44.

5 Investment -The pattern of investment to be followed by Non-

Government Provident Funds, Superannuation Funds and Gratuity
Funds, w.e.f. 1st April, 2009 as per Notification No.5/88/2006-PR dated
14th August, 2008, as under:

(i) Securities (Govt. Securities, Mutual Funds) Upto 55%

Debt Securities, Term Deposit receipts, Rupee Bonds Upto 40%
(iii) Money market instruments Upto 5%
Shares of companies on which derivatives are available in
BSE or NSE or equity linked schemes of mutual funds
Regulated by SEBI Upto 15%

44.6 Architecture of NPS: Unbundled architecture - Function

specific intermediaries:

(1) Subscriber interface- Points of Presence/ Aggregator

Points of Presence (POPs) are the first points of interaction of the
NPS subscriber with the NPS architecture. The authorized
branches of a POP, called Point of Presence Service Providers
(POP-SPs), who act as collection points and extend a number of
customer services to NPS subscribers. Currently there are 39
PoPs in number with 9000+ branches.

Record keeping- Central Record Keeping and Accounting

Agency
National Securities Depository Limited (NSDL) as Central
Recordkeeping and Accounting Agency (CRA) is acting as an
operational interface between PFRDA and other NPS
intermediaries such as Pension Fund Managers, Annuity Service
Providers, Trustee Bank etc. Providing Administration and
customer service functions for NPS and issue of unique
Permanent Retirement Account Number (PRAN) and maintaining
its database are the main responsibilities. National Securities
Depository Limited (NSDL) commenced Central Recordkeeping
Agency (CRA) operations on 2nd June, 2008.
Fund Management
PFRDA has appointed 3 Pension Fund Managers for Government
sector to perform investment management function under the
NPS. Each year the incremental fund flows are divided among
them in proportion of the returns generated by them in the
preceding year. Investments of such pension funds are made in
accordance with the investment pattern notified by the
Government. These PFMs are:
LIC Pension Fund Ltd.
SBI Pension Fund
UTI Retirement Solutions Pension Fund

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(4) Custodian- Stock Holding Corporation of India (SHCIL)

SHCIL has been appointed as Custodian of NPS and it aims

to provide Custodial services in compliance with SEBI Custodial
Regulations 1996 such as Settlement Processing of Assets, Safe
keeping of securities – Electronic form, Physical Custody of
Securities and Corporate Actions

(5)Supervision- NPS Trust

NPS Trust is established under Indian Trust Act, 1882 and

appointed NPS Board of Trustees in whom the administration of
the “New Pension System” vests under Indian Law. The Trust is
responsible for taking care of the funds under the NPS and the
Trust also holds an account with the Bank of India, designated as
the NPS Trustee Bank.

Axis Bank as Trustee Bank is responsible for transfer of funds

collected and remittances to PFM.

44.7 NPS in States

NPS has been adopted by several State Governments. So far, 26

State Governments have notified adoption of NPS for their new
employees. The States of West Bengal and Tripura have still not
adopted NPS for their employees.

Extension of New Pension System to the Unorganised Sector

Workers: After receiving Government’s approval for extending the NPS
to all citizens including the unorganised sector workers PFRDA has
decided to roll out the NPS architecture for all citizens of the country
during the financial year 2009-10 so that NPS is available to all citizens
including the unorganised sector workers. Unorganised Sector refers to
a person who is not:

a.) a regular employee of the Central or a State Government, or an

autonomous body/ PSU of the Central or a State Govt. having employer
assisted retirement benefit scheme
covered by any social security scheme under any of the laws
namely-

Employees’ Provident Fund and Miscellaneous Provision

Act,1952
The Coal Mines Provident Fund and Miscellaneous Provisions
Act, 1952
The Seamen’s Provident Fund Act, 1966
The Assam Tea Plantation Provident Fund and Pension Fund
Scheme Act, 1955
The Jammu and Kashmir Employees’ Provident Fund Act, 1961

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 The NPS for all, on a voluntary basis, has been launched with
effect from 1st May, 2009 with the same architecture as prevalent for
NPS main with a slight difference of Pension Fund Managers. For
unorganised Sector there are 6 PFMs in comparison to 3 PFMs for
Government Sector and beneficiaries under this system have an option
to choose the PFM of their choice.

Notification No. 5/7/2003-ECB & PR dated 22nd December, 2003,

No.5/7/2003-ECB & PR dated the 10th October, 2003 and
Resolution No. 1(6)/2007 dated 14th November, 2008
****

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 Chapter 45

VARIOUS ALLOWANCES

45.1 HOUSE RENT ALLOWANCE

45. 1.1 Policy of the Government is to allow free quarters to such establishment
as are required to reside in on the office premises for the proper discharge of
their duty. Thus Govt. has granted rent free quarters to Engineering Supervisors,
Traffic Officers, Postmasters, Sub Postmaster and to certain categories of staff in
Railway and Civil departments. The grant of quarters (including rent free) is
subject to the condition that Govt. accommodation is available. It is not the
liability of the Government to furnish residential accommodation compulsorily to
the employees. But as a matter of convenience, the Govt. has endeavored to
provide accommodation. In places where Government is not in a position to
provide accommodation for their staff House Rent Allowances (HRA) is given.

Thus HRA is a compensatory allowance which is granted to the Central

Government Employees to compensate them partly for what they have to pay
hired residential accommodation. An official residing in his own house is also
entitled to HRA.

45.1.2. Consequent upon the decision taken by the government on the

recommendations of the Sixth Central Pay Commission the earlier classification
of cities has been revised viz. A-1 to ‘’X”. A, B-1 & B-2 to “Y” and C &
Unclassified to “Z”. In determining the revised classification, the population of
Urban Agglomeration area of the city has been taken into consideration. The list
of cities/ towns classified as ‘X’,’Y’ and ‘Z’ for the purpose of grant of house rent
allowance is at Annexure I

45.1.3.1 The rates of House Rent Allowance from 1.9.2008 are as under:-

Classification of Rate of House Rent Allowance as a percentage of

Cities/Towns (Basic pay +NPA where applicable)
X 30%
Y 20%
Z 10%

45.1.3.2 The term “Basic Pay” in the revised pay structure means the pay drawn
in the prescribed pay band plus the applicable grade pay but does not include
any other type of pay like special pay, etc. In the case of Government servants in
the pay scales of HAG+ and above, basic pay means the pay in the prescribed
scale.

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45.1.4. In respect of those employees who opt to retain their pre-revised scale of
pay, the pay for the purpose of those orders shall also include, in addition to the
basic pay in the applicable pre-revised scales, stagnation Increments (s),
Dearness pay and Non-Practicing Allowance as per orders in force on 1.1.2006.

45.1.5. The orders issued by Finance Ministry in the past for grant of HRA/CCA
at higher rates to the central governments employees posted within the
municipal area are at Annexure II.

All other condition governing grant of HRA under existing orders shall
continue to apply

45.1.6 Special compensatory allowance @2.5% of basic pay admissible w.e.f.

01.08.97 to group ‘C’ ,’D’ and group ’B’ non-gazetted employee whose pay
scales correspond to or are lower than the pay scales of group ’C’ employees
posted at Gandhinagar as per this Ministry’s O.M. No.2(64)/97-E.II(B) dated
04.07.2001, also stands abolished.
45.1.7 These are applicable to all civilian employees of the Central Government
and the civilian employees paid from the Defenses Services Estimates . Armed
Forces personnel and Railway employees, are governed by separate orders.
Min/Finance O.M. No.2(13)2008.E II(B) Dated 29th August 2008

ANNEXURE I

O.M.NO.2(13)/2008‐E.II(B) dt.29 August 2008

LIST OF CITIES/TOWNS WHERE HOUSE RENT ALLOWANCE IS ADMISSIBLE TO CENTRAL
GOVERNMENT EMPLOYEES
S.NO STATES CITIES CITIES CLASSIFIED AS “Y”
CLASSIFIED AS
“X”
1 Andhra Pradesh Hyderabad(UA) Vijayawada(UA),Warangal(UA),
Vishakapatnam(UA), Guntur
2 Assam Guwahati (UA)
3 Bihar Patna(UA)
4 Chandigarh Chandigarh
5 Chhattisgarh Durg‐Bhilai Nagar(UA),Raipur(UA)
6 Delhi Delhi(UA)
7 Gujarat Ahmedabad(UA),Rajkot(UA),Jamagar(UA),
Bhavangar(UA),Vadodara(UA),Surat(UA)
8 Haryana Faridabad
9 Jammu& Kashmir Srinagar(UA).Jammu(UA)
10 Jharkhand Jameshedpur(UA),Dhanbad, Mangalore(UA),
Mysore(UA)
11 Karnataka Bengaluru(UA) Belgaum(UA),Hubli‐Dharwad,Mangalore(UA),

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