Interim arrangement
From Indiapensions
The New Pension Scheme became operative from 1.1.2004. The scheme is applicable to all new entrants to Central Government including Central Government civil ministries, non civil ministries and departments and armed forces (civil) who are paid a pension from the Consolidated Fund of India.
The Department of Economic Affairs is setting up the institutional framework for the New Pension Scheme which is expected to be in place in a few months. Meanwhile, the CGA and the CPAO are jointly managing the 'Interim Arrangement' of collecting contributions, issuance of unique account numbers, administration and recordkeeping for persons who join Central Government service on or after 01 January 2004.
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Working of the interim arrangement
In the interim arrangement, only contributions into Tier-I accounts (@ 10% of basic+DA), will be recovered from the salary bills of new Government employees every month. The Government will match this with an identical contribution into the employees' Tier-I account. Deductions and contributions to Tier-I accounts begin only from the 2nd month after the Government employee joins service. No deductions from salary or contributions by Government are effected for the month of joining service.
No deductions are made towards GPF contribution from these new Government employees as the GPF scheme is not applicable to them.
The Central Pension Accounting Office (CPAO) is functioning as the 'Interim CRA' for the new pension scheme and is responsible for central recordkeeping and reconciliation of pension contributions by new Central Government employees.
The Pay & Account Offices (P&AOs) under the CGA are partly performing the role of the CRA (of allotting unique account numbers) and partly that of POPs they are responsible for monitoring salary deductions and reporting of contributions to the CPAO.
Allotment of Permanent Pension Account Number (PPAN)
The CGA has developed a new software which captures information on new employees and their contributions. The CGA has delivered training to almost all P&AOs on this software and on handling the accounting and information processes of the New Pension Scheme. The CGA has developed and distributed a new form for new employees to all P&AOs. The Drawing and Disbursement Officers (DDOs) have been requested by their relevant P&AO to provide information on new employees in the prescribed format.
On joining service, the concerned DDO instructs a new Government employee to fill up the form prescribed by the CGA and provide particulars such as his name, designation, scale of pay, date of birth, nominee(s) for the New Pension Scheme, relationship to the nominee etc.
On receipt of the above form from the DDO, the P&AO allots a unique 16 digit Permanent Pension Account Number (PPAN) to the new employee. The first four digits of the PPAN indicate the calender year of joining the scheme, the next digit indicates whether it is a Civil Ministry or a Non-civil Ministry, the next six digits represent the P&AO's code and the last five digits indicate the running serial number of the individual Government servant in a particular calendar year. Each P&AO maintains an Index Register for the purpose of allotment of PPAN to new Government employees.
The P&AO returns a copy of the statement indicating the PPAN number alloted to each new employee with the help of the DDO and also a copy to the Principal Accounts Office. The Principal Accounts Office consolidates this information and forwards the same to the CPAO. The CPAO feeds this information in its database.
Along with the salary bill for the Government servants who join the service on or after 1.1.2004, the DDO/CDDO also prepares a separate bill for the matching contributions to be paid by the Government and creditable to the PPAN. On receipt of the salary bills of the new employees, the P&AOs exercise usual checks and pass the bill and make the payments to the DDOs.
The P&AO consolidates the information on new employees received from various DDOs and forwards the same electronically to the respective Principal Accounts Office. The Principal Accounts Office consolidates the information and sends the same in electronic form to the CPAO. CPAO on receipt of this information from all Principal Account Officers (including from the non-civil ministries) updates the database and generates exception reports on missing credits, mismatches etc. which are sent back to the P&AOs concerned through the Principal Account Officers for further action.
Transfers and promotions
Whenever any Government servant is transferred from one office to another either within the same accounting circle or to another accounting circle, balances are not transferred to another accounts office. However, the DDO indicates the unique account number and the month up to which the employee's contribution and the matching Government's contribution has been transferred to the Pension Fund in the Last Pay Certificate of the individual.
The CGA is drafting some rules regarding treatment of contributions in the event of a transfer or promotion of an employee covered by this scheme. In principle, if the basic pay of an employee covered by the scheme changes in the middle of the month, the change in the contribution amount to the PPAN will be effected only from the subsequent month. The CGA will shortly finalise the rules regarding responsibility for effecting the deduction and transfer to the PPAN i.e. whether the earlier or new DDO will be responsible for this transaction.
Withdrawals
No withdrawal of any amount is allowed during the interim arrangement. Provisions regarding terminal payments in the event of untimely death of an employee or in the event of his leaving the Government service during the interim period are yet to be notified.
Concerns regarding the Interim Arrangement
- The CGA and the P&AOs have no direct control on the DDOs. The relevant ministries and departments should notify their respective DDOs regarding this scheme to ensure that the DDOs are reporting new employees and their salary details to their respective P&AOs. The DDOs should also be required (and trained) to comply with the information and accounting formats and procedures prescribed by CGA.
- In order to ensure zero delays in the deduction and transmission of information regarding contributions to PPAN, it is essential that the P&AOs receive information regarding new employees on time.
- Standard information regarding the operations as well as employee benefits and rights may have not been provided to new employees. Also, provisions regarding terminal payments in case of the untimely death of the Government employee and in the event of his leaving the Government service have not been notified as yet.
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