NPS: New Guidelines Issued On Refund Of Employee’s Share On Death, Disability—Check Key Details
The updated directives address scenarios involving contributions to the National Pension System in cases of invalidation, ensuring compliance with the CCS Pension Rules for government employees.
In a move aimed at offering better clarity to government employees and their families, the Department of Pension and Pensioners’ Welfare (DoPPW) has introduced new guidelines regarding the refund of NPS contributions in cases of employee death or disability.
This update specifically addresses scenarios involving the death, disability, or invalidation of subscribers prior to the implementation of the Central Civil Services, or CCS, (Implementation of National Pension System) Rules, 2021.
The directive from the DoPPW, part of the Ministry of Personnel, Public Grievances and Pension, clarifies the procedures and benefits available to government employees or their beneficiaries in the event of the subscriber’s death or disability.
Existing pension regulations were amended to ensure that employees who joined before January 1, 2004, would continue to be covered under the CCS (Pension) Rules, 1972, and the CCS (Extraordinary Pension) Rules, 1939.
In the event of a subscriber's death or discharge from service due to invalidation or disability, the family members or the concerned government servant will be entitled to benefits according to the Central Civil Services (Extraordinary Pension) Rules, 1939, or the Central Civil Services (Pension) Rules, 1972. The contributions made by the government, along with any returns accumulated in the subscriber's pension fund, will be transferred to a government account.
The guideline stated, “If the subscriber or the family members of the deceased subscriber, upon his death, avails the option of additional relief on death or disability provided by the Government, the Government shall have the right to adjust or seek transfer of the entire accumulated pension wealth of the subscriber to itself.”
The remaining pension corpus will be paid as a lump sum to the government servant or to the nominee, in accordance with the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under National Pension System) Regulations, 2015.
To ease difficulties encountered by employees appointed after January 1, 2004, temporary benefits were introduced under the CCS Pension Rules in 2009 for those affected by death or discharge due to disability. However, these benefits were provisional and could be adjusted against final payments in line with the forthcoming regulations.
These directives were effective from January 1, 2004. The employee's contributions, along with any accrued returns, are refunded to the nominee, legal heir, or government servant, as appropriate. This refund also includes interest calculated from the date of death or discharge up to the payment date, as per the rates and methods applicable to Public Provident Fund (PPF) deposits at the time.
In cases concerning Central Government employees enrolled in the NPS, if a government servant or their family members have received benefits under the CCS (Pension) Rules, 1972, or the CCS (Extraordinary Pension) Rules, 1939, in line with the DoPPW memorandum dated May 5, 2009, and have also benefited from the accumulated pension corpus under NPS, they must refund the government's contribution along with accrued returns from the NPS. This applies if the NPS accumulations have not been deposited into the government account or refunded for the benefits under the pension rules.
