The Department of Pension and Pensioners’ Welfare (DoP&PW) has notified the Central Civil Services (Implementation of National Pension System) Rules, 2021 to govern service related matters of central government civil employees covered under the National Pension System.
In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman proposed to increase the employer’s contribution to 14% of the employee’s basic salary under the NPS for central government staff.
The DoP&PW, which comes under the Ministry of Personnel, Public Grievances and Pensions, has released a new office memorandum detailing the government’s contribution to the National Pension System (NPS) for central government employees.
This latest memorandum, dated October 7, outlines the rules governing contributions and provides clarity on various scenarios affecting pension contributions.
Also read: Central govt employees alert! New guidelines on NPS contributions issued
The NPS operates on a defined contribution basis. According to Rule 7 of the Central Civil Services (Implementation of National Pension System) Rules, 2021, the central government will contribute 14% of the emoluments of each government employee to their individual pension account every month. This amount will be rounded to the nearest higher rupee.
Govt to contribute 14% monthly to employees’ pension accounts
“The central government shall make contribution of 14% or such other percentage as may be notified from time to time, of the emoluments of a government servant to the individual pension account of the central government employee every month. The amount of contribution payable shall be rounded off to the next higher rupee,” the memo said.
Importantly, no government contribution will be made during periods when the employee is not required to contribute, except in specific cases. For instance, if an employee is on medical leave or pursuing higher studies beneficial to their official duties, the government will contribute based on the employee’s notional emoluments, which include basic pay and dearness allowance.
Adjustments in pension contributions during suspension and foreign service guidelines
In cases of suspension, contributions will be based on the subsistence allowance paid to the employee. If the period of suspension is later classified as duty or leave for which salary is payable, the government will adjust contributions accordingly. Any difference in contributions during the suspension will be credited to the employee’s pension account along with interest, at rates determined by the government.
The memorandum also addresses contributions during foreign service, including deputations to international organizations. These will follow guidelines issued by the Department of Personnel and Training.
Finally, the memorandum emphasizes that all ministries and departments must ensure that these provisions are communicated to personnel managing NPS matters for effective implementation.