NPS is far beneficial than Government Pension

NPS is far beneficial than Government Pension – Comparison of New Pension Scheme (National Pension Scheme) and Central Government Pension

The Central Government employees who have joined after 1/1/2004 and are put under National Pension Scheme (NPS)  have been demanding abolition of NPS and have been persuading the Central Government to make the government pension scheme applicable to them.

This only exhibits their ignorance of the fact that the New Pension Scheme is highly lucrative and make the government employees who joined after 1/1/2004 far richer than the government employees who enjoy government pension scheme.  By doing so they are in the process of ruining the great fortunes that lies in store under New Pension Scheme. Let me compare both the scheme:

Comparison of New Pension Scheme (National Pension Scheme) and Central Government Pension

Benefits under NPS

Let me take a case of Upper Division Clerk(UDC) who joins government service in 2014 at the age of 25  and renders 35 years  of service till attaining 60 years of age. He / She gets 3% annual increment every year and gets one promotion every 10 year under M.A.C.P.  Although he / she is likely to get 14 to 20% increase in D.A every year as per Consumer Price Index I just take 12%(assuming 6 + 6%) 2 times D.A in a year

YEAR D.A. assumed @
12%
Per
annum
PAY + GRADE
PAY
with 3% annual increment
D.A TOTAL Total
Monthly
Subscription
(employee and Govt)
Annual
Subscription
Annual Appreciation of Investments @
8.7%
Only
TOTAL
PENSION
WEALTH

2014

107%

9910

10604

20514

4102

49224

2320

51,544

2015

119%

10210

12150

22360

4471

53652

7012

1,12,208

2016

131%

10520

13781

24301

4860

58320

 12511

 183039

2017

143%

10840

15501

26341

5268

63216

 18903

 265158

2018

155%

11170

17314

28484

5696

68352

 26290

 359800

2019

167%

11510

19222

30732

6146

73752

 34779

 468331

2020

179%

11860

21229

33089

6618

79416

 44487

 592234

2021

191%

12220

23340

35560

7112

85344

 55546

 733124

2022

203%

12590

25558

38148

7630

91560

 68097

 892781

2023

215%

12970

27886

40856

8172

98064

 82293

 1073138

2024*

227%

14130

32075

46205

9240

110880

 98589

 1282607

2025

239%

14560

34798

49358

9872

118464

 117170

 1518241

2026

251%

15000

37650

52650

10530

126360

 138041

 1782642

2027

263%

15450

40634

56084

11216

134592

 161433

 2078667

2028

275%

15920

43780

59700

11940

143280

 187596

 2409543

2029

287%

16400

47068

63468

12694

152328

 216809

 2778680

2030

299%

16900

50531

67431

13486

161832

 249371

 3189883

2031

311%

17410

54145

71555

14312

171744

 285614

 3647241

2032

323%

17940

57946

75886

15178

182136

 325893

 4155270

2033

335%

18480

61908

80388

16078

192936

 370601

 4718807

2034*

347%

21060

73078

94138

18828

225936

 421184

 5365927

2035

359%

21700

77903

99603

19920

239040

 478101

 6083068

2036

371%

22360

82956

105316

21064

252768

 541139

 6876975

2037

383%

23030

88205

111235

22248

266976

 610878

 7754829

2038

395%

23730

93734

117464

23492

281904

 687954

 8724687

2039

407%

24450

99512

123962

24792

297504

 773068

 9795259

2040

419%

25190

105546

130736

26148

313776

 866975

 10976010

2041

431%

25950

111845

137795

27560

330720

 970498

 12277228

2042

443%

26730

118414

145144

29028

348336

 1084535

 13710099

2043

455%

27540

125307

152847

30570

366840

 1210066

 15287005

2044*

467%

29640

138419

168059

33612

403344

 1348977

 17039326

2045

479%

30530

146239

176769

35354

424248

 1501283

 18940857

2046

491%

31450

154420

185870

37174

446088

 1668876

 21055821

2047

503%

32400

162972

195372

39074

468888

 1853953

 23378662

2048

515%

33380

171907

205287

41058

492696

 2057162

 25928520

2049

527%

34390

181235

215625

43126

517512

 2280169

 28726201

* MACP / Promotion Years

(A) Therefore, the total pension wealth of a government servant who joined in 2014 and retiring under New Pension Scheme shall at the time of his retirement be Rs. 2,87,26,201/-

(B) 60% of the lump-sum pension wealth which he / she will be  getting on retirement:
Rs.1,72,35.720

(C) 40%   invested in an annuity scheme  which he / she can receive before 70 years:
Rs.1,14,90,481

(D) Earned Leave Encashment:  Rs. 215625 x 10 months        :  Rs.   21,56,250

TOTAL of (A) (B) (C) and (D) will be            Rs. 3,08,82,451

Death Gratuity:

Although not entitled for retirement gratuity, but eligible for Death Gratuity  If died during the service

Monthly Pension:

At the assumed Interest at the rate of 8.7% per annum on  the other 40%  of pension wealth of Rs.1,14,90,481  invested in annuity shall fetch
monthly pension of  at least  :            Rs.83,306/ –

Not only this, before he / she attains the age of 70 he / she can withdraw the remaining  40% of his pension wealth of Rs. 1,14,90,481/- which if invested in Fixed Deposit of a nationalised bank can fetch interest and take care of not only of his wife and children but his descendants also for generations to come.

This is just a tip of the iceberg. If we consider the other  4 pay commission benefits that materialize on 1/1/2016, 1/1/2026, 1/1/2036 and 1/1/2046 which a NPS pensioner who joins as UDC shall be getting  before his retirement in 2049,his total pension wealth will be undoubtedly double the above amount which comes to more than Rs.5 crores. While a person who joins as U.D.C. gets this much, one will be rocked out of stupor to know what a Group A officer who renders 35 years of service may get – undoubtedly his total pension wealth will be more than Rs.10 crores.

Benefits under Central Government Pension Scheme

Now let us see what will be the retirement benefits of the above person if he / she is put in government pension scheme:

1.Gratuity for 16.5 months :

Rs.2,15,625 x 16.5 months = Rs.35,57,812/- Restricted to  Rs.10,00,000

2. Earned Leave Encashment:

Rs. 215625 x 10 months :     Rs.21,56,250

3. Pension Commutation:

Rs.17195 x 40% = Rs.6878 x 12 x  8.194 years   Rs  6,76,300

Total Benefits under Central Government Pension Scheme:         Rs.38,32,550

4. GPF Balance:

As it is a general tendency of the government servants to withdraw from GPF frequently, there will be very little left at the time of retirement

5. Monthly pension

i) Rs.34390 / 2    =  Rs.17195 (basic pension being 50% of pay and grade pay Less 40% of basic pension towards commutation (Rs 6878) which will be restored after 15 years

Balance basic pension       is Rs. 10317

ii) DA @ 527% of basic pension of Rs.17195  = Rs. 90617 (subject to increase in DA every 6 months based on consumer price index)

Total pension                        is Rs.1,00,934 per month.

After the death of government servant  say after 67 years, spouse can take only 60% of the basic pension i.e.Rs.17195 x 60% = Rs.10317 plus D.A.at the prevailing rates. After spouse’s death children are unlikely to draw the pension as they would have already crossed the age limit.  Thus, unlike the dependents of NPS pensioners, there will be nothing left for financial security  of the dependents of the government pensioners .

Thus it is unwise on the part of government servants who have joined after 1/1/2004 to demand for abolition of NPS scheme and grant of government pension.

Mr.M.Dorai
Deputy Director
ESIC Model Hospital,
Bangalore (Ministry of Labour, Government of India) is the author of this Article.

The views expressed in this article are those of the guest author and are not intended to represent the views of GConnect.

26 Comments

  1. Nicely elaborated sir.Thanx 4 highlighting n giving such precious information. One Tthing left that only the amount contributed by employee,half the amount, invested in sip 4 30 yrs horizon, the return assumed at avg previous record,though subject 2 mkt risk, would-be a little bit less what u calculated under nps. In addition of all d benefits under old pension scheme. So nps is of lesser value n like getting ur own money invested.

  2. The calculations presented are totally wrong. Central Government Pension scheme is many times more beneficial than NPS.
    1.First of all only 50% of the money received on retirement from NPS should be considered, since 50% is contributed from the salary like in GPF. If GPF contribution is not touched, the amount received from GPF will be equal to atleast 50% of the money received from NPS.
    2. The limit of Rs.10 lakhs for gratuity is increased after every wage revision and hence he will receive full Rs.35,57,812/-
    3. The monthly pension is increased by 6% DA every 6 months and by 30% after every wage revision .
    4. After 80 years , the monthly pension is increased by 20% every 5 years, and becomes double or 100% at the age of 100. Since life expectancy is increasing and persons who have crossed 60 years of age are expected to live upto 90 years, this is a very huge benefit given during the last wage revision by hoodwinking our politicians.
    5. In the pay commission report itself it has been mentioned that the benefit of central government pension is equal to monthly tax free payment of 30% of the basic plus DA, compared to only 10% for those covered under NPS. Hence those covered under NPS are losing atleast 20% of basic plus DA every month, compared to the old central government employees. Why this discrimination against the new employees?

  3. Sir,
    As per your calculation CG employee under NPS will be benefited at the time of retirement or after retirement. But, during the service period when money will be required for the children education, marriage, construction of house, medical treatment etc. we can,t use these money. We can see only as still there is no option to withdraw money under NPS.

  4. Let Mr Dorai opts for NPS if he thinks it is beneficial instead of trying to misguide the young people

    He forget to add the rate of inflation and pension updation which the old pensioner are eligible

  5. It is foolish to compare both the systems , since NPS is contributed one. In old system one is getting pension without contributing anything . If you will be seriously saving 10 percentage contribution in PPF you will be enjoying that savings and free of cost pension also.

  6. Well. The computations give false picture. First GPF can not be ignore . Half of total accumulation stated will be available to old pension scheme employees and thats a major chunk. Second the tax will eat upto 30% of money accumulated. Assume u have made Rs. 1000 contribution and Rs. 1000 by Govt. ( total accumulated Rs. 2000 in whole life just example ) . Now at retirement, with this one time payment in retiring year U will pay 30% tax . So tax will be Rs. 600 . u get Rs. 1400 only and that also Rs. 1000 paid by u . Wat Govt paid u. Tell me.

  7. HATS OFF TO MR. M.DORAI FOR HIS ARTICLE. WHAT A SENSATIONAL NEWS THAT NPS IS BENEFICIAL THAN GOVERNMENT PENSION.. I WAS WORRIED ABOUT THE INJUSTICE DONE BY THE GOVERNMENT IN NOT GRANTING GOVERNMENT PENSION TO THE GOVERNENT SERVANTS JOINED AFTER 2004. BUT ON READING THIS ARTICLE MY JOY KNEW NO BOUND. I AM CONVINCED THAT NPS PENSIONERS WILL BE I N A BETTER FINANCIAL POSITION THAN GOVERNMENT PENSIONERS WHO MAY LOOK PUNY BEFORE NPS PENSIONERS. NOW THE TIME HAS COME FOR NEWLY JOINED GOVERNMENT SERVANTS TO FIGHT FOR RETENTION OF THIS NPS SCHEME AND TO SEE THAT THE GOVERNMENT WILL NOT YIELD TO ANY PRESSURE FROM ANY QUARTER FOR ABOLITION OF NPS SCHEME..

  8. Sir, The article on NPS is an eye-opener. The author Mr. .Dorai has taken a painstaking job to bring home the facts about the benefits of NPS scheme. His accurate calculations of increments and MACP promotions and also the interest calculations on investments deserves appreciation. I have cross checked the interest calculations with GConnect interest calculator at 8.7 and it is perfectly tallying. I pitied the government employees under NPS scheme. Now I envy them.

    Ravi Rakesh

  9. SIR,

    WHAT U COMPARED IS RIGHT. THE NPS CONTRIBUTOR SHOULD BE ALLOWED TO OPT FOR TIER-II. BUT TILL DATE NO SUCH CONTRIBUTION FOR TIER-II IS ALLOWED. IF IT IS ALLOWED, WE MAY A CHANCE OF TAKING MONEY FROM OUR OWN AND USEFUL FOR IT AND EMERGENCY EXPENSES ALSO. SO, KINDLY CLEAR ABOUT THIS POINT. TILL DATE NO ONE IS ALLOWED TO CONTRIBUTE IN TIER-II IN PUDUCHERRY. I AM EXPECTING YOUR SPEEDY REPLY PLEASE.

  10. Sir the employee contribution should not be taken into acct because it is his own money he can invest anywhere. also the old pension system did not take such subscription to build pension fundz.in case of early deaths nps will be unable to supporr the dependents.if market is drastically down then the results will be different.retirement benifits needs security

  11. Author’s calculation is simple but not free from error. His observation is correct that a person having BP+GP=9900 will get more than 2.8 crore after 35 years of service if he joins in 2014 under NPS. But his observation that it is more beneficial than the old pension scheme is not correct. Basis is as follows:
    1. The person will be get benefit of 4 pay commissions (every time his salary may have 3.5 times hike considering 3% increment/or about 3 times hike in pay revision). As a result, the last salary drawn may be more than 20 lac per month. Pension will be more than 10 lac/m and reduced pension 6 lac/m
    2. Gratuity limit is expected to be increased 3 times by each pay commission. In 2048 the limit may be 8.1 crore .
    3. So retirement benefit as per old pension scheme will be: 40% commuted pension (around 3.4 crore), 10 month EL encashment ( 2 crore) and gratuity (3.5 crore). Total will be around 8.9 crore.
    4. The above figures are without considering promotion, saving in GPF deduction, tax saving, and restoration of pension after 15 years. If these factors are considered the retirement benefits will be much more.
    5. Even considering pessimistic pay commission recommendations, the retirement benefits under old pension scheme will definitely be in crores and more than the new NPS. Thus old pension scheme is more beneficial to employee than the NPS.

    Somebody may do the precise calculations to update the above table considering pay revision trends by earlier pay commissions.

  12. THE ARTICLE OF THE AUTHOR MR. M. DORAI, DEPUTY DIRECTOR, ESIC, MINISTRY OF LABOUR IS QUITE ILLUSTRATIVE AND HE HAS PROVED BEYOND DOUBT WITH COMPARISONS OF BOTH THE SCHEME THAT NPS IS BENEFICIAL THAN GOVERNMENT PENSION SCHEME. . CAN MR. SOHAIL AHMED KHAN SAY WHICH PAY COMMISSION HAS GIVEN HIM 3 TIMES HIKE THAT IS 300% INCREASE IN PAY AND ALLOWANCES?

    I HAVE SEEN 3 PAY COMMISSIONS OF JAN.1986, JAN. 1996 AND JAN.2006 SO FAR. IN EACH PAY COMMISSION I JUST GOT 25% TO 30% INCREASE IN OVERALL SALARY.INCLUDING HRA AND OTHER ALLOWANCES. THE PAY COMMISSIONS SIMPLY ADDED SOME INCREASE IN THE OLD BASIC PAY EXCLUDING D.A. AND SIMPLY MERGED THE D.A. WITH THE OLD BASIC PAY AND FRAMED NEW BASIC PAY. THE OVERALL HIKE IS JUST 25 -30% ONLY AND NOT 300% OR 350% OR 3.5 TIMES HIKE AS STATED BY MR. SOHAIL AHMED KHAN.

    EVEN IF REMAINING 4 PAY COMMISSION BENEFITS OF A NEWLY JOINED UDC IS TAKEN THE PAY AND D.A. CAN COME TO JUST AROUND RS.4.5 LAKHS TO 5 LAKHS Y AFTER 35 YEARS OF SERVICE AND NOT RS. 20 LAKHS AS STATED BY MR.SOHIL AHMED KHAN. OKAY EVEN IF RS. 20 LAKH SALARY IS ASSUMED DURING RETIREMENT IN 2049 , THE TOTAL PENSION WEALTH UNDER NPS AND RETIREMENT BENEFITS OF GOVERNMENT PENSIONER ALSO WILL INCREASE CORRESPONDINGLY. WHATEVER BE THE SALARY WHICH IS APPLICABLE FOR BOTH..

    FOR EXAMPLE IF THE TOTAL PENSION WEALTH OF A NPS PENSIONER IS RS.3,08,82,451/- FOR A SALARY OF RS.2,15,625 DURING 2049, THE TOTAL NPS PENSION WEALTH MAY GO UP TO RS.28.64 CRORE IF HIS SALARY IS GOING TO BE RS.20 LAKHS PER MONTH DURING RETIREMENT IN 2049. (RS. 3,08,82,451/2,15,625 X 20,00,000 = RS..28,64,45,922/-) WHEREAS THE RETIREMENT BENEFITS OF A GOVERNMENT PENSIONER MAY COME TO JUST 9.23 CRORES ONLY..( GRATUITY RS.20 LAKHS X 16.5 MONTHS=RS..3,30 CRORES,, LEAVE ENCASHMENT RS. 20. LAKHS X 10 MONTHS =RS.2 CRORES. PENSION COMMUTATION RS.10,00,000 X40%=4.00 LAKH X 12 X 8.194=3,93,31,200. ALTOGETHER RS.9.23 CRORES ONLY. BUT NPS PENSION WEALTH WILL BE 28.64. WHERE IS 9.23 CRORES AND WHERE IS 28.64 CRORES?

    MR..SOHAIL AHMED KHAN, YOU SAY THE GOVERNMENT PENSION WILL BE RS. 10 LAKH. OKAY. WHAT WILL BE THE MONTHLY INCOME OF NPS PENSIONER IF RS.28.64 CRORE IS INVESTED IN BANK AT SAY 8.5% INTEREST? RS.28.64 CRORE X 8.5%=RS.2,43,44,000/12 MONTHS =RS.20.28 LAKHS PER MONTH REGULARLY PLUS THE PRINCIPAL AMOUNT OF RS. 28.64 CRORES AT YOUR DISPOSAL ALWAYS FOR ALL TIME. TO COME.. SO NEVER SAY GOVERNMENT PENSION SCHEME IS BETTER. I KNOW THE PLIGHT OF GOVERNMENT PENSIONERS WHO TAKE VERY LESS RETIREMENT BENEFITS AND LESS THAN 40% OF TOTAL SALARY AS PENSION, SINCE PENSION IS NOT PAID ON OTHER ALLOWANCES LIKE HRA AND T.A.

    RAVI RAKESH
    .

  13. Sir,
    Your calculation is totally based on the earning that arise at the time of retirement.
    Just think of necessities that will come during his service tenure like children education, housing building, health, marriages and other obligations.
    If options are there to withdraw some amount of money from NPS without n number of conditions, it would be some what better than existing one.
    No way it is beneficial than old pension scheme.
    Plz. stop misguiding young entrants to the CG.

  14. Without comparing how much a person is going to get under NPS or Old Pension Scheme, I would like to ask the author in the following scenario.

    Suppose two persons joined into the service one on 31st December, 2003 and one on 1st January, 2004. Both in the same cadre. Suppose retirement is due on the same date for both of them. Assume that both of the got the same order of promotions. Only difference is at the end of their service, they will have only 1 day difference in their service.

    Now both of them started getting the pension. Now suppose by the grace of GOD both of them lived for more than 70 years.

    Now I would like to ask the author of this article, Whether both of them get the same amount? Old Pension fellow will continue to get the amount at enhanced DA rates, but what about the NPS fellow? He will getting the constant amount. He will be severly impacted by the DA …

    So how this NPS is better?
    It is wrong my dear friend.
    Thankyou.
    RaviKumar

  15. My dear friends I come under NPS.Persons who are saying that nps is better than old pension scheme ,why are they not proposing to govt that they also want to come under NPS.But they will never propose it because they very well know old pension scheme is more beneficial.They are only making joke of us.

  16. I am nps subscriber and have been tracking my investments. the said 8.7 % return on investments is very big farce and false information. Actual returns as per my calculations are only barely 4%.

  17. The NPS is to be scrapped for GOVT employees. One what about family pension? With cost of living is increasing what is the factor to nutralise. In the old system atleast DA and pay commission revisions are there Further in the old system , the GOVT is contributing but not their salary is reduced whereas in the new system even though GOVT is contributing along with employees contribution this is not taking in to account other factors but also the employees are getting less salary .Further it is understood that the new pension is not implemented to all central govt employees and officers.The assumption of depositing and getting interest is also wrong. one is risk of money lost and family quarrels will be more. Most of the people who have retired have lost the commuted value to daughters/sons and their life /care is taken care by the sons/daughters because of the pension/family pension they are receiving Chances of no interest regime – as we following the foot steps of world bank and others are very real. I hope the Hon Supreme court , will take care of all these things ( it is understood there is case filed by Railway federation) will scrap the scheme If it is advantageious why MPs are not brought in to this schmeme (recently I have read a news item that MPs/ MLAs ( of some states ) wants many fold increase in their salary/pension and there is no difference between the parties in this demand . Let Hon Modi decide whichever and whatever the beneficial both to GOVT employees and also to MPSs

  18. I have read the article. Really the author Shri M. Dorai, who appears to be a high ranking Officer in Central Government has taken much strain to prepare the article to enlighten goverrnment employees including me that NPS is far beneficial than the government pension. The comparison between both really shows vast variation in benefits compared to the retirement benefits of old government pension scheme and New Pension scheme. . The new pension wealth is 8 times more than the retirement benefits under government pension as shown in the article. This 8 times difference between NPS pension scheme and government old pension scheme shall always continue to remain at the same proportion whatever be the inflation factor or salary hike or pay commission recommendations at any given time, because the broader principles of 16.5% gratuity, 10 months leave encashment and 40% commutation of basic pension will never get changed.

    Even if it is assumed that a government pensioner may also get a total pension amount equal to or more than RS.3,08,82,451/- (as shown in the article) if he happen to live say above 80 years, even then the amount which he gets is in the form of monthly pension (in other words in monthly instalment for over 20 years ) is of less value because it can only
    serve the limited purpose towardsr his comfortable living after retirement and too only till he and his wife live and thereafter no income is available for his family members. With his meager retirement benefits of Rs.38,32,550/-, he cannot even acquire a property for his children.

    But with the vast pension wealth of Rs.,3,08,82,451/- out of which he can draw Rs.1,72,35,720/-after retirement, being 60% of total pension wealth, a NPS pensioner can buy a residential property and as well live comfortably with the monthly pension which he gets on his balance 40% investment of Rs.1,14,90,481/ in life time annuity. As rightly pointed out by the author, this amount of Rs.1,14,90,481/- will take care of not only his family members but his decendants also for generations. Added to it the property acquired by NPS pensioner shall keep on appreciating many fold for generation to generation.

    THEREFORE I HAVE NO DOUBT THAT NPS IS UNDOUBTEDLY FAR BENEFICIAL THAN GOVERNMENT PENSION.

  19. Hi guys,
    I agree with the author of the article ‘’NPS is far beneficial than Government Pension’’ for the following reasons:
    1. One thing every one forget is under NPS scheme the government servant gets huge amount on retirement which is many times more than what a government servant under old pension scheme gets as per the comparison shown in the article’ . Whatever be the salary increase or inflation factor after 35 years, but the proportion of variation between the retirement benefits of old defined pension scheme and the corpus in new pension scheme shall grow at same level because the mathematical principal can never get changed.
    2. With this money a government servant can even acquire a residential property for his dependants which gets appreciated for generations to come and as well comfortably live on interest on the other 40% invested in annuity in Life Insurance etc from where the government servant, his spouse and parents can get pension till death . Thereafter the 40% annuity amount can be withdrawn fully by the children and the blood relations of the government servant if there are no children left. This will also be of immense help to the dependants in addition to a residential property left behind by the government servant..
    3. Whereas with the very little retirement benefits paid in cash to government servant under old defined pension scheme he cannot think of acquiring a property. He has to depend on monthly pension which comes to an end after death and there afterwards no financial security available for the dependents.
    4. One should know why a government servant under old pension scheme opts for commutation of 40% of basic pay for 8.154 years and is ready to take less pension for 15 years thus permanently losing his 40% of basic pension amount for almost 7 years towards interest adjusted against commutation of pension for 8.154 years.
    Because having more money has its own advantage and is liked by all the government servants than depending on more monthly pension. If there is a provision for 100% commutation of basic pay, I am quite sure every one will be ready to opt for it. Even if government give option for Golden Hand Shake Scheme, more than 90% of government servants under old pension scheme may prefer it.

    DEVENDAR PRASAD

  20. Sir,

    I agree with the author regarding whatever he wrote.

    but i think author is not comes under NPS and never seen any NPS account transaction details. whole calculation is based on the assumption of 8.7% return.

    Sir, i joined central government in 2011 and till Sep 2014 i calculated that i got only 3.8% Per Annum appreciation of my funds which is lesser than the saving accounts interest.

    we are talking about the pention, means the reqtirement funds which should be 100% secure with fixed returns. because i don’t want to take risk for my retirement. i would be more happy that if government put this into EPF (like Private and PSUs) , at least we will get fixed returns. our most of the money gets invested into share market and no one knows how to control it. till date no proper rules are framed.

    Very cleverly you said regarding GPF Balance “As it is a general tendency of the government servants to withdraw from GPF frequently, there will be very little left at the time of retirement”, But did you ever think that if we require money than what we can do???? we have to go for personal loans from banks and have to pay very high interest like 18% P.A. and other processing charges too. did you ever think about this???

    there are many ifs and buts and you can not feel the pain unless you bearing the same. moreover, government may promote the NPS on optional basis, not forcibly.

    regarding all calculations are on assumption basis (who know about equity that how much they return), however in case of old pension you can predict approx amount. retirement funds should be safe one because at the age of 60 we don’t want to struggle much and expecting a fixed steady income.

    One last thing, did you calculate that old pension is related with the DA, and what in case of NPS???? take this calculation too.

  21. Sir,

    I agree with the author regarding whatever he wrote.

    but i think author is not comes under NPS and never seen any NPS account transaction details. whole calculation is based on the assumption of 8.7% return.

    Sir, i joined central government in 2011 and till Sep 2014 i calculated that i got only 3.8% Per Annum appreciation of my funds which is lesser than the saving accounts interest.

    we are talking about the pention, means the reqtirement funds which should be 100% secure with fixed returns. because i don’t want to take risk for my retirement. i would be more happy that if government put this into EPF (like Private and PSUs) , at least we will get fixed returns. our most of the money gets invested into share market and no one knows how to control it. till date no proper rules are framed.

    Very cleverly you said regarding GPF Balance “As it is a general tendency of the government servants to withdraw from GPF frequently, there will be very little left at the time of retirement”, But did you ever think that if we require money than what we can do???? we have to go for personal loans from banks and have to pay very high interest like 18% P.A. and other processing charges too. did you ever think about this???

    there are many ifs and buts and you can not feel the pain unless you bearing the same. moreover, government may promote the NPS on optional basis, not forcibly.

    regarding all calculations are on assumption basis (who know about equity that how much they return), however in case of old pension you can predict approx amount. retirement funds should be safe one because at the age of 60 we don’t want to struggle much and expecting a fixed steady income.

    One last thing, did you calculate that old pension is related with the DA, and what in case of NPS???? take care of this calculation too.

  22. are u aware that persons under nps scheme are not given the benefit of cghs post retirment which is the main benefit of old pension scheme.health care cost is increasing day by day and if pensioners are not covered under cghs then their life is worst.

  23. sir
    this article not considered few things
    1: old defined benefit based pension is inflation adjusted
    while anyone computes wealth under NPS is mere assumption.nobody is guaranteeing that one would get this amount. lot of uncertainty while old pension one is sure what to get
    2 GPS is ur money .it is up-to you wheather want to spend now or later.that is individual habit so should not be compared.if one is very financially disciplined the amount he has has been depositing in tier 1 mandatory accound will deposit in GPS then he will be whole amount qwner.
    3: the person who are advocating see their service life at what post they have worked in majority of service life and they get pension of what they are at end of service.let somebody spent majority in lower grade pay but last year he become officer then he will be getting officer s pension unlike NPS where whole corpus decide on what you are in majority of service life.
    it is going to benefit only corporates and company who get a lot money to invest in market ,to lend to industries and earn interest but in indian scenarion where social security is dismal condition and a lot of corruption in banks and NBFCs how could ailing and old person think their old age relying NPS. return.

  24. Few observations: 10% deduction from NPS employee returns on which cannot be included or for comparison sake should be added to pension fund of old pension scheme.
    Mr Dorai is killing the person in old pension scheme at the age of 67;-). Govt employees are known to live up to 75 years average.. And average age is likely to go up. And by the way 8.7% growth.. Last heard it was below 4% per annum.

    Dear Sir, While we appreciate your effort in carrying out these calculations. Assumptions do not make complete sense

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