NPS in KERALA : Implementation of National Pension System to employees joining service with effect from 01.04.2013 - Orders issued

GOVERNMENT OF KERAI.A 

Abstract 

Pension - Implementation of National Pension System to employees joining service with effect from 01.04.2013 - Orders issued. 

FINANCE (PENSION-A) DEPARTMENT 

G.0.(P) No. 20/2013/Fin. Dated, Thiruvananthapuram, 07. 01.2013 

Read: G.O(P) No. 441/2012/Fin dated 08.08.2012 

ORDER 

In accordance with the national pattern adopted by the Central Government and various State Governments, Government vide G.O read above, decided, in principle, that the National Pension System (NPS) shall be introduced with effect from 01.04.2013 which shall be applicable to all appointments made thereafter. 

2. Government, after having examined the matter in detail, are pleased to implement National Pension System in the State with effect from 0 1.04.2013 and issue the following further orders: 

i. The NPS would be mandatory for all appointments made on or after 01.04.2013. 

ii. The NPS will work on a defined contribution basis and will have two Tiers. viz. Tier I and Tier II. Contribution to Tier I will be mandatory for the employees whereas Tier II will be optional and at the discretion of the Government servants. 

iii. In Tier I, the Government servant shall make a contribution of 10% of his / her Basic Pay + Dearness Allowance which will be deducted from his/ her salary every month by the Treasury Officer / Drawing and Disbursing Officer concerned. Government will also make a matching contribution. The amount so deducted from the salary of the Government servant and the amount of matching contribution will be transferred to a pension account in order to invest the same as per the provisions of Government of India / Pension Fund Regulatory and Development Authority (PFRDA), a statutory body constituted by the Government of India. The entire amount under Tier I (Government servant contribution + matching Government contribution + investment returns) will be kept in a non withdrawable pension Tier I account. 

iv. Tier II contribution will be kept in a separate account that will be made available at the option of the Government servant. Government will not make any contribution to Tier II account. 

v. The pension funds of the Government servants will be managed by Pension Fund Managers (PFMs) nominated by the PFRDA and the records will be maintained by the National Securities Depository Ltd. (NSDL) that functions as the Central Record keeping Agency (CRA) of the Scheme. 

vi. A Government servant can exit at the retirement age from Tier I of the Scheme. At exit, it would be mandatory for him/ her to invest 40% of pension wealth to purchase an annuity which will provide for pension for the lifetime of the individual and his/ her spouse/ dependent parents. The Government servant would receive a lump sum of the remaining pension wealth, which the individual would be free to utilize in any manner. In case of Government servants who leave the Scheme before attaining the retirement age the mandatory annuitization would be 80% of the pension fund. 

vii. The Scheme will apply to all employees to whom Part III, KSR is applicable. 

viii. It will apply to all PSUs where pensionary benefits as per Part III, KSR are granted. 

3. The guidelines, detailed accounting procedure to be followed in the Scheme and necessary amendments to KSR will be issued separately. 

By Order of the Governor, 

Dr.V.P.JOY 

Principal Secretary (Finance) 

source : http://www.finance.kerala.gov.in/

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National Pension Scheme gives mixed bag of returns

In a year when Employees’ Provident Fund gave a 9.5 per cent return and an over 8 per cent inflation rate ate into much of people’s income, the New Pension Scheme gave a mixed bag of results. Rising interest rates and volatile stock markets have impacted its returns in 2010-11 but, since inception, the NPS has managed to do better.

The performance review of fund managers for 2010-11 by the Pension Fund Regulatory and Development Authority has revealed that NPS for private citizens has managed to give higher returns than NPS for government employees.

Central government employees in NPS earned a return of 8.05 per cent to 8.45 per cent, much below the weighted average of 9.7 per cent in 2009-10. While UTI gave the highest return of 8.45 per cent, SBI gave the lowest return of 8.05 per cent. However, returns for state government employees in NPS was much higher, which ranged between 11.34 per cent and 9.88 per cent.

“It is about timing your investments as well as exposure to instruments,” said a PFRDA official. Central government employees who joined the service after 2004 are mandated to be part of NPS, which allows up to 15 per cent of the total corpus to be invested in equities, while the rest in corporate debt and government securities.

Private citizens, who were allowed to join the scheme from May 2009 can invest 50 per cent of their portfolio in equities and the rest in government securities and corporate bonds via one of the six fund managers — UTI Retirement Solutions, SBI, ICICI Prudential Life Insurance, Reliance Capital, IDFC AMC and Kotak Mahindra AMC.

Surprisingly, it is not equities but corporate bonds that was the top performer in the past one year.

“Equities have been the most volatile in the past one year, so corporate bonds and G-secs have given a higher return,” said Balram Bhagat, CEO, UTI Retirement Solutions, which was the top performing fund manager for NPS for central government, state government and the low cost NPS Lite.

The fund managers gave returns between 8.05 per cent (SBI) to 11.89 per cent (Kotak) for equities, which was a tad higher than the average return of 11.14 per cent from Nifty and 10.94 per cent from the Sensex. Equities as a class of investment, however, has given as high as a 17.85 per cent (ICICI) return since NPS was launched two years ago.

However, the usually staid and low-risk, low-return bonds and securities proved to be the dark horse, although PFRDA officials said that high interest rate regime has hit bond yields. Corporate bond yielded returns varying between 12.66 per cent (SBI) and 6.26 per cent (IDFC). G-secs have also given handsome returns. While UTI gave 12.52 percent, SBI gave 12.25 per cent. The lowest performer was IDFC with a return of 6.97 per cent in 2010-11.

PFRDA officials however cautioned that returns would be higher over a period of time as NPS corpus grows. The total corpus for central government employees is Rs 6,400 crore and for those of state is Rs 1,200 crore. The private sector contributed Rs 80 crore to the scheme.

source: Indian Express

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