NPS is not better than Central Government Employees Pension

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1. I think old pension is far better than new pension, after retirement a senior citizen can healthy live with old pension, because DA will add time to time and new pay commission benefit will add with old pension scheme,

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2. CAN ANYBODY EXPLAIN THE INTEREST CONTENT IN THE TABLE PLEASE BECAUSE THERE IS NO DEFINITE RETURNS FROM THE FUNDS AS THEY ARE INVESTED IN THE STOCK MARKETS……TKS

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   1. Yes you are correct. But for the purpose of calculation the author has assumed certain annualized returns which is mentioned as Interest here. For instance, since for the period from 2004 to 2014 SBI Pension Fund for Central Government Employees under NPS has increased from Rs. 10 to Rs. 19.40 (as on 26.11.2014).

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3. The table is totally bakwash. There is provision of gratuity for nps members also. secondly one can opt for 80% or for total accumulate amount to get a bigger pension. Thirdly in 2049 there will be no person who will be under old pension after retirement in 2049.

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4. What about other benefits which are granted to employee under Gpf system.
   1. 10 day’s leave encashment ofLTC which is not granted to emplyee under NPS System
   2. 3 month basic adwance withdrawal which is not granted to employee covered under NPS System.

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5. One thing is forgotten> Out of Cash in hand on retirement (60% of Total NPS Wealth) 2,92,65,690; 83.33% of amount was contributed by the employee(i.e. 50% NPS fond is contributed by NPS employee) and only Rs.48,77,615 is the actual amount from Govt Contribution.

   In NPS 10% salary to be contributed whereas GPF employee have to contribute only 6%.
   In GPF you can with draw the amount whenever you want; whereas it is not possible in NPS.
   NPS fund growth was Nil during 2013-14 as the NAV was only Rs. 16 per unit for more than 1 year; whereas GPF fund grown at the rate of 8.9%
   In NPS whenever the NAV increases No of unit allotted is less for a contributed amount. e-g in beginning unit value(NAV) is Rs 10. For Rs1000 NPS allots 100 units(NAV). If the unit value (NAV) is Rs.20. NPS needs Rs.2000 to purchase 100 units(NAV)

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6. Sir, as per your calculations total NPS amount in hands including annuity of 40% comes to Rs56158926 (19510460 + 36647666 ).If the amount of Rs 14331607 ( amount in hands of government pensioner) is reduced from it making the amount at par for both, comes to Rs 41827319. From this another amount of Rs 3703092.( this is because my calculations are based on the amount invested at the age of 60 and pension starts at the age of 61, so this amount is reduced to make it equal to the pension received by the Government pensioner.). So now the NPS pensioner will have an amount of Rs 38124227/- in his hands for investment. If this amount is invested @ 8.7% and if the pensioner survive till 85 yrs of age he will get a annual pension of Rs 4177139 /_ . The amount is much more than the government pensioner. If he dies before 85 yrs of age his NOK will get sufficient amount, and if he survive above 85 yrs of age the gap of his five lac more than the government pensioner can be invested and he lives happily. Best of luck dear NPS pensioners.

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7. We cant predict the stock market value when we retire. And one more point is the total cash in retirement of the NPS employees are taxable

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8. I was expecting a rebuttal to the original article and here it is. Which scheme is better is irrelevant. What is more important is that the Government Employee should be prudent and disciplined in his approach towards saving and investing for his retired life. What he does intelligently with the money he earns during his service or after retirement dictates how he fares in life as a retiree.

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9. NPS is very bad. As per my calculation NPS employees will get only 10 % of pension what old pension schemee gives.

   Following modifications to be done in calculation.

   Consider the case of a IAS officer joining in PB3 , GP 5400 at the age of 25 years and retires as cabinet secreatry. He will get eight promotions in between. Further he will see three pay commissions normally which gives 40 % increase in salary by fitment benefits.Third factor to be taken in account that pension should increase with DA and pay commission as presently increases. Now case the person who will live upto the age of 85 years approx. You will nkow that he will get only 10 % of pension comparing to old pension scheme.

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10. Agreed. However, the calculation needs further improvement. (i) If we see the entry level basic of Group-A employee. Rs. 700/- pm became 2200/-pm in 4th pay commission. it became 8800/-pm in 5th pay commission and 15600/+5400 – in 6th pay commission. thus, the entry level basic increases by a factor of 2.5 to 3 in each pay commission. Considering annual increment basic pay of an employee may be fixed at much higher. Conservatively, the basic pay of an employee increases by a factor of 3 to 3.5 after each pay commission. The employee joining in 2014 will get benefit of 4 pay commissions (2016, 2026, 2036 and 2046). Thus his basic will increase by a factor of 3.5×3.5×3.5×3.5. Also, retirement gratuity will increase in each pay commission. Seeing the trend, it increases by a factor of 2.5 to 3, 10 lac will become minimum 10×2.5×2.5×2.5×2.5 lac. Therefore, the employee under central government pension scheme will get much more than the NPS. (ii) The retirement benefit received by an employee under old pension scheme is exempted from income tax and full amount can be invested. This will give another source of income. However, amount received under NPS is taxable. (iii) benefit of DA is available to old pension scheme. (iv) One member has commented that after 2049 no old pensioner will be there. This is correct as of now but may get change based on recommendations of future pay commission under pressure of employee union and government policy.

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11. As per the above table, the Total Cash in hand on Retirement with GPF employee is 1,43,31,607/- and with NPS employee is 3,66,47,666/-. What if the NPS employee decides to draw only Rs. 1,43,31,607/- as his cash in hand on retirement and invests the rest of the amount (4,18,26,519/-) in his annuity? Can somebody please help with the calculation and tell what will be the monthly pension of the NPS employee then?

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12. Old pensions is better than NPS because in nps 50% amount is already deducted from your salary only 50% amount is contribute by govt and gratuity is also available in nps employee only and only pension is convert in NPS

    Thanks
    rajeev

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13. Gratuity is also applicable to nps member

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14. Dear Binal please see my calculations dated 27 Nov, if a NPS pensioner survive for more than 90yrs , he will be in a loss, and if he survive less than that he / his NOK is financially benefited. In addition to this, if a NPS pensioner leaves the job before 20 yrs of service, he will get the accumulated amt, where as def personal leaving the job before pensionable service, he will not get anything.

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15. all NPS calculations are predictions, where as old pension scheme confirmed. out of accumulated corpus 10% is from employee side, i request author to not to consider employees contribution in above calculation and then make comparision. we can invest 10% in private pension funds where returns are more(but risky), let govt. give us old pension scheme we will be happy with the amount we get in old pension scheme, we will parallely invest 10% privately so that we get double pension. i am state govt. employee we dont have GPF but previously we had defined pension scheme where without contribution from ourside retired employee was getting 50% of his last drawn salary, at the age of sixty 50% salary more than sufficient seen many happily retired employees around, no need of NPS favor from government. i just made some calculations and published it in scrapnps.blogspot.com, just visit and put your valuable views there

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