The Department of Pension and Pensioners’ Welfare (DoPPW) issued guidelines for central government employees regarding contribution to the National Pension System (NPS) during suspension, probation, and deputation to a foreign shore in a circular on October 7, 2024.

As per the rules, NPS contribution is mandatory for central government employees. The employees contribute 10 per cent of their basic salary and dearness allowance (DA) and the government contributes 14 per cent of their monthly salary and DA to the pension scheme. However, if the employee is on leave or under suspension, or is posted outside India, the contributions will be made as per the following rules.

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During The Suspension Period:

NPS contribution during the suspension period is allowed, subject to the outcome of the enquiry. After the probe against the employee is complete and the government passes the final order, the employer’s contribution will be made based on the employee’s entitlement. If the duration of the suspension is treated as a duty period, stipulated contributions will be made to the NPS account. If the period is treated as leave for which leave salary is payable, the contribution will be made based on that salary.

According to the memorandum, any difference between the amount already deposited and the due amount will be dealt with by crediting the difference amount and the interest to the subscriber’s NPS account. The interest rate will be based on the Public Provident Fund deposit rate.

The same rules will apply if an employee is sent on deputation or transferred to another department under the central or state government.

During Probation:

The memorandum clarifies that the same rules will apply to those under probation. “The “subscribers shall contribute towards National Pension System during the period spent under probation.”

During Service Outside India:

For employees posted on deputation to the United Nations, Asian Development Bank, International Monetary Fund, etc., NPS contributions will be made as per instructions issued by the Department of Personnel and Training and the Pension Fund Regulatory and Development Authority (PFRDA).

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Delay In Contributions:

As per the process, the contribution should be sent to the trustee bank by the employer on the last day of each month, except March, for which the last date is April 1 (due to the financial year-end). For any delay in crediting the contribution to the individual pension account beyond the timeline (not by the subscriber or attributable to the subscriber), interest will be credited to the subscriber’s account for the delayed period.

In 2004, the government replaced the old pension scheme (OPS) with the NPS and made it mandatory for all central government employees. The government contributes a higher percentage of the employees’ salaries while providing tax benefits to both old and new tax regimes. The new rules will positively impact a suspended employee if the person comes out clean after the inquiry. It will also help employees on deputation as the memorandum provides clarity on their NPS contributions.