Those who have joined/joining the Banks on and from 1-4-2010 will be governed by the New Defined Contributory Pension Scheme.
AGE OF RETIREMENT :60 years
Features of New Pension Scheme:
a. Effective from 1-11-2017
b. There will be two tiers of contribution i.e. Tier I and Tier II
c. Contribution to Tier I is compulsory and contribution under Tier II is optional.
d. Under Tier I, employees will contribute 10% of Pay plus DA.
e. Banks will contribute 14% of Pay plus DA.
f. For Tier II contributions, there will be no matching contribution by the Banks.
g. Tier I contributions will be kept in Non-refundable account.
h. Tier II contributions will be kept in a separate account and are withdrawable at the option of the employee.
i. There will be no separate PF account or contribution by the employees.
j. The account will be maintained by a Central Record keeping Agency.
k. The contributions will be managed by Pension Fund Managers. The service charges by the Service Provider/Fund Manager of NPS will be borne by the bank (including SBI) from the FY 2021.
l. PFRDA – Pension Fund Regulatory and Development Authority will regulate the scheme.
m. On retirement at the age of 60, it would be mandatory to invest 40% of the contributions in Pension Annuity and 60% can be taken as cash. Employee can also invest more than 40% in Pension Annuity.
n. For those who retire/exit service before the age of 60 years, 80% of the contributions shall be invested in Pension Annuity.
o. Each employee will be given a Permanent Pension Account Number (PPAN).
p. Pension Fund Manager will offer three options to employees to invest their contributions according to their choice.
q. Employees will have the choice to invest the contributions in Equity or in Corporate Sector or in Government Sector.
r. Maximum permissible limit for investments:
In Equity – 50% of contribution
In Corporate Sector – 100% of contribution
In Government Sector – 100% of contribution
s. Employee can choose any mixture of investment upto above ceilings.
t. If employee does not give his choice, Fund Manager will invest the contribution under Auto Choice Method.
u. Even under Auto Choice Method, investment in Equity will not exceed 50% of the contribution.
v. Employee will have the choice to choose the Fund Manager and the investment pattern.
w. Employee has the right to change the Fund Manager annually.
x. Employee has also the choice to change the investment pattern between investment in Equity, in Corporate Sector and in Government sector looking to the returns on investment and perceived risks in investments.
y. Contribution to Tier I is non-withdrawable during service but Tier II contribution can be withdrawn at his option.
z. Pension based on the Annuity purchased will be payable for lifetime of the employee/dependent parents/spouse.