NPS is not better than Central Government Employees Pension

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.
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