Rule 11 — NPS Rules
Original Rule Text
11. Thus, NPS, the Contributory Pension Scheme, is mandatory to all employees joining services of Central Government (except Armed Forces) and Central Autonomous Bodies on or after 1st January 2004 (Authority : FR : 16). It replaced the existing system of Defined Benefit Pension with effect from January 01, 2004. Contributions are made by “Subscriber” and by the “Employer and Deposited into individual pension account (PRAN) of the employee.
- NPS Architecture
What This Means
NPS, formally called the Contributory Pension Scheme, is mandatory for all central government employees (other than those in the Armed Forces) and employees of Central Autonomous Bodies who joined service on or after 1 January 2004. It replaced the earlier Defined Benefit Pension system, where the government bore the entire cost of pension without any contribution from the employee during service.
Under NPS, contributions are made by two parties — the 'Subscriber' (the employee) and the 'Employer' (the government) — and both amounts are deposited into the subscriber's individual pension account, identified by the PRAN. The architecture of NPS connects the subscriber, Nodal Office, Pay and Accounts Office (PAO), Central Recordkeeping Agency (CRA), Trustee Bank, and Pension Fund Managers in a structured flow of funds.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1NPS is mandatory for central government employees (except Armed Forces) joining on or after 1 January 2004.
- 2It replaces the Defined Benefit Pension with effect from 1 January 2004.
- 3Both the subscriber (employee) and employer (government) contribute to the individual PRAN.
- 4Central Autonomous Bodies are also covered under this mandate.
- 5The NPS architecture involves a chain: Subscriber > Nodal Office > PAO > Trustee Bank > Pension Fund Managers.
Practical Example
Amit Sharma joined the Central Secretariat as an Assistant Section Officer on 15 March 2005. Since he joined after 1 January 2004, he is automatically enrolled in NPS and cannot opt for the old defined-benefit pension. Each month, his salary slip shows a deduction of 10% of his basic pay+DA, and the government credits an equal (now 14%) matching contribution. All of this flows into his PRAN and is invested by a Pension Fund Manager chosen by Amit (or the default scheme).
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
▼
▼
▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.