Govt contribution to NPS raised

New Delhi: In a new year bonanza to 18 lakh central government employees, Finance Minister Arun Jaitley on Monday said the Centre has decided to enhance its contribution towards their pension corpus to 14 per cent from existing 10 per cent and also made entire withdrawal amount tax free at the time of retirement. 

The individual contributions, which will continue to be capped at a maximum of 10 per cent of the basic salary, will be exempt from taxable income under Section 80 C of Income Tax Act. The National Pension System (NPS) is a government-sponsored pension scheme that was launched in January 2004 for government employees. 

However, in 2009, it was opened to all sections. Based on the recommendations of Committee of Secretaries (CoS), the Cabinet last week decided to increase its contribution to 14 per cent for the central government employees under the NPS, he said. "Some changes have been made in the larger interest of employees. The corpus would now be 24 per cent from 20 per cent. Of this 14 per cent would be contributed by the government and the remaining 10 per cent by the employees," he said.