Contributory pension Scheme (NPS/CPF)

The government has fixed 10% of the Basic Pay+ Grade Pay+ Dearness Allowance+ NPA, as the mandatory amount of contribution to the Scheme. No excess or lesser amount should be

deducted from the salary. It is the responsibility of the DDOs, for the correctness of the deduction. If, say, the total of BP+GP+DA is Rs 13410, than only 1341/ (@10% of 13410/-) should be deducted from the salary.
For any deviation, in the deduction, the DDO concerned would be held responsible.

The eligible state government employee shall commence contribution to CPS, after allotment of CPS account no. by this office, from the first month of joining the government service, as ‘Arrear’. This will also be deducted @ 10% of the BP+GP+DA, of the particular month. months are due, starting from the month of joining CPS, to the month of ‘First contribution’ is made by the DDO, after getting the CPS INDEX NUMBER.

Illustration: If month of joining is January, 2007 and month of first deduction, after getting CPS INDEX NUMBER, is January, 2009, the total arrear months are 24, and arrear has to be deducted as 1/24 in January, 2009, 2/24 in February, 2009, 3/24 in March, 2009…..up to 24/24 in Dec, 2010.

This amount has to be shown separately, as ‘ARREAR’ along with current month’s CONTRIBUTION’. (I.e. one subscription for current month and one additional for subscription arrears).

For ‘Arrear’ contribution also, equivalent amount would be contributed by the employer.

Other arrears such as PC arrears or DA arrears should be deducted in the month of account and SHOWN SEPARATELY AS ‘OTHER ARREARS’ in instalments only.

Interest would be calculated at the prevailing rate applicable to GPF which is now at 8%.

Interest is given for current credits from the month of contribution. For arrear credit, interest is from the month of transaction, though arrear may relate to previous months.

Final payment procedure: At the time of retirement, the employee would be required to invest 40% of the pension wealth to purchase an annuity which will provide pension for life time to the employees and in the event of his death to his dependent parents/spouse.
The remaining 60% pension wealth would be paid to the employee at the time of his retirement to utilize in any manner.

CPF deduction shall not exceed an amount equal to 10% of his salary (includes Dearness Allowance but excludes all other allowance and perquisites).

The monthly contribution is 10 percent of the Pay and DA to be paid by the employee and matching contribution by the state Government. The contributions and returns thereon would be deposited in a non-withdrawable pension account.

CPF = 10% of (Basic Pay+DA+NPA)