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New pension scheme
Published on 4 Feb. 2010 12:24 AM IST
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Nagaland government today announced that it has adopted new restructured Defined Contribution Pension Scheme of the government of India, applicable to state government employees who joined the service from January 1, 2010. To make the scheme operational, the state government would join the Central Record Keeping arrangements as entered between the Pension Fund Regulatory Development Authority (PFRDA) and the National Securities Depository Limited (NSDL) for the central government employees, an official notification issued by state chief secretary Lalthara said here. Now, with the introduction of this scheme, all persons appointed in the service of the state government with effect from January 1, 2010 would not be eligible for pension under the existing pension rules, but would be covered by the Defined Contribution Pension Scheme (new pension scheme). According to the notification, a monthly contribution of 10% of the basic pay and Dearness Allowance (including Dearness Pay) has to be paid by employees towards the pension fund. The state government would also provide a matching contribution as employer’s share, it stated. The contribution made would be deposited in a non-withdrawal pension tier-I account. Such funds, the notification said would be invested by Pension Fund Managers as approved by PFRDA under different categories of scheme which would be a mix of debt and equity. Fund managers would then provide information about the performance of different investment schemes in order to let employees understand the choices about which scheme to choose. The entire amount lying in his pension tier-I account at the time of retirement will be the pension wealth of the retiring government servant. At the time of retirement, employees will receive a lump sum payment equivalent to 60% of his pension wealth. It is mandatory for the retiring government servant to invest the remaining 40% of his pension wealth to purchase an annuity. The annuity should provide pension for the employee’s life time and his/her dependent parents and his spouse at the time of retirement. However, the individual would be free to utilize the lump sum 60% of his pension wealth in any manner. Individuals would have flexibility to leave the pension system prior to age 60 years or 30 years of service as the case may be. In such cases, the mandatory annuitisation would be 80% of pension wealth. State government would separately issue detail instruction on scheme operation. In addition, each individual may also have a voluntary tier-II withdrawal account.

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