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In a bid to make retirement income scheme more attractive for Central government employees, the government has agreed to chip in a higher 14 per cent of the basic salary of an individual as its contribution to the National Pension System (NPS), a top source said. The move would benefit over 36 lakh Central government employees.
Also, individual contributions, which will continue to be capped at a maximum of 10 per cent of the basic salary, will be exempt from taxable income.
The NPS is a government-sponsored pension scheme that was launched in January 2004 for government employees. However, in 2009, it was opened to all sections. The scheme allows subscribers to contribute regularly in a pension account during their working life. On retirement, they can withdraw a part of the corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular income after retirement.
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