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 | ||
The views expressed in this article are those of the Forum Member and are not intended to represent the views of GConnect
Stay connected with us via Facebook, Google+ or Email Subscription.
Subscribe to Central Government Employee News & Tools by Email [Click Here]
Follow us: Twitter [click here] | Facebook [click here] | Google+ [click here]
Admin
COMMENTS
Author of the article has fortten to add GPF amount that is paid to retiree of old defined pension. Further 50% of the amount of NPS wealthe is that of the employees savings from their salaries, so, Govt. will be paying only 50% of the NPS welath accumulated at the time of retirement whether under old pension scheme 100% of pensionery benefit and monthly pension with provision of increase in pension as and when DA rates revised and also pay & pension revised on a/c of pay commission recommendatios. The author also missed to calculate the revised gratuity since gratuity is also revised by the Govt. on the recommendations of the Pay commission or otherwise periodically and In 2049 it will come to Rs. one crore or more.
NPS may be beneficial when Govt. contribution will raise to 15% of basic + DA and atleast 9% annual return guranteed by the Govt. , Grautity to NPS employees will be given on full length of service with maximum limit of Rs. one crore on 2036. and leave encashment for 360 days to NPS employees will be admissible.