Nalco opens New Pension Scheme's PSU account

Tue, Nov 3 05:59 AM

National Aluminium Company (Nalco) Ltd has become the first public sector unit to move its employees' retirement funds to the New Pension Scheme (NPS). The Board of the Pension Fund Regulatory and Development Authority (PFRDA) has cleared the modalities for Nalco to contribute 6% of workers' basic pay into the NPS, starting this month.

Citing Nalco's 'test case', the PFRDA is writing to the department of public enterprises to enable all central PSUs to bring their 1.5 million-odd workers into the NPS fold. If all PSUs come on board, the high annual record-keeping costs of NPS, which is currently at Rs 47, would fall by 36.5%, thanks to volume discounts. The NPS currently has 6.5 lakh accounts and is expected to hit the million mark by March 2010, which will trigger a 20% cut in record-keeping costs.

Nalco had been mulling a move to the NPS after the Second Pay Revision Committee report for PSUs was cleared by the Centre last year. The committee had mandated that central PSUs give their employees 30% of basic pay as retirement benefits. With 24% of worker's salary going into the Employees' Provident Fund, PSUs had been asked to either set up their own schemes for the residual 6% or join an existing scheme. "Nalco was a test case for us — if it switches to NPS, more and more PSUs would want to come as that additional 6% needs to be deployed somewhere. The PFRDA board has given its green signal and Nalco is moving around 1800 executives' superannuation pension funds into the NPS," PFRDA chairman Dhirendra Swarup said.

"I will be writing to the department of public enterprises informing them that Nalco has joined us and you may let all the other central PSUs know that the NPS platform is ready and available," Swarup said.

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