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National Pension System Rules
19 rules • 2004
New Pension System for government employees joining after 01.01.2004 — contribution, fund management, withdrawal, exit, Tier I/II accounts.
General
Rule 1The National Pension System (NPS) is the retirement savings arrangement introduced for central government employees who joined service on or after 1 Januar...Rule 2Before 2004, the central government operated a 'Defined Benefit Pension Scheme.' Under this system, a retiring government employee received a monthly pensi...Rule 3Under the Defined Benefit Pension Scheme, employees did not contribute a single rupee from their salaries toward their own pension. They simply served, ret...Rule 4One of the key drivers behind the shift to NPS is the dramatic increase in human longevity. People today live significantly longer than previous generation...Rule 5Given the fiscal unsustainability of the old Defined Benefit Pension system (due to rising retiree numbers, longer life expectancy, and the absence of a de...Rule 6The NPS framework is governed by a set of specific rules and regulations rather than a single all-encompassing statute. The main regulatory instruments are...Rule 7The Pension Fund Regulatory and Development Authority (PFRDA) was established by the Government of India on 23 August 2003, initially through an executive ...Rule 8NPS was initially mandatory only for central government employees who joined on or after 1 January 2004. However, from 1 April 2009, NPS was extended and m...Rule 9The NPS cutoff date of 1 January 2004 is applied based on when an employee actually joins service, not when they were selected. A commonly asked question i...Rule 10NPS has four defining features that make it different from the old pension system. First, it is portable: each subscriber gets a unique Permanent Retiremen...Rule 11NPS, formally called the Contributory Pension Scheme, is mandatory for all central government employees (other than those in the Armed Forces) and employee...Rule 12The Ministry of Finance's Department of Financial Services oversees NPS at the central government level. The Pension Fund Regulatory and Development Author...Rule 13Every NPS subscriber automatically has a Tier-I account, which is the core pension account. They also have the option to open a Tier-II account, which func...Rule 14All Tier-I contributions, along with the investment returns they earn, accumulate in a non-withdrawable Pension Tier-I Account. This account cannot be acce...Rule 15Partial withdrawals from the Tier-I account are allowed, but only under strict conditions. The subscriber must have been enrolled in NPS for at least three...Rule 16The CCS (Implementation of NPS) Rules, 2021 gave formal statutory shape to the rights of NPS subscribers across various situations — retirement, superannua...Rule 17Existing government employees who were in service when the CCS (NPS) Rules, 2021 were notified are also required to submit Form-1 (option for benefits) and...Rule 18The rules address several edge cases around option-giving. An employee who is invalided out or discharged may submit a fresh option after recovery. If they...Rule 19When an employee opts for Voluntary Retirement (after 20 years of service) or Premature Retirement under FR 56(j), they are entitled to full NPS retirement...