New Pension Scheme (NPS) is a defined
contribution scheme, its payout depends upon the amount of contribution and the
growth on the investment over a period of time for an individual while defined
benefit schemes payout is defined and is based on salary and number of years in
service etc. at the time of retirement of an individual.
At the time of normal retirement after
attaining 60 years, the subscriber can withdraw 60% of the accumulated wealth
and will be required to invest remaining 40% of the accumulated wealth to buy a
life annuity from insurance company approved by Insurance Regulatory and
Development Authority (IRDA). The mandatory provision of annuitisation will be
invested to buy life annuities as per various options available to him. The
amount of annuity varies depending upon the option selected by him.
Registration of ASPs (Annuity Service Providers) is under process and as soon
as they get registered, other details will be made available.
In old pension scheme government pays
pension after retirement as its liability while in NPS government
co-contributes to employee during his service period to build up a corpus on
which annuities will be paid.
This information was given by the Minister
of State for Finance, Shri Namo Narain Meena in written reply to a question in
the Rajya Sabha today.
DSM/SS/HB/SL
(Release ID: 78589)
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