000-60,000 crore next fiscal, when the commission’s report will have to be implemented, out of the Rs 74,000 crore projected by the panel.
Below is the transcript of AK Mathur’s interview with Shereen Bhan on CNBC-TV18.
Question – Let me start by asking you for your first comment on what we are picking up from sources within the government at this point in time. What top government officials seem to be suggesting to us is that payment for allowances may perhaps be staggered and at this point in time, the Pay Commission recommendations and the payout will be confined to the salary and the pension component and also suggesting that some of the perks of the Seventh Pay Commission as recommended are notional and may not be accepted by the government. How would you respond to this information?
Answer – I have no idea what recommendation they are going to respond and what not they are going to respond, but I am very happy if that is the attitude of the government, that they will immediately release the salary and the pension part, because about 46 lakh people will be benefitted by the pay hike and similarly the greater pay hike will be to the pensioners.
That constitutes almost 52 lakh people. So, I am very happy that they have decided to release that immediately. And they can consider of releasing the allowances after sometime looking to their financial position.
However, we have tried to make it that the recommendation should be well within the kitty of the government. But still we do not know how much of the actual burden will be on the exchequer. Only our rough estimate is about Rs 1,02,000 crore. But perhaps, on the calculation of the allowances, it might exceed a bit also.
Question – So, you are saying that on the basis of the allowance component, it may exceed the estimation and perhaps, the government then given the fiscal pressures at this point in time is well within its right to stagger the payment of the allowances. What has been the past precedent?
Answer – Past precedent has been government always delayed the payment of the allowances, payment of the recommendations in total. And the government do certain modifications, one way or the other and it depends upon the government that if their finances are well within the reach, then they can release forthwith or they can defer it for sometime also.
In the past also, the reports were always belated and sometimes, in the last Sixth Pay Commission, it took two years to implement them. But I am happy that they are going to implement the present Pay Commission’s recommendation which is given to them well within the time.
Government has sufficient time to react, they have to bring this Pay Commission’s recommendation with effect from January 1, 2016. We had given them a report in the early November. So, government has sufficient time to react on that.
Question – When you made that estimate of Rs 74,000 crore, that was the budgetary spend that you factored in as part of the Pay Commission, did you factor in the allowances as well?
Answer – We did of course, that is why we roughly estimate it to be Rs 1,02,000 crore. But actually, the allowance part is such a tricky thing that it depends upon your basic pay.
And sometimes, someone has some basic pay another fellow has some other basic pay. So, exactly, working out is very difficult. So, on an average, we have taken it that it should cost the government to the extent of Rs 1,02,000 crore but, it may exceed the calculation, go a bit deeper.
Strength of Central Govt Pensioners as on 01.01.2014
Strength of Pensioners as on 01.01.2014 : Pensioners can be broadly categorised into Civil and Defence. Within civil pensioners there exist three broad categories: Central Civil, Railways and Post.
As on 01.01.2014, as per data reported to the Commission, the total number of pensioners were 51.96 lakh. The category wise break up is shown in the pie chart below
Pensioners and Family Pensioners The break-up of the total 51.96 lakh pensioners as on 01.01.2014 between pensioners and family pensioners, category wise, is as under:
The table above brings out the following: i. Of the total 51.96 lakh pensioners as on 01.01.2014, 11.83 lakh viz., 23 percent were family pensioners.
ii. Civilian pensioners consisting of Central Government Civil, Railways and Posts, as on 01.01.2014 number 27.81 lakh while defence pensioners (including defence civilians were 24.15 lakh. Defence pensioners (including defence family pensioners and defence civilians) constitute 47 percent of all pensioners.