The Department of Pension and Pensioners’ Welfare (DoPPW) has issued an Office Memorandum regarding the refund of the employee’s share of the National Pension System (NPS) along with returns, applicable in cases of death, disablement, or invalidation prior to the notification of the CCS (Implementation of NPS) Rules, 2021.
This decision by the DoPPW, which come under the Ministry of Personnel, Public Grievances and Pension, is intended to provide clarity and support to government employees and their beneficiaries with regards to NPS refund in case of accountholder’s death.
The NPS was introduced in January 2004, making it mandatory for new central government recruits, excluding the Armed Forces. Amendments to existing pension rules ensured that government servants appointed before January 1, 2004, continued under the CCS (Pension) Rules, 1972, and the CCS (Extraordinary Pension) Rules, 1939.
NPS: Provisional benefits under the CCS Pension Rules
To alleviate the hardships faced by employees appointed after January 1, 2004, provisional benefits under the CCS Pension Rules were extended in 2009 for those affected by death or discharge due to disability. However, these benefits were subject to adjustment against final payments under the new rules.
In 2015, regulations stipulated that upon the death of a subscriber, if benefits were claimed under the CCS Pension Rules, the entire accumulated pension wealth would be transferred to the government. This transfer included both the government contribution and the subscriber’s accumulated corpus.
The CCS (Implementation of NPS) Rules, 2021, further clarified that, in the event of a subscriber’s death or discharge due to invalidation, the government contribution and returns would be transferred to the government account, while the remaining corpus would be paid to the subscriber’s nominee or legal heir.
“If on death of the subscriber or his discharge from service on invalidation or disablement, benefits are payable to the family members /Government servant under the Central Civil Services (Extraordinary Pension) Rules, 1939 or the Central Civil Services (Pension) Rules, 1972, the Government contribution and returns thereon in the accumulated pension corpus of the subscriber shall be transferred to government account,” the Office Memorandum said.
“The remaining accumulated pension corpus shall be paid in lump sum to the Government servant or the person(s) in whose favour a nomination has been made under the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under National Pension System) Regulations, 2015, as the case may be.”
Effective from January 1, 2004, these guidelines ensure that the employee’s contribution with returns is returned to the nominee or legal heirs, along with interest calculated from the date of death or discharge until payment, based on Public Provident Fund rates.
For cases where benefits were already granted under CCS rules, it is stipulated that if the government contribution was not deposited into the government account, a refund will be required at the time of exit from NPS, including interest calculated at applicable rates.
This memorandum aims to provide transparency and support for government employees and their families, ensuring they receive their rightful benefits in the event of unforeseen circumstances.