Sir,
These days much hue and cry is being made over the newly introduced scheme of pension in favour of Govt. employees. New Pension System (NPS) was launched in J&K with effect from January 1, 2010 , while as the Central Govt. had already implemented this scheme from 2004 in favour of its employees (barring Armed Forces). The NPS is regulated by Central Recordkeeping Agency (CRA) of the National Securities Depository Limited (NSDL) with its headquarters centred at Mumbai. NPS is far better than the existing traditional GPF (Old Pension System). District Treasury Offices act as nodal agencies for this scheme.
Unfortunately, people in general and the subscribers (employees) in particular are lacking the necessary knowledge regarding NPS in order to familiarise themselves with the pros and cons of this newly introduced fruitful scheme. Even some treasury/acounts officials are lacking necessary knowledge of this two year old scheme in J&K. State Govt. should imapart them proper trainings in this regard so that subscribers do not feel any inconvenience. Under NPS, the state Govt. provides a matching share (10% at present) to the deductions from the salary of NPS subscriber which is remittted into a twelve digit unique account number of each subscriber. In this way, the deducted amount meant for saving, is doubled unlike in GP System. The growth of the savings is multiplied through reliable agencies like UTI, SBI and LIC , controlled and coordinated by the CRA/NSDL. Besides, postal delivery of annual statements by the CRA, a subscriber can also access his/her account online in order to check the savings. An NPS subscriber can increase his/her savings by extending the deductions under Tier-II. At the time of retirement, the savings of an NPS subscriber would far exceed than that of a traditional GPF Account Holder.
In addition to the difference in the quantum of savings (which is much higher in case of NPS subscribers), the major difference between the two is that while the savings of a GPF subscriber remains stagnant, the saved amount of an NPS Subscriber is mobilised. Obviously, a conscious economist will always favour the later one. Other difference being that while the traditional GPF subscribers become a burden on the Govt. after retirement, an NPS Subscriber can receive his/her own earned amount in the form of small chunks similar to the monthly pension in the post retirement period. Because, even after retirement, there is a provision of a manageable pension in case the employee wants to invest a portion of his outstanding amount in the reliable companies through CRA.
Traditional Pension System is against the credentials of the modern economic principles while New Pension System has been devised by the policy makers keeping in view the changing trends in the financial management, economics and investments. NPS is active wherein the subscribers’ money could be invested for the growth of economy without any loss to the investor while old system is passive where subscriber is wholly and solely dependent on spoon feeding from the Govt. and there is no benefit of their stagnant money to the society or nation. Governments don’t have a ‘divine’ or ‘heavenly’ source of income rather it just regulates and channelizes the public wealth (money). We are a part of the Govt. , so every stakeholder is obliged to play an active role in promoting and uplifting the public economy. Lastly, I perceive the NPS as a symbiotic relationship where both the subscriber as well as the Govt. is at an advantage and the existing Old Pension System (GPF) as parasitic relationship wherein only the subscriber gets benefited at the cost of weakening the Govt. or public economy.
Yours etc….
Abdul Hamid Mir
Lecturer Chemistry
Govt. Hr Sec School
Chuchot-Shamma, Leh.
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