GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF
FINANCIAL SERVICES
LOK SABHA UNSTARRED QUESTION NO.
187
TO BE ANSWERED ON 18th JULY, 2022
(MONDAY)/ ASHADHA 27, 1944 (SAKA)
NEGATIVE RETURNS OF NPS
187. Shri Raja Amareshwara Naik,
Shri Bhola Singh,
Shri Rajveer Singh (Raju Bhaiya),
Shri Vinod Kumar Sonkar,
Dr. Sukanta Majumdar
Will the Minister of Finance be pleased to state:
(a) whether the Government is
aware that the New Pension Scheme (NPS) has given negative returns on its
corpus in this financial year;
(b) if so, whether the Government
is aware of the fact that there is huge anger and unrest among the Government
employees due to uncertainty and decline in their pension corpus and if so, the
remedial action taken thereon;
(c) whether the Government has
received complaint against the fund managers of NPS regarding corruption/
malpractices in NPS and if so, the details thereof along with the action taken
thereon;
(d) whether the Government is
considering to devise a mechanism for guarantee of minimum pension to the
Central Government category of NPS subscribers; and
(e) if so, the details thereof
and along with the other steps being taken by the Government in this regard?
ANSWER
THE MINISTER OF STATE IN THE
MINISTRY OF FINANCE
(DR. BHAGWAT KARAD)
(a) & (b) Pension is a
long-term financial product and its performance and returns are assessed on
long term basis. Returns on NPS are market determined and annually evaluated by
PFRDA. On the basis of returns, fund allocation is done amongst the three fund
managers by PFRDA. For the financial year 2021-22, the returns under NPS for
Government employees have been 6.91%. NPS returns in respect of Government
employees since inception are 9.33%. These returns are compounded annual growth
rate of corpus invested in various assets classes viz. Government securities,
Corporate debt instruments, Money market instruments and equity market. For
financial year 2021-22 NPS returns are better than most debt instruments.
The investment guidelines of NPS
are framed by the Pension Fund Regulatory and Development Authority (PFRDA) and
adequate safeguards are placed while framing these guidelines. The Pension Fund
managers registered with PFRDA make investments under NPS in various asset
classes i.e. Government securities, Corporate debt instruments, Money market
instruments, Equity market etc., as per the investment guidelines and the
amendments thereto issued by PFRDA. Pension is a long- term financial product.
Investments are done by Pension funds in such a way that the investments yield
better returns in long term.
Government of India has taken a
number of steps for streamlining NPS for Central Government employees. These
include enhancement of Government's contribution from the earlier 10% of Pay +
DA to 14% of Pay + DA, freedom of choice for selection of Pension Funds and
pattern of investment to subscribers, payment of compensation for non-deposit
or delayed deposit of NPS contributions for any period during 2004-2012, tax
exemption under Section 80C of the Income Tax Act, 1961 and increase in tax
exemption limit for lump sum withdrawal on exit from earlier 40% to 60% of the
amount due, making the entire withdrawal exempt from income tax.
(c) The Pension Funds are
monitored by PFRDA and are bound by the regulations to undergo periodic audits
and inspections. In case of complaint against fund managers, the same is dealt
with in terms of PFRDA’s guidelines.
(d) & (e) The overall architecture of NPS is such that the benefits under NPS depend on the accumulated corpus of the subscriber at the time of Exit. To protect the interest of the subscribers, the Government in 2019, enhanced Government's contribution from the earlier 10% of Pay + DA to 14% of Pay + DA, freedom of choice for selection of Pension Funds and pattern of investment to subscribers, payment of compensation for non-deposit or delayed deposit of NPS contributions for any period during 2004-2012, tax exemption under Section 80C of the Income Tax Act, 1961, and increase in tax exemption limit for lump sum withdrawal on exit from earlier 40% to 60% of the amount due, making the entire withdrawal exempt from income tax.
