Central Government contribution in National Pension Scheme (NPS) raises to 14%

The Union Cabinet has recently raised the government’s contribution to National Pension Scheme (NPS) to 14% of basic salary from the current 10%. However, minimum employee contribution will remain at 10%. The Cabinet also allowed government employees to commute 60% of the fund accumulated at the time of retirement, up from 40% at present. Also, employees will have the option to invest in either fixed income instruments or equities. As per the Cabinet decision, if the employee decides not to commute any portion of the accumulated fund in NPS at the time of retirement and transfers 100% to annuity scheme, then his pension would be more than 50% of his last drawn pay. The following changes will come into effect from the beginning of a financing year, meaning April 1, 2019.