The story of Detriot’s bankruptcy was simple enough. Allow capitalism to grow the city, campaign against income inequality, tax the job creators until they flee, increase government spending in order to boost employment, promise generous pension plans to keep people voting for failure. Rinse, wash and repeat- Ben Shapiro
It was on December 10, 2018 that the then Union Finance Minister and BJP stalwart Arun Jaitely announced enhancement of the government’s contribution to the New Pension Scheme (NPS) raising it from the existing slab of 10 per cent to 14 per cent. The minimum employee contribution stood at 10 per cent.
This enhancement and consequent change in the structure of the contribution was evaluated by the financial and political observers then as the effort of the political dispensation to woo over 36 lakh central government employees and their families.
The December 10, 2018 announcement was welcomed by the employees in Jammu and Kashmir too, as it was then expected that the state employees would be brought under the umbrella of this beneficial preposition. This expectancy was bolstered with the August 05, 2019 announcement wherein Jammu and Kashmir was brought directly under the control of the central government and it was announced that the employees of the State (now Union Territory) would get all benefits that are presently entitled to central government employees.
However, sluggish pace in advancing the benefit to employees in Jammu and Kashmir is reminiscent of the inordinate delay by the political dispensation in implementing the New Pension Scheme. The NPS was made applicable to Jammu and Kashmir after six years of its coming into force by the Union Government. The New Pension Scheme, which replaced the old pension scheme, was rolled out and launched on January 01, 2004 for the central government employees. One of the reasons for delayed launch of the NPS in the erstwhile State of Jammu and Kashmir that those at the helm of affairs does not want to invite the wrath of the youth in particular besides providing the ammunition to the opposition to gird their lions.
Consequently, the NPS was implemented in Jammu and Kashmir on January 01, 2010 wherein all the fresh recruits appointed in the State Service were brought under the ambit of this contributory pension scheme. Henceforth, from the year 2010 the applicability and coverage of the employees in the Government Service under the Old Pension Scheme based primarily upon the number of years of the service rendered and the basic pay at the time of superannuation was obliterated for the fresh recruits.
Under the scheme, the employee and employer were equal contributors to the Pension Scheme which was fixed at the maximum of 10 per cent of the Basic Pay.
NPS is being implemented and regulated by the Pension Fund Regulatory and Development Authority. Government Servants till to date have not been able to reach over a consensus as to which scheme is better; the Old Pension structure or the New Pension Scheme. All that can be said about this is that while the Old Pension scheme was ‘Benefit Defined’, the new scheme is amalgamation of ‘Market and Contribution Defined’.
Under the recent changes in the structure of NPS, the subscriber is eligible to withdraw 60 per cent of the corpus. The remaining 40 per cent of the accumulated fund goes towards annuity.
The Tax exemption limit for lump sum withdrawal on exit too was enhanced to 60 per cent, it was announced, adding that the entire withdrawal will henceforth be exempt from purview of the Income Tax.
Out of 60 per cent of the accumulated corpus withdrawn by the NPS subscriber at the time of retirement, 40 per cent is tax exempt and balance 20 per cent is taxable.
The changes were made with the rationale that this will impact augmenting of old-age security at a time of rising life expectancy and by making NPS more attractive, government will be facilitated in attracting and retaining the best talent.
The Tier –I subscribers of the Union Territory of Jammu and Kashmir and Ladakh are eagerly awaiting the announcement by the administration of releasing and hiking Government Contribution under NPS to 14 per cent. It is hoped that the wait is not prolonged as to take away the sweetness of the benefit. The words by American President Abraham Lincoln aptly narrate thee yearning, “ And in the end it’s not the years in your life that count. It’s the life in your years.”