The Union Cabinet on December 6, 2018, approved the proposal to streamline the National Pension System (NPS). The NPS was implemented in May 2009 to provide a pension option to 360 million informal sector workers and provide them with old-age income security. NPS is being implemented and regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
1. Mandatory contribution by the Central Government enhanced by 4 per cent from the existing 10 per cent to 14 per cent for employees covered under NPS Tier-I
2. Central government employees will be provided with freedom of choice for selection of Pension Funds and pattern of investment.
3. Payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012
4. Contribution by Government employees under Tier-II of NPS will now be covered under Section 80 C for deduction up to Rs 1.50 lakh for the purpose of income tax at par with schemes such as General (PF), Contributory PF, Employees PF and Public PF, with a lock-in period of 3 years.
5. The entire withdrawal will now be exempt from income tax as the tax exemption limit for lump sum withdrawal on exit has been enhanced to 60 per cent.