Dearness Allowance :-
we all are curiously waiting for Dearness Allowance arrears. How much it will increase? How much DA Arrears i will get? no of questions are there. We all are preparing for planning how can spend my dearness Allowance arrears? What can i do with my dearness Allowance arrears?
However most important thing which no one can think how dearness Allowance arrears badly effect on our National Pension Schemes?
Postalnps has wish to discuss that issue deeply with you all , that how it is possible that how dearness Allowance can badly effect on our Pension, is it ? Answer is yes, definitely DA arrears will badly effect on your Pension by postalnps.
We will discuss this issue deeply lets see.
The Dearness Allowance (DA) is a cost of living adjustment allowance paid to Government employees, Public sector employees (PSE)and pensioners in India, Bangladesh and Pakistan
Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact of inflation on people. Indian citizens may receive a basic salary or Pension that is then supplemented by a housing or a dearness allowance, or both. The guidelines that govern the DA vary according to where one lives. DA is a fully taxable allowance.
Basically DA is calculated on basic pay of the employees. Increases of salary is depends upon basic salary and DA percentage.
Now we see that how Dearness allowance will effect on national Pension Scheme.
National Pension system is defined contributed Pension system that employee shall Subscribe a monthly contribution of 10 percent of their basic pay pluse Dearness allowance as employee contribution and equal matching contribution provided by the government or employer in term of G.I.,M.F.F.NO.1(7)(2)/2003/TA/11 and O.M NO.1(7)(2)/2003/TA/67-74 dated 04.02.2004.
Formula of NPS contribution
It is basic formula to deduct employee subscription as NPS contribution and every employer doing such deductions from employee salaries.
As we know that DA has been increased by 3 percent government of India declared that in Gazette. That effect should be implemented form the January 2019 means before 3 months obviously we will get DA arrears of the three months that is January, February and March.
Bad effect of DA arrears on National Pension System
However no any employer is deducting 10 percent of DA arrears as NPS contribution that is big loss of every employee covered under National Pension Schemes. If employee contribution is not deducted you will not get employer government matching contribution in your account. However your account could not get credit of your NPS contribution so you will loss National gain that is NAV (interest) that calculated as cumulatively till the superannuation of the employee. That badly effect on your corpus amount which you will get at your Retirement and you can't purchase large amount of annuity. So you will loss your own Pension. I mean that you had lost your Pension because no any employer is deducting contribution from DA arrears.
For your information only Odisha state government has clerify this order and they ordered in Gazette notification to deduct contribution from DA arrears and provide matching contribution from government.
Click here to view order
How DA helpful after Retirement
As we see DA is calculated in gross salary. And it is calculated on basic pay of the employee. Therefore Salary of every employee will increase when DA will increase that all we know. It helps to increase Pension indirectly.
When salary increases change in lifestyle of employees comes automatically.
It helps to increase purchase power of the employees. In that weys DA would be effective on economic and social life of the servant.
It helps to live great life after Retirement indirectly.
Postalnps hope that you all has been got that we all are losing our Pension indirectly.
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