BANGALORE: Finance Minister Arun Jaitley has introduced new schemes in order to create a ‘pensioned society’. He has put forth tax incentives to this effect, as well as a new pension scheme outlines in the 2015 Union Budget.

These measures are not only targeted towards increasing retirement savings, but also towards highlighting the profile of the government’s little known National Pension Scheme.

Under Section 80CCC and Section 80CCD, the investment limits for pension products have been increased. In both cases, the limit is now at 1.5 lakh rupees. This raises it to the limit level of Section 80C which covers pension products from mutual funds.

To promote the NPS, Arun Jaitley has made a separate window under Section 80 CCE. "Since this section doesn't fall under the overall cap of Rs 1.5 lakh under Section 80CCE, the deduction of Rs 50,000 for the NPS will be over and above the normal limit of Rs 1.5 lakh," says Vikram Shroff, Head, HR Law of Nishith Desai Associates

However, insurance and mutual fund players are upset with this singular action for the NPS. "The life insurance sector has been completely ignored in the Budget. We expected a separate limit of Rs 50,000 for pension plans, but the rise has been restricted to the NPS," says Manoj Jain, CEO, Shriram Life Insurance.

Apart from the deductions, a new pension scheme has been launched, and the government will provide 50 percent of the premium, to a limit of thousand rupees a year up to five years. The new scheme is called the Atal Pension Yojana and is being set up to offer a defined pension.

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