New Delhi, Dec 10 (IANS): The government has decided to enhance its contribution for its employees covered under the National Pension System from the existing 10 per cent to 14 per cent of the basic salary, Finance Minister Arun Jaitley said on Monday.

However, the minimum employee contribution will continue to remain 10 per cent.

The move would benefit around 18 lakh central government employees through an increase in the eventual accumulated corpus, greater pension payouts after retirement without any additional burden, and by augmenting old-age security in a time of rising life expectancy, the government said.

It added that the impact on the exchequer was estimated to be around Rs 2,840 crore for the financial year 2019-20, and will be in the nature of a recurring expenditure.

"The financial implications on account of provisions regarding payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012 would be in addition to the (said) amount," a government statement said.

The decision was taken by the Union Cabinet in its meeting on December 6. The announcement was, however, not made at that time in view of the polls in Rajasthan the next day.

The new entrants to the central government service on or after January 1, 2004 are covered under the National Pension System (NPS).

Examining certain concerns regarding the NPS, the Seventh Pay Commission had made several recommendations in 2015, including setting up of a Committee of Secretaries for streamlining the implementation of the pension system. It was later set up in 2016.

"The committee submitted its report in the year 2018. Accordingly, based on the recommendations, draft cabinet note was placed before the cabinet for its approval," the statement said.