Sir I have joined CRPF and I want to know about Defined Contribution Pension Scheme (DCPS) of Central Reserve Police Force (CRPF) . What is this New Pension Scheme ? Will a small part of salary of Government officers be deducted ? Please tell me in detail .

The Defined Contribution Pension Scheme (DCPS) works on defined contribution basis and will have two tiers – Tier-I and II.

Contribution to Tier-I is mandatory for all Government servants joining Government service, whereas Tier-II will be optional and at the discretion of Government servants.

Employee’s Contribution:-

Deduction is available under section 80CCD(1) in respect of employee’s contribution in the year in which contribution is made.

However no deduction is available in respect of Employee’s contribution, which is in excess of 10% of the salary of the Employee.

In Tier-I, a Government servant will have to make a contribution of 10% of his basic pay plus DA, which will be deducted from his salary bill every month by the PAO concerned. The Government will make an equal matching contribution.

Tier-I contributions (and the investment returns) will be kept in a non-withdrawable Pension Tier-I Account. Tier-II contributions will be kept in a separate account that will be withdrawable at the option of the Government servant.Government will not make any contribution to Tier-II account.

The existing provisions of Defined Benefit Pension and GPF would not be available to the new recruits in the central Government service

An independent Pension Fund Regulatory and Development Authority (PFRDA) will regulate and develop the pension market.

As an interim arrangement, till such time the Statutory PFRDA is set up, an interim PFRDA has been appointed by issuing an executive order by M/o Finance (DEA).

A Government servant can exit at or after the age of 60 years from the Tier-I of the Scheme. At exit, it would be mandatory for him to invest 40 per cent of pension wealth to purchase an annuity (from an IRDA-regulated Life Insurance Company) which will provide for pension for the lifetime of the employee and his dependent parents/spouse. He would receive a lump-sum of the remaining pension wealth which he would be free to utilize in any manner.

In the case of Government servants who leave the Scheme before attaining the age of 60, the mandatory annuitization would be 80% of the pension wealth.