New Pension Scheme for Govt Employees

New Pension Scheme

Two types of accounts under the New Pension Scheme – Tier-I and Tier-II. NPS investment is mandatory in Tier-I account, while it is voluntary in Tier-II

The NPS investment made by a government employee is 10% of the sum of Basic Pay and Dearness Allowance of that employee.

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The NPS investment in Tier-I of a employee made by government is 14% of the sum of Basic Pay and Dearness Allowance of that employee.

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A government employee can invest in Tier-II only if his Tier-I account is open. Investment in Tier-II of New Pension Scheme is voluntary

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There are eight fund managers to manage NPS investments made by government employees in Tier-I Account.

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Default Fund Managers

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Fund managers are allowed to invest in equities up to 50% of the contribution to NPS by a government employee.

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On retirement, an employee can withdraw only up to 60% from his NPS corpus. The remaining 40% has to be invested in life insurance plans.

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