M.krishnan
Secretary General
Confederation of Central Govt.
Employees & Workers
Pension system was in vogue in India for a century or more and the
British Government during the pre-independence era introduced Pension
Rules for Government employees and thus made it statutory. In the year
1982 Supreme Court in its landmark judgement in Nakara’s case declared
that - “as per India’s constitution, Government is obliged to provide
social and economic security to pensioners and that Government retirees
had the fundamental right to pension..... Pension is not a bounty nor a
matter of grace depending upon the sweet will of the employer. It is
not an ex-gratia payment, but a payment for past service rendered. It
is a social welfare measure, rendering socio-economic justice to those
who in the hey days of their life, ceaselessly toiled for their
employers on the assurance that in their old age, they would not be left
in lurch.”
During the advent of globalisation policies in 1980’s the pension
reforms also started simultaneously. IMF & World Bank started
publishing so many reports and documents emphasizing the need for
pension reforms. They also started studying about the reforms to be
undertaken in the pension sector in India. In 2001, “IMF work paper on
pension reforms in India” and World Bank India specific report“India -
the challenge of old age income security” were published. Their work
reports emphasized that “Pension obligations or promises made by the
Governments which have potential of exerting pressure on Govt. finances,
have been a subject of increased focus in assessing medium to long term
fiscal sustainability.” In tune with the dictates of IMF and World
Bank BJP-led NDA Government appointed Bhattacharjee Committee in 2001
headed by Ex-Chief Secretary of Karnataka, to study and recommend
pension reforms. Thus after creating ground for pension reforms, under
the pretext of implementing recommendations of Bhattacharyya Committee,
the NDA Government introduced New Pension System called Defined
Contributory pension system for all employees who join service on or
after 01-01-2004. The Congress-led UPA Government which came to power
in 2004 continued with the reforms and promulgated an ordinance to
legalise NPS. But UPA-I Govt. could not pass the Pension Bill in
Parliament due to stiff opposition of Left Parties supporting it. Later
when UPA-II Government came to power the Pension Regulatory and
Development Authority (PFRDA) Bill was passed in the Parliament with the
support of BJP, the then opposition party. Many State Governments
governed by political parties other than Left Parties, introduced
Contributory Pension System for their employees from various dates after
2004. Left Front Governments of Kerala, West Bengal and Tripura
refused to introduce the New Pension Scheme and they continued with the
old defined benefit pension scheme. Congress-led UDF Government
introduced NPS in Kerala. After BJP coming to power in Tripura also
Contributory Pension Scheme is introduced recently. In West Bengal old
Pension Scheme continues even now. Not only newly appointed Central and
State Government employees, almost all new entrants of public sector
and Autonomous bodies are also brought under the purview of NPS.
As per New Contributory Pension Scheme an amount of 10% of pay plus
Dearness Allowance will be deducted each month from the salary of the
employees covered under NPS and credited to their pension account.
Equal amount is to be credited by the Government (employer) also. Total
amount will go to the Pension Funds constituted under the PFRDA Act.
From the pension fund the amount will go to the share market. As per
the PFRDA Act - “there shall not be any implicit or explicit assurance
of benefit except (share) market based guarantee mechanism to be
purchased by the subscribers”. Thus the amount deposited in Pension
Fund may or may not grow depending on the fluctuations in the share
market. After attaining 60 years of age i.e., at the time of
retirement, 60% of the accumulated amount in the Pension Account of the
employee will be refunded and the balance 40% will be deposited in an
Insurance Annuity Scheme. Monthly amount received from the Insurance
Annuity Scheme is the monthly pension i.e., Pension is not paid by
Government, but by the Insurance Company and hence NPS is nothing but
Pension Privatization..
Thus it can be seen that the growth of the accumulated amount in the
Pension fund depends upon the vagaries of share market. If the share
markets collapse, as happened during the 2008 world financial crisis,
then the entire amount in the pension fund may vanish. In that case
employee will not get any pension. Every fluctuation in the share
market will affect the future of pension of those employees who are
covered under NPS. Uncertainty about pension and retirement life looms
large over their heads. Even if there is a stabilized share market the
40% amount in the annuity scheme is not enough to get 50% of the last
pay drawn as pension, which is the minimum pension as per old pension
scheme. Many employees who entered in service after 01-01-2004 has
retired in 2017 and 2018 after completing 12 & 13 years of service.
They are getting Rs.1400- to Rs.1700- only as monthly pension from
Insurance Annuity Scheme. If they have entered service in 2003 i.e., in
the old pension scheme, they would have got 50% of the last pay drawn as
pension subject to a minimum of Rs.9000- as minimum pension, that too
without giving any monthly contribution towards pension from their
salary. In short, NPS is nothing but NO PENSION SYSTEM.
As per clause 12(5) of the PFRDA Act even the employees and pensioners
who are not covered under NPS, can be brought under the Act by a Gazette
notification by the Government. Thus NPS is a Damocles’ sword hanging
over the head of all employees and pensioners.
Who is the beneficiary of this pension reforms? As in the case of every
neo-liberal reforms, the ultimate beneficiary is the Corporates. The
huge amount collected from the workers through pension fund is invested
in share market by the Pension Fund Managers and this amount in turn can
be utilied by the multi-national Corporates for multiplying their
profit. Amount deducted and credited to the Pension fund from each
newly recruited employees plus the employer’s share amount will remain
with the pension fund and share market for a period of minimum 30 to 35
years i.e., till the age of 60 years. During this long period of 35
years crores and crores of rupees will be at the disposal of share
market controlled by multinational corporate giants. Ultimate causality
will be the poor helpless employee/pensioner.
Confederation of Central Government Employees and Workers and All India
State Government Employees Federation (AISGEF) has been opposing the NPS
from the very beginning and a one day strike was conducted on 30th
October 2007. It was one of the main demand in all other strikes during
these period. The campaign and struggle against NPS continued and as
of now the subjective and objective conditions for a bigger struggle
against NPS has emerged as almost 50% of the total employees in Central,
State, Public sector and Autonomous bodies are now covered under NPS
and are becoming more and more restive and agitated. 7th Central Pay
Commission Chairman Retired Supreme court Judge Sri. Asok Kumar Mathur
has correctly pointed out that “Almost a whole lot of Government
employees appointed on or after 01-01-2004, were unhappy with New
Pension Scheme. Govt. should take a call to look into their
complaint”.
As per the recommendations of 7th CPC, Central Government appointed a
Committee called “NPS Committee” for streamlining the functioning of
NPS. The Staff-side has demanded before this Committee to scrap NPS and
guarantee for 50% of the last pay drawn as minimum pension subject to a
minimum of Rs.9000-. Even though, the Committee has submitted its report
18 months back, the Government has not yet disclosed the
recommendations of the Committee.
Confederation and AISGEF has decided countrywide intensive campaign
culminating in one day strike on 15th November 2018 demanding that the
Defined Contributory Pension Scheme (New Pension Scheme - NPS) imposed
on new entrants must be scrapped and the Government should reintroduce
the Defined Benefit Pension Scheme (Old Pension Scheme - OPS) that was
in vogue for a century or more. We are also exploring the possibility of
organizing an indefinite strike in the coming days exclusively on one
demand i.e., SCRAP NPS, RESTORE OPS for which wider consultations are
being made with all like-minded organizations.
......
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e-mail: mkrishnan6854@gmail.com
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