7th Pay Commission: Why these 18 lakh employees will retire richer
New Delhi, Dec 13: There is some news on the 7th Pay Commission and related issues that may bring about a cheer for Central Government employees.
A Union Cabinet decision on the Centre's contribution to the National Pension Scheme could bring about some amount of relief to the CG employees.
What has changed
As per the decision, the Centre's contribution to the National Pension Scheme would now be 14 per cent instead of the earlier 10 per cent. This will benefit 18 lakh Central Government employees. Moreover 60 per cent of the withdrawal would be exempted from tax.
What is the scheme:
NPS is a government sponsored scheme which was launched in January 2004 for government employees. In the year 2009, it was however opened up to all sections. The 7th Pay Commission recommended for the setting up of a committee of secretaries. The committee was constituted and it submitted its report in 2018. It was on the basis of the draft the Cabinet approved the decision.
How employees benefit:
The government contribution has risen from 10 to 14 per cent for those employees covered under the NPS Tier-I. Individuals will now have the freedom of choice for selection of Pension Funds an pattern of investment. The rules state that 40 per cent of the total accumulated corps used to buy annuity at retirement or reaching the age of 60 was already tax-exempted. Out of 60% of the accumulated corpus withdrawn by the NPS subscriber at the time of retirement, 40% was tax-exempt too.
What about the pay hike:
Starting 2019, the government would put in place a new method to decide on the promotions and pay hikes. Based on the recommendations of the 7th Pay Commission, CG employees would get a pay hike on the basis their performance. What is more important is that there would be also an option for the public to rate the employee online. This would also be taken into account while deciding on promotions and hikes.