NPS-AR brings additional relief with provisional pension

Several benefits are lined up for those who wish to invest their money in the government’s new pension scheme.

Published: 30th December 2019 04:23 AM  |   Last Updated: 30th December 2019 11:10 AM   |  A+A-

Express News Service

MUMBAI: Several benefits are lined up for those who wish to invest their money in the government’s new pension scheme. Family pension under the National Pension System-Additional Relief (NPS-AR) scheme and additional relief in the form of provisional pension on defined benefit lines are to be paid to the pensioners. The department of expenditure under the Ministry of Finance has recently issued a memorandum, wherein concerned bank branches were requested to obtain the requisite life certificates from pensioners, so that those covered under the NPS-AR will be given timely payment of pensions electronically. The pensioners will benefit from this directive to the banks.

Under the NPS-AR, pensioners or their families need to submit the requisite certificates to the Central Pension Accounting Office (CPAO).At present, one is initially expected to invest in the Atal Pension Yojana (APY) under NPS only till the age of 60. After that, the pensioner has to mandatorily withdraw 60 per cent of the money, keeping the balance 40 per cent as annuity with any of the 12 life insurers who manage such funds. However, when the new scheme falls in place, one will be able to invest in the fund until 70 years of age.

“The Pension Fund Regulatory and Development Authority (PFRDA) has urged the government to allow pension fund subscribers to put their annuity with NPS until 63 years of age,” says S Bandopadhyay, whole time member (finance), PFRDA.

Even though 60 per cent of the total money received at maturity from the NPS is tax-free, annuities are taxed in the hands of investors. PFRDA has suggested that only interest earned should be taxed and not the entire annuity, Bandopadhyay said.

“PFRDA has suggested that the government increase the tax exemption amount on the exclusive pension investment, currently available for Rs 50,000 to Rs 1 lakh under Section 80CCD (1B) in NPS,” he said. PFRDA wants that systematic withdrawal plans (SWPs) to be allowed in the NPS, so that subscribers may choose a more efficient option than annuity products.

There are special provisions for government employees as well. For example, those who have joined the government service on or after January 2004 and are covered under NPS, will have a provisional pension and also a cover in case of death or disability. The spouse or family of the deceased government employee would also get the benefit.

As of date, the total corpus of NPS was pegged at Rs 4,00,000 crore, which is likely to go up to Rs 4,30,000 crore by March 31, 2020. In terms of the number of policies, it currently stands at 3.20 crore, and is likely to go up to 3.40 crore by the end of the current fiscal.


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp