Reservation and Promotions

 National Pension System Rules -2021

New Delhi, 31.03.2021 – Under the powers granted by Article 309 and Clause (5) of Article 148 of the Constitution, and following discussions with the Comptroller and Auditor-General of India regarding personnel in the Indian Audit and Accounts Department, the President enacts the following rules governing the implementation of the National Pension System (NPS):

 

Rule:1 Short Title and Commencement:

 

These rules will be called the Central Civil Services (Implementation of National Pension System) Rules, 2021.

They take effect from the date of their publication in the Official Gazette.

Rule:2 Application:

 

        These rules apply to government employees, including civilian staff in Defence Services, appointed on or after January 1, 2004, except:

·       Railway employees,

·       Casual or daily workers,

·       Contingency-paid workers,

·       All India Service members,

·       Locally recruited staff for diplomatic missions abroad,

·       Contract employees,

·       Those governed by the Constitution or other laws in force,

·       Individuals covered under the Central Civil Services (Pension) Rules, 1972 by specific orders.

Rule:3 Definitions:

 

Terms used in these rules include:

·       Accredited Bank: A bank authorized to handle government transactions and transfer funds for the NPS.

·       Accumulated Pension Corpus: The total value of pension investments in an individual’s account under the NPS.

·       Annuity: Regular payments made to subscribers from their pension corpus by an Annuity Service Provider.

·       Annuity Service Provider: A life insurance company regulated by the Insurance Regulatory and Development Authority (IRDA) to provide annuities under NPS.

·       Authority: Refers to the Pension Fund Regulatory and Development Authority (PFRDA).

·       Central Recordkeeping Agency: An agency responsible for maintaining subscriber records under the NPS.

·       Drawing and Disbursing Officer: An official designated to handle payment matters for the government.

·       Defence Services: Includes services under the Ministry of Defence and Defence Accounts Department, excluding those permanently governed by military laws.

·       Emoluments: Defined in rule 5.

·       Foreign Service: Service where a government employee is paid from non-government funds with government approval.

·       Government: Refers to the Central Government.

·       Head of Department: An authority outlined in the Delegation of Financial Powers Rules, 1978, or as designated by the President.

·       Individual Pension Account: A subscriber’s NPS account, specifying its terms and conditions.

·       National Pension System (NPS): A contributory pension scheme collecting and managing individual contributions under regulations from PFRDA.

·       Pay and Accounts Officer: An official maintaining accounts for the central government or union territories.

·       Pension Fund: An intermediary managing pension contributions under PFRDA regulations.

·       Permanent Retirement Account Number (PRAN): A unique identifier given to NPS subscribers.

·       Subscriber: A government employee enrolled in an NPS scheme.

·       Trustee Bank: A bank managing NPS funds under the Banking Regulation Act, 1949.

Rule:4  Registration into the National Pension System (NPS):

1. Government employees covered by these rules must submit a registration application for the NPS, along with an option form (as referred to in Rule 10), immediately upon joining service, using the Common Subscriber Registration Form or any form specified by the Authority. This should be submitted to the Head of Office.

 

2.    Upon receiving the application, the Head of Office must verify its completeness, sign it with the date of receipt, and forward it to the Drawing and Disbursing Officer (DDO) within three working days of the employee joining. A copy of the application must be retained for record-keeping.

 

3. The DDO must send the employee's application to the Pay and Accounts Officer (PAO) or Cheque Drawing and Disbursing Officer (CDDO) within three working days of receiving it from the Head of Office.

 

4. The PAO or CDDO, after receiving the application, must process it and submit it to the Central Recordkeeping Agency (CRA) via the online system within three working days. A signed copy of the application must also be sent to the CRA for record purposes.

 

5. The CRA will complete the registration process and issue a Permanent Retirement Account Number (PRAN) for each employee, as per the Authority's timeline. Once the PRAN is generated, the CRA will notify the PAO or CDDO and provide PRAN kits to the subscriber according to the prescribed process.

 

6. The PAO or CDDO must inform the DDO of the PRAN immediately.

 

7. The DDO must then relay the PRAN to the Head of Office without delay.

 

8. The Head of Office will notify the subscriber of their PRAN, record it in the Common Subscriber Registration Form (or another form specified by the Authority), and enter it into the employee’s service book. A certified copy of the registration form will be pasted in the service book within five working days.

 

9. The authorities involved in this process must ensure no delays occur in registering the employee and crediting their first NPS contribution. The first contribution must be credited within 20 days of the application submission or by the end of the month in which the employee joined, whichever is later.

 

10. If the NPS registration is not completed before the first salary is drawn, the salary will be paid after withholding the contribution amount determined under Rule 6. Once the PRAN is generated, the withheld amount, along with interest as per Rule 8, will be credited to the employee's Individual Pension Account.

 

11. The option form submitted in sub-rule (1) will be processed according to Rule 10.

5. Emoluments:

1. For determining mandatory NPS contributions, "emoluments" include basic pay as defined in Rule 9(21)(a)(i) of the Fundamental Rules, 1922, non-practicing allowance (NPA) for medical officers, and the applicable dearness allowance (DA) for that month.

 

2. If an employee is on leave with salary, their leave salary, including pay and DA, will be considered part of their emoluments for NPS contribution purposes.

 

3. If an employee is on leave without salary or extraordinary leave, only the salary and DA for the portion of the month they were on duty or on paid leave will be considered as emoluments.

 

4. If an employee is under suspension, the subsistence allowance paid during that period will be treated as emoluments.

 

5. Pay received while on deputation in India will be counted as emoluments. 

6.For employees on foreign service or deputation outside India, their emoluments will be based on the pay they would have received if they were not on deputation.

 

7. If a re-employed retiree's pay is reduced due to their pension, the pension amount used to reduce their pay will be included in the emoluments.

Rule:6. Subscriber Contributions to the NPS:

1. NPS operates on a defined contribution basis. Employees must contribute 10% (or any other percentage notified) of their emoluments each month, rounded up to the next rupee.

 

2. Employees may contribute during suspension, and if their suspension period is later treated as duty or paid leave, contributions will be adjusted based on the emoluments for that period, with the difference credited along with interest.

 

3. No contributions are required during periods of unpaid leave or absence. 

4. Employees on deputation will continue contributing to NPS based on their emoluments as though they were not on deputation. 

5. Any salary arrears due to retrospective increases will be treated as contributions for the month in which they are paid.

 

6. Employees on probation must contribute to NPS during this period.

 

7. Contributions during foreign service or deputation to international organizations will follow Department of Personnel and Training instructions and Authority procedures.

 

8. The DDO must deduct contributions from the employee's salary and submit details to the PAO or CDDO by the 20th of each month.

 

9. Employees may contribute more than the required amount following the procedures set by the Authority and Government.

 

10. The PAO or CDDO must prepare and upload a contribution file and generate a transaction ID by the 25th of each month. Contributions must be sent to the Trustee Bank by the last working day of each month, except for March, which should be submitted on the first working day of April. Delayed contributions will be credited along with interest for the delay.

7. Government Contribution:

(1) The Government will contribute 14% of a government employee's salary or a different percentage, if notified, to their Individual Pension Account each month. The contribution will be rounded up to the nearest rupee. If the employee is on leave for medical reasons, civil unrest, or for higher studies related to their official duties, and is either unpaid or paid less than full salary, the Government will contribute 14% (or the notified percentage) based on their notional salary, which includes pay, dearness allowance, and non-practicing allowance.

(2) The Government will not contribute during periods when the employee is not required to make contributions as per the rules.

(3) For employees under suspension, the Government’s contribution will be based on the subsistence allowance. However, no contribution will be made if the employee chooses not to pay during suspension. If the suspension is later treated as duty or leave, the Government will recalculate its contribution based on the employee’s entitled salary, and the difference, along with interest, will be added to the pension account. The interest rate will be the one applicable to Public Provident Fund deposits.

(4) Contributions during foreign service or deputation to international organizations (like the UN or World Bank) will be governed by specific orders from the Department of Personnel and Training and follow the Authority’s procedure.

(5) The contribution amount will be rounded up to the nearest rupee.

(6) The same timeline rules for an employee’s pension contributions apply to the Government’s contributions. If there is a delay in crediting the contribution due to reasons beyond the employee’s control, the Government will credit the amount with interest, as specified in rule 8.

Rule 8. Interest on delayed deposit of contributions:

(1) If there is a delay in contributions due to reasons beyond the Subscriber's control, the following scenarios apply:

 

(i) Delay in starting monthly contributions because the Subscriber’s registration in the National Pension System was completed later than the deadlines set in Rule 4.

(ii) Delay in the deduction of monthly contributions from the Subscriber's salary or in crediting them to their Individual Pension Account, exceeding the time limits defined in Rule 6.

(iii) Delay in the government’s crediting of monthly contributions to the Subscriber’s Individual Pension Account beyond the time limits set in Rule 7.

In these cases, the contributions will be credited to the Subscriber's Individual Pension Account, along with interest for the period of delay. The interest will be added to the account within thirty days of the contribution being credited, at the rate determined by the Government for Public Provident Fund deposits. Specifically, the interest rate for the period from January 1, 2004, to December 31, 2012, will be as notified by the Department of Financial Services on January 31, 2019, and by the Department of Expenditure on April 12, 2019.

 

(2) (i) Any delays in the registration of the Subscriber in the National Pension System, the commencement of contributions as per Rule 4, or the deduction and crediting of contributions as per Rules 6 and 7 will be investigated by the Head of Department or Chief Controller of Accounts to determine responsibility.

(ii) If it is found that the delay was due to administrative lapses, the responsible officials may be required to compensate the Government for the financial loss incurred due to interest payments.

(iii) The determination of responsibility and liability for such officials will follow the same process as that for delayed Tax Deduction at Source under Section 201(IA) of the Income-tax Act, 1961. This is in addition to any disciplinary actions that may be proposed against the officials responsible for the lapse.

Rule 9. Investment of the Accumulated Pension Corpus:

The Subscriber’s accumulated pension corpus will be invested according to the guidelines set forth by the Authority.

 

10. Option to avail benefits on death or invalidation or disability of Subscriber during service:

(1) Every government employee enrolled in the National Pension System must, upon joining, fill out Form 1 to indicate their choice between benefits under the National Pension System or the Central Civil Service (Pension) Rules, 1972, or the Central Civil Service (Extraordinary Pension) Rules, 1939, in case of their death or disability retirement. Employees already in service and covered by the National Pension System should exercise this option as soon as feasible after these rules are announced.

(2) The option must be submitted to the Head of Office, who will verify the information and place it in the employee's service book. A copy will be forwarded to the Central Recordkeeping Agency through the Drawing and Disbursing Officer and the Pay and Accounts Officer, who will also record the details in the online system.

 

(3) (a) Each government employee must submit family details in Form 2 along with Form 1:

(i) If the employee has no family, they should provide the information in Form 2 once they do.

(b) Employees must inform the Head of Office about any changes in their family size, including the marriage of children.

(c) If a child becomes disabled and unable to earn, the employee must notify the Head of Office with a Medical Certificate from a qualified Medical Officer. This should also be noted in Form 2.

(d) (i) The Head of Office will acknowledge receipt of Form 2 and any future communications from the employee, signing and dating them for record.

(ii) Any changes in family size communicated by the employee will be recorded in Form 2.

(4) (i) The option given in sub-rule (1) can be revised by the Subscriber multiple times before retirement, with the updated option submitted to the Head of Office.

(ii) A Subscriber discharged due to invalidation or disability will have the opportunity to submit a new option at discharge.

(iii) If a Subscriber fails to provide a new option or is unable to do so at discharge, their last submitted option remains in effect.

(iv) If no option was submitted and the Subscriber cannot provide one at discharge, their case will follow the provisions outlined in sub-rule (6).

(5) If a Subscriber dies while in service, the last option they submitted before their death will be considered final, and their family cannot revise it.

(6) (i) If a Subscriber who did not submit an option dies before completing 15 years of service or within three years of the rule notification, their family will receive a pension as per the Central Civil Services (Pension) Rules, 1972, or the Central Civil Services (Extraordinary Pension) Rules, 1939, as a default option.

(ii) If a Subscriber is discharged due to invalidation or disability before completing 15 years of service without submitting an option, and cannot do so at discharge, they will receive a pension based on the same rules as above.

(iii) In all other cases where no option was submitted, the claims of the Subscriber and their family will be processed according to the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under National Pension System) Regulations, 2015, as a default option.

(7) If the option submitted by the deceased Subscriber under sub-rule (1) or the default option under sub-rule (6) becomes invalid due to the lack of an eligible family member for family pension, that option will be void, and the benefits under the National Pension System will be granted to the legal heirs of the employee as per the regulations

 

Multiple Choice Questions

1. When did the Central Civil Services (Implementation of National Pension System) Rules, 2021 come into force? 

   a) 1st January 2004 

   b) 31st March 2021 

   c) On the date of publication in the Official Gazette 

   d) 1st April 2021 

Answer: c) On the date of publication in the Official Gazette 

 

2. Which category of persons is NOT covered under the Central Civil Services (Implementation of National Pension System) Rules, 2021? 

   a) Government servants appointed after 1st January 2004 

   b) Railway servants 

   c) Civilian Government servants in Defence Services 

   d) Persons employed on contract

Answer: b) Railway servants

 

3. Which of the following is defined as the periodic payment made by the Annuity Service Provider to the subscriber under the National Pension System? 

   a) Accumulated Pension Corpus 

   b) Annuity 

   c) Emoluments 

   d) Pension Fund 

Answer: b) Annuity

 

4. Who is responsible for regulating the Pension Fund under the Central Civil Services (Implementation of National Pension System) Rules, 2021? 

   a) Reserve Bank of India 

   b) Pension Fund Regulatory and Development Authority (PFRDA) 

   c) Comptroller and Auditor-General of India 

   d) Ministry of Defence 

Answer: b) Pension Fund Regulatory and Development Authority (PFRDA)

5. What does the term "Accumulated Pension Corpus" refer to? 

   a) The periodic payment made to a retired Government servant 

   b) The total contributions collected and saved in a subscriber's Individual Pension Account 

   c) A unique identification number for each subscriber 

   d) The total salary earned by a Government servant during service 

Answer: b) The total contributions collected and saved in a subscriber's Individual Pension Account 

 

6. Which agency is responsible for recordkeeping, accounting, and customer service for subscribers of the National Pension System? 

   a) Accredited Bank 

   b) Central Recordkeeping Agency 

   c) Comptroller and Auditor-General of India 

   d) Trustee Bank 

Answer: b) Central Recordkeeping Agency 

 

7. The Central Civil Services (Implementation of National Pension System) Rules, 2021 do not apply to: 

   a) Members of the All India Services 

   b) Civilian Government servants in the Defence Services 

   c) Government servants appointed after 1st January 2004 

   d) Employees of the Union Government

Answer: a) Members of the All India Services 

 

8. What does the term "Permanent Retirement Account Number" (PRAN) refer to in the context of the National Pension System? 

   a) A unique identification number allotted to each subscriber 

   b) The bank account number where pension is credited 

   c) The number assigned to the pension fund 

   d) A unique number assigned to an Annuity Service Provider 

Answer: a) A unique identification number allotted to each subscriber 

 

9. Who is the "Head of Department" as per the Central Civil Services (Implementation of National Pension System) Rules, 2021? 

   a) Any Gazetted Officer of the Department 

   b) An authority specified in Schedule 1 of the Delegation of Financial Powers Rules, 1978 

   c) The Chief Secretary of the Department 

   d) The Comptroller and Auditor-General of India 

Answer: b) An authority specified in Schedule 1 of the Delegation of Financial Powers Rules, 1978 

 

10. What is a "Trustee Bank" under the National Pension System? 

   a) A bank that handles payments to retirees 

   b) A bank that manages pension investments 

   c) A banking company as defined in the Banking Regulation Act, 1949 

   d) A bank selected to process foreign service pensions 

Answer: c) A banking company as defined in the Banking Regulation Act, 1949 

 11.  When should a government servant submit an application for registration in the National Pension System?

a) After one year of service

b) Immediately upon joining service

c) After retirement

d) After three months of service

Answer: b) Immediately upon joining service

12. To whom should the government servant submit the Common Subscriber Registration Form for registration in the National Pension System?

a) Pay and Accounts Officer

b) Central Recordkeeping Agency

c) Head of Office

d) Cheque Drawing Officer

Answer: c) Head of Office

13. Within how many working days should the Head of Office send the completed registration application to the Drawing and Disbursing Officer?

a) Five working days

b) Three working days

c) Ten working days

d) One working day

Answer: b) Three working days

14. Who is responsible for forwarding the registration application to the Pay and Accounts Officer or Cheque Drawing and Disbursing Officer after receiving it from the Head of Office?

a) Head of Office

b) Central Recordkeeping Agency

c) Drawing and Disbursing Officer

d) Subscriber

Answer: c) Drawing and Disbursing Officer

15. How long does the Pay and Accounts Officer or Cheque Drawing and Disbursing Officer have to process and forward the application to the Central Recordkeeping Agency?

a) Two working days

b) Three working days

c) Seven working days

d) One working day

Answer: b) Three working days

16.  What is allocated by the Central Recordkeeping Agency after completing the registration process for a government servant?

a) Pension Certificate

b) Permanent Retirement Account Number (PRAN)

c) Service Book

d) Subscription ID
Answer: b) Permanent Retirement Account Number (PRAN)

17.  Once the Central Recordkeeping Agency completes the registration process, who does it communicate the PRAN to first?

a) Subscriber

b) Head of Office

c) Pay and Accounts Officer or Cheque Drawing and Disbursing Officer

d) Drawing and Disbursing Officer
Answer: c) Pay and Accounts Officer or Cheque Drawing and Disbursing Officer

18.  Within how many working days must the Head of Office record the PRAN in the service book of the subscriber?

a) Two working days

b) Three working days

c) Five working days

d) Ten working days

Answer: c) Five working days

19.  By when should the first contribution of the government servant be credited to their Individual Pension Account?

a) Within 10 days of joining service

b) Within 30 days of application submission

c) Within 20 days of application submission or by the end of the month of joining

d) After six months

Answer: c) Within 20 days of application submission or by the end of the month of joining

20.  If registration is not completed before the first salary payment, what happens to the government servant's salary?

a) It is withheld

b) It is paid in full without any deductions

c) Contributions are withheld and credited once PRAN is generated

d) Salary is delayed until registration is complete

Answer: c) Contributions are withheld and credited once PRAN is generated

21. What happens if there is a delay in the commencement of monthly contributions due to factors not attributable to the Subscriber?

A) The Subscriber loses the contributions.

B) Contributions may be credited along with interest.

C) Contributions are returned to the Government.

D) No action is taken.

Correct Answer: B) Contributions may be credited along with interest.

22. Within how many days must the interest on delayed contributions be credited to the Subscriber's Individual Pension Account?

        A) 15 days

        B) 30 days

        C) 45 days

        D) 60 days

Correct Answer: B) 30 days

23. What is the interest rate for delayed contributions based on?

        A) Market rates

        B) Rate decided by the Government for Public Provident Fund deposits

        C) Fixed at 5%

        D) None of the above

Correct Answer: B) Rate decided by the Government for Public Provident Fund deposits

24. If the delay is due to administrative lapse, who is responsible for the pecuniary loss caused to the Government?

        A) The Subscriber

        B) The Head of Department

        C) The delinquent official(s)

        D) The Central Government

Correct Answer: C) The delinquent official(s)

25. How will the Accumulated Pension Corpus of a Subscriber be managed?

        A) It will remain in the Subscriber's bank account.

        B) It will be invested by pension funds as notified by the Authority.

        C) It will be transferred to private accounts.

        D) It will not be invested.

Correct Answer: B) It will be invested by pension funds as notified by the Authority.

26. What option must every Government servant covered under the National Pension System exercise upon joining Government service?

        A) Option for salary increment

        B) Option for availing benefits under the National Pension System or certain Pension Rules

        C) Option for health insurance

        D) Option for retirement plan

Correct Answer: B) Option for availing benefits under the National Pension System or certain Pension Rules

27. What should a Government servant do if there are changes in the size of their family after submitting Form 2?

        A) Nothing, the original form is sufficient.

        B) Communicate any changes to the Head of Office.

        C) Submit a new Form 1.

        D) Inform their colleagues.

Correct Answer: B) Communicate any changes to the Head of Office.

28. What happens to the last option exercised by a Subscriber if they die while in service?

        A) It can be revised by the family.

        B) It is treated as final.

        C) It is disregarded.

        D) It automatically transfers to a beneficiary.

Correct Answer: B) It is treated as final.

29. What will happen if a Subscriber dies before completing 15 years of service and did not exercise an option?

        A) The family will not receive any benefits.

        B) Family pension will be granted according to default options in Pension Rules.

        C) The Subscriber's savings will be returned.

        D) The family will receive a lump sum payment.

Correct Answer: B) Family pension will be granted according to default options in Pension Rules.

30. In the event that the option for family pension becomes invalid due to the non-availability of an eligible family member, what will happen?

        A) The family will receive no benefits.

        B) Benefits will be granted to the legal heirs according to NPS regulations.

        C) The option will remain valid indefinitely.

        D) A new option must be submitted.

Correct Answer: B) Benefits will be granted to the legal heirs according to NPS regulations.