New NPS Guidelines Issued — All You Need To Know

The Central Pension Accounting Office (CPAO) has introduced new guidelines to streamline processing under the National Pension System (NPS). The changes aim to ensure that disbursements are handled similar to the Old Pension Scheme (OPS), addressing long-standing delays and uncertainties faced by retirees.

On Mar. 12, the CPAO issued an official memorandum directing all authorities to follow the revised process for handling NPS cases. This follows an earlier directive issued on Dec. 18, 2023, which sought to align pension processing under NPS with the OPS framework to ensure timely disbursal.

Despite earlier instructions, reportedly some Pay and Accounts Offices (PAOs) continued to deviate from the prescribed method, leading to delays. The CPAO highlighted that certain PAOs were still submitting three copies of Provisional Pension Payment Orders (PPOs), while only two copies — one for the pensioner and one for the disbursing authority — were required. This duplication has been a key factor in processing delays, said the CPAO.

In its latest directive, the CPAO stressed the importance of adhering to the updated submission process.

“It has been observed that while submitting such cases to CPAO, few PAOs have not followed the guidelines in submission of NPS cases as OPS cases. To be more specific, it has been noticed that three (3) copies of Provisional PPOs (used earlier for submission of NPS cases to CPAO) have been submitted by PAOs, while submitting NPS cases as OPS cases whereas only two (02) copies of PPO Booklets (Pensioner Portion & Disburser Portion) should be submitted along with cases to CPAO,” the memorandum stated.

Banks authorised for pension disbursement have also been asked by the CPAO to review the guidelines and comply with the updated procedures. “Similarly, all the CPPCs of the authorised banks are also requested to go through the OMs issued by this office and subsequent orders in this regard and act accordingly,” the CPAO added.

The objective of these new rules is to expedite pension processing for NPS retirees while improving transparency in disbursal. By standardising the process, pensioners can expect a smoother and more efficient experience, free from unnecessary procedural hurdles.

Before the introduction of the NPS in 2004, government employees were covered under the OPS, which provided a fixed pension based on their last drawn salary and years of service. Employees needed at least 10 years of service to qualify for this benefit.

OPS pensioners receive a guaranteed amount, which is periodically adjusted for inflation through biannual Dearness Allowance (DA) revisions. In case of a pensioner’s death, their family remains eligible for pension benefits.

The NPS, introduced in 2004, replaced the OPS for government employees and was later extended in 2009 to private-sector employees, self-employed individuals and Non-Resident Indians (NRIs). Unlike the OPS, the NPS is a market-linked pension scheme where returns depend on investment performance.

Employees contribute regularly to their NPS accounts, and upon reaching the age of 60, they can withdraw 60% of their accumulated corpus tax-free while investing the remaining 40% in an annuity plan.