Time to repeal NPS and restore OPS

Time to repeal NPS and restore OPS

"Pension is neither a bounty, nor a matter of grace depending upon the sweet will of the employer, nor an ex-gratia payment”. – Hon’ble Supreme Court of India

Bruhaspati Samal

General Secretary

Confederation of Central Govt. Employees and Workers

Odisha State Coordination Committee

Mobile: 9437022669, eMail: bsamalbbsr@gmail.com

While pension plans are facing challenges throughout the globe, 2022 Mercer CFA Institute Global Pension Index Survey (MCGPI), inter alia observes that the objective of pension reform must be crystal clear and the prospective of all stakeholders must be addressed. Whether it is public pension system with their reliance on government finances or private pension plans invested in the financial markets, the retirement income systems should be able to meet the expectations of the communities. It is worth mentioning here that Mercer CFA Institute is a research centre based within Monash University’s Monash Business School, Australia which carries research works to assess the pension systems in various countries across the world based on three sub-indices, adequacy, sustainability and integrity. This year’s edition assessed pension systems in 44 countries which account for 65% of the global population. While Iceland topped the list with best pension system, India stood at 41st rank out of 44 countries in the Index with a declining score in sustainability and integrity.

Discussing the present position of pension system in India, we can amply say that in spite of serious protests and continuous struggles by all sections of employees of the Central and State Governments, the New Pension Scheme, now National Pension Scheme (NPS) was introduced since 1st January, 2004 as a part of the implementation of the new economic policy following the IMF-World Bank policy on pension reforms. The irony is that NPS was given effect from 01.01.2004 only with an Executive Order on 21.12.2003 and subsequently PFRDA Act was passed in 2013 in the Parliament and legally came into force with effect from 01.02.2014 through a Gazette Notification. Though, it was subsequently accepted by many State Governments, Public Sector Undertakings and Autonomous bodies, it failed to meet the expectations of the employees. Illustratively, after rendering 17.6 years of service in Defence Ordnance Factory with last basic Pay of Rs.56900/-, while Sri S. Sivasankaran is entitled for monthly pension of Rs. 28450/- plus Dearness Relief (DR) as admissible from time to time under Old Pension Scheme (OPS), he was eligible for Rs.4900/- only as monthly pension under NPS. Similarly one Sri R. Ramachandran when retired after serving for 13.5 years with a basic pay of Rs.30500, got  monthly pension of Rs.2417/- under NPS instead of actual entitlement of Rs.15250/- plus DR under OPS. Such, examples are many to justify that the NPS has violated the socio-economic justice needed for the employee at the fag end of his life.

In this context, the historic judgement on 17th December, 1982 of the Hon’ble Supreme Court of India in D S Nakra versus Union of India case needs a deep analysis which states, "Pension is neither a bounty, nor a matter of grace depending upon the sweet will of the employer, nor an ex-gratia payment. It is a payment for the past services rendered. It is a social welfare measure rendering socio-economic justice to those who in the heyday of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in the lurch". According to the historic observation of the Hon’ble Supreme Court, pension creates a vested right subject to CCS (Pension) Rules, 1972 which are statutory in character since enacted in exercise of the power conferred under proviso to Article 309 of the Constitution of India.  Thus introduction of NPS just through an Executive Order at the sweet will of the Govt. has not only violated the statutory provision guaranteed under Constitution of India, but also the historic decision of the Hon’ble Apex Court as above.

Moreover, NPS has also violated the written assurances given by the Govt. of India in the Standing Committee meeting of National Council, Joint Consultative Machinery held on 14.12.2007 which states inter alia, “For the employees who have entered with effect from 01.01.2004 are not likely to be worse off vis-a-vis the current pension system in force, as the replacement rate would match to the present one. Thus, NPS is a win-win situation for the employees and the Govt’. The above illustrations are abundantly clear how NPS contradicts the above assurance and goes against the fundamental right of an employee.

On the other hand, the OPS is a defined benefit scheme without any contribution from the employee and guaranteeing minimum pension of 50% of the last pay drawn subject to minimum of Rs.9000/- per month plus DR. There is also a benefit of getting a lump sum amount equivalent to 40% of the pension at the time of superannuation as the commutation value which is restored after 15 years. In addition, the pension amount is increased by 20% each 5 years starting at the age of 80 and doubling the pension amount at the age of 100 of the pensioner. There is neither such social security nor any guarantee of minimum pension under NPS. Even though the employee contributes 10% of his salary every month in addition to similar 14%contribution by the employer, the NPS beneficiary gets a meagre amount of monthly pension as illustrated above. 

However, due to continuous struggle by all sections of employees of the Central and State Governments, though the some State Governments like Jharkhand, Rajastan, Chhatisgarh, Punjab and Himachal Pradesh have issued notifications to rollback to OPS, the Central Govt. is not yet ready to scrap out the NPS and thus the PFRDA Act, 2013 is still prevailing as the sword of Damocles. In addition, keeping the 2024 General Election in view, though many political parties like Congress, AAP and Left Political parties are now issuing Election Manifesto to accelerate their assurances for restoring OPS, the ruling NDA Govt. at Centre has no reaction. The entire working class was eagerly waiting for the Central Budget 2023-24 with much expectation for any positive declaration on minimum assured pension of Rs. 9000/- to all in the unorganized sector and to drop NPS restoring OPS. But nothing such came out in the said budget which has demoralized the employees and workers across the country. In addition, serious resentments amongst the employees are also mushrooming in the line that if NPS is so good, why the public representatives who are enjoying more than one pension not brought under NPS instead of OPS.

Thus, all the Central Govt. employees including Railway, Postal and Defence and the State Govt. employees including teachers have formed a Joint Forum for Restoration of OPS (JFROPS) under the banner of National Joint Council of Action (NJCA) comprising Railway and Defence Federations, Confederation of Central Govt. Employees and Workers including National Federation of Postal Employees, All India State Govt. Employees Federation (AISGEF), Teachers’ Federations and Paramilitary Pensioners’ Association conducting 3 joint meetings in a series in New Delhi on 8th December, 2022, 7th January and 21st January, 2023 with unanimous resolution to organize various agitational programmes throughout 2023 for the purpose. Apart from conducting National and State Level Conventions, submission of online petitions to the Hon’ble President of India, District and State level rallies including family members of the NPS beneficiaries, gate-meetings, Parliament march and Bharat Band etc will be there.  A decision may also be taken by NJCA to adopt indefinite strike.

Now, it is high time for the Central Govt. to realize the pain and problems of the employees and workers along with the gravity of the series of agitational programmes as above and took it seriously to repeal NPS and restore OPS.

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