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)

YEARDAPAY+GPDATOTALNPSYEARLYINTEREST NPS-Wealth
201410799101060420514410349236232051,556
20151191021012150223604472536647008112,228
201613110520137812430148605832012505183,052
2017

7CPC – DA MERGED

02430102430148605832018667260,039
2018122503030042803456076728425786353,109
2019242578061873196763937671634326464,151
2020362655095583610872228666444454595,269
20214827350131284047880969715256355748,776
202260281701690245072901410816870227927,171
2023722902020894499149983119796862941,133,261
202484316302656958199116401396801051591,378,100
202596325803127763857127711532521270981,658,450
2026108335603624569805139611675321521591,978,141
2027

8CPC – DA MERGED

069805069805139611675321799722,325,645
20281271900862880528161061932722114152,730,332
202924740601777491834183672204042478983,198,634
2030367628027461103741207482489762899833,737,593
2031487857037714116284232572790843382884,354,964
2032608093048558129488258983107763934885,059,229
2033728336060019143379286763441124563265,859,667
2034849086076322167182334364012325286496,789,548
2035969359089846183436366874402446113827,841,174
203610896400104112200512401024812247048009,027,198
2037

9CPC – DA MERGED

020051202005124010248122480798410,316,406
203812206530247842313144626355515692362011,795,181
2039242127305105526378552757633084105593613,484,201
2040362191107888029799059598715176120673915,406,116
20414822568010832633400666801801612137800817,585,735
20426023245013947037192074384892608157191220,050,255
20437223942017238241180282360988320179082322,829,398
204484260970219215480185960371152444204032326,022,165
2045962688002580485268481053701264440232335729,609,962
20461082768602990095758691151741382088264102533,633,074
20471202851703422046273741254751505700299684538,135,620
20481322937303877246814541362911635492339466743,165,779
20491443025404356587381981476401771680383869248,776,151

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 Hand3,66,47,666
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 to10,00,000
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 Amount59,49,631
Total in Hand1,43,31,607
Monthly Pension (50% of Final Basic Pay of Rs. 302540)-Monthly Commutation3,08,591

Comparison of Monthly Pension and Cash in hand on retirement in the case of NPS and Government Pension

Govt PensionNPS
Total Cash in hand on Retirement1,43,31,6073,66,47,666
Monthly Pension (in the case of NPS pension to be received from 40% of NPS wealth which has to be deposited as Annuity)3,08,5911,46,005
Additional Pension required to in the case of NPS to get pension equivalent to government Pension1,62,586
Additional Annuity (principal) required to get amount equivalent to government pension2,23,16,060
Remaining cash in hand in the case of NPS after making provision for Additional Pension1,43,31,606
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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