Govt. of India,
Deptt. Of Expenditure vide their
OM No.F.No.1)T)(2)/2003/TA/19 dt.14.1.2004 & 4.2.04 have introduced
a New Defined Contribution Pension Scheme replacing the existing System
of Defined benefit Pension System. The New Pension Scheme comes
into operation w.e.f. 1.1.2004 and is applicable to all new entrants to
Central Govt. service except to Armed Forces joining Govt. service on
or after 1.1.2004.
New Pension Scheme
will work on
defined contribution basis
and will have two tiers – Tier I and Tier II.
is mandatory for
servants joining Govt. service
on or after 1.1.2004. In Tier I, Govt. servants will have to make
a contribution of 10% of his Basic Pay, DP and DA which will be
deducted from his salary bill every month by the PAO concerned.
The Govt. will make an equal matching contribution. Tier I contribution
will be kept in a non withdrawal Pension Tier I account.
II will be optional
and at the
discretion of Govt.
servants. Tier II contributions will be kept in a separate
account that will be withdrawal at the option of Govt. servant.
The scheme of voluntary contribution under Tier II will not be made
operative during the period of interim arrangement and therefore no
recoveries will be made from the salaries of the employees on this
Benefit Pension and GPF would
not be available to new Govt. servants joining Govt. service on or
Regulatory and Development and
Authority (PFRDA) will regulate and develop the pension market.
- As an
arrangement till such
time the statutory PFRDA is
set up and interim PFRDA has been appointed by issuing an executive
order by Ministry of Finance(DEA).
- It has
also been decided
II will not be made operative
during interim period.
the regular Central
Keeping agency and Pension Fund
Managers all appointed and the accumulated balances under each
individual are transferred to them, it has been decided that such
amounts rep[resenting the contributions made by the Govt. servants will
be kept in the Public Account of India . This will be a temporary
arrangements as announced by the Govt.
Govt. servant can exit
at or after
the age of 60 years from
Tier I of the Scheme. At exit, it would be mandatory for him to
invest 40% of pension wealth to purchase an annuity (from an IRDA
regulated Life Insurance Company), which will provide for pension for
the life time of the employee and his dependent parents/
employee. In case of Govt. servants who leave the scheme before
attaining the age of 60, the mandatory annuitisation would be 80% of
the pension wealth.
contribution will start from salary of
the month following the month in which the Govt. servant has joined
service. Therefore, no recovery will be effected for the month of
deductions will be
GPF contribution from the
Govt. servants joining the service on or after 1.1.2004 as the GPF
scheme is not applicable to them.
- It has
been decided that
formation of a regular Central
Record Keeping Agency, Central Pension Accounting office(CPAO) will
function as the Central Record Keeping Agency for the above scheme.
for allotment of Permanent Pension Account Number (PPAN)
service, the Govt. servant will be
required to provide particulars such as his name, designation, scale of
pay, date of birth, nominee(s) for the fund, relationship of the
nominee etc. in the prescribed for (Annexure I). The DDO
concerned will be responsible for obtaining this information from all
Govt. servants covered under the New Pension Scheme.
PAO concerned will
unique 16 digit Permanent Pension
Account Number (PPAN). The first four digits of this number will
indicate the calendar year of joining Govt. service, the next digit
indicates whether it is a Civil or a Non-civil Ministry, the next six
digits would represent the PAO Code (which is used for the purpose of
compiling monthly accounts), the last five digits will be the running
serial number of the individual govt. servant which will be allotted by
the PAO concerned. PAO will allot the serial number pertaining to
individual Govt. servants from 00001 running from January to December
of a calendar year. A register will be maintained for allotment
of PPAN to ensure that PPAN are allotted in sequence and there is no
duplication of PPAN.
the flow of
information from Non
to the CPAO, each of them will nominate a Nodal Office, which will be
responsible for forwarding the consolidated information/particulars in
respect of their Ministry/Departments and for correspondence with CPAO.
particulars of the
servants received from the various
DDOs will be consolidated by the Nodal Office identified in each
Ministry/Department/Office and sent to the CPAO. The CPAO will
keep this information in their computer database.
involved in the
operation of the new pension
scheme will be intimated in due course.
first salary bill of
entrant will be passed after
ensuring that the Annexure-I is received. Tier1 amount equal to 10% of
the (basic+dp+da+npa) will be deducted from the payBill and a matching
contribution will also be credited to the individuals credit.
for the individuals who are
covered under this scheme.
is to be
captured in the Annexure-II,
which should be carefully checked.
data file of
annexure-II will be created and
forwarded to CPAO on monthly basis.
on receipt of this
will update its database and
generate exception reports for missing credits, mismatches etc.
withdrawal of any
amount will be
allowed during the interim
- At the
end of each
the CPAO will prepare annual
accounts statements for each employee showing opening balance, details
of monthly deduction and Govt.’s matching contribution, interest
earned, if any, and the closing balance. CPAO will send these
statements to Nodal Office concerned.
the close of each
year, CPAO will have to report
the details of the balances (PAO-wise) to each PAO for the purpose of
reconciliation. The PAO will reconcile the figures of
contributions with figures as per the books of CPAO.
Accounting checks to be exercised for New Pension Scheme
service, the Govt. servant will
furnish particulars such as his name, designation, scale of pay, date
of birth, nominee(s) for the fund, relationship of the nominee etc. in
the prescribed form (Annexure I) for allotment of Permanent Pension
Pay bills are
new entrants who joined
service on or after 1.1.2004.
the Govt. servant under the
Scheme (Tier I) will start from the salary of the month following the
month in which the Govt. servant has joined service. Therefore,
no recovery shall be effected for the month of joining.
Tier I is mandatory.
contribution will be
made by Govt.
be 10% of his basic pay, DP,
DA& NPA which will be deducted from his salary bill every month.
in Basic Pay/DA/DP due to
arrear of pay, DA revision, 10% of paid emoluments are also to be
towards GPF contribution from the
Govt. servants joining service on or after 1.1.2004 as GPF scheme is
not applicable to them.
Number will be of 16 digits.
designed format will accompany
each pay bill indicating PPAN No., Basic Pay, DA, DP, Name, amount of
contribution, month etc. apart from other information.
therein in the schedule are
correct as per recovery made in the bill.
checks as are done in other
pay bills the pay bill is passed for payment.
recovery made on
individual contribution and equal
matching Govt. contributions will be compiled to relevant code heads as
1. 00/016/02 – Individual Contribution
2. 00/016/03 – Govt.
as Plus receipts with corresponding/respective charge head i.e. Service
heads and New RDR heads.
14. Finally schedules are detached and sent to EDP