In a major update for central government employees, the Center has issued certain guidelines regarding contributions to the National Pension System (NPS). The Department of Pensions and Social Protection of Retirees, under the Ministry of Personnel, Public Grievances and Pensions, shared an office memorandum, dated October 7, 2024, outlining details of changes in contribution rules Employee NPS.

The guidelines also reiterated some existing provisions, including the requirement for contribution of 10% of monthly salary to NPS. This contribution is subject to periodic review, but the amount will always be rounded to the nearest whole rupee, the memorandum said.

NPS contributions during suspension periods

However, it specifies that during periods of suspension, employees can choose to continue to contribute. If a suspension is subsequently considered an obligation, contributions will be recalculated based on the employee’s salary during this period.

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Any discrepancy in contributions will be credited to the individual’s retirement account with applicable interest, it adds.

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While absent without pay or on unpaid leave, employees will not be required to contribute, in accordance with the guidelines issued in the Office Memorandum.

Besides, those who are posted to other departments or organizations will still contribute to the NPS on the basis of their salary, as if they had not been transferred, the rules said.

Employees on probation must contribute to the NPS

Employees on probation are also required to contribute to the NPS since the aim is to ensure that their retirement savings start as early as possible.

The process for managing these contributions includes monthly payroll deductions, which must be submitted by the Drawings and Disbursements Manager. The payroll and accounts manager will compile the contributions and send them to the trust bank before the end of each month, with specific deadlines set for March, the memorandum said.

In the event of a delay in crediting contributions, affected employees will receive their contributions along with interest for any delay, thereby ensuring that their retirement accounts are properly maintained, according to the Office memorandum.

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All ministries and departments have been urged by the DoPPW to communicate these new arrangements to personnel involved in NPS matters, ensuring strict compliance with the updated rules.

These new guidelines aim to streamline the process of contributing to the pensions of state employees and to improve the management of their retirement savings.