Finance Minister Nirmala Sitharaman presented big changes to the National Pension System in the 2024 Budget. Here’s a breakup on what you must know about it:
Increase in Employer Contribution
This implies that the budget increased the employer contribution towards the NPS from 10% to 14%. All state and central government employees would be covered under this change. It is likely that in the long run, this move would benefit employees by providing an enhanced retirement savings.
Impact on Take-Home Salary
While the increment in employer contribution would strengthen the retirement funds of employees, it will also equally affect their take-home salary. Employees may see a reduction in their monthly earnings due to the increased deduction towards NPS.
Long-Term Benefits
Higher contribution from the employer is to ensure that one has better financial security during retirement years. Even though the monthly take-home salary will reduce, enhanced contributions towards NPS are considered to yield greater long-term financial benefits.
The announcement by Finance Minister Nirmala Sitharaman comes as part of her seventh budget. This was special in that it marked five full budgets and one interim budget. No woman finance minister had achieved so many budgets as she did.
