The odyssey of two decades from NPS to UPS

 The odyssey of two decades from NPS to UPS

 

Bruhaspati Samal

General Secretary

Confederation of Central Govt. Employees and Workers

Odisha State Coordination Committee, Bhubaneswar

eMail: samalbruhaspati@gmail.com

Mobile / WhatsApp No. 9437022669

 

Without honouring and giving proper justice to the long pending demands of crores of Govt. employees and pensioners across the Nation to restore the Old Pension Scheme (OPS) and to scrap out the National Pension Scheme (NPS) introduced since 1^st January, 2004, the Union Cabinet, chaired by the Prime Minister Shri Narendra Modi approved a new pension system in the name of Unified Pension Scheme (UPS) on 24^th August, 2024  guarantying an Assured Pension equivalent to 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years which will  be proportionate for lesser service period up to a minimum of 10 years of service, Assured Family Pension equivalent to 60% of pension of the employee immediately before her/his demise and Assured Minimum Pension of Rs.10,000 per month on superannuation after minimum 10 years of service. On Assured Pension, Assured Family Pension and Assured Minimum Pension, Dearness Relief based on All India Consumer Price Index for Industrial Workers (AICPI-IW) as in case of service employees will be there. Lump sum payment at superannuation in addition to gratuity will be given equivalent to 1/10^th of monthly emoluments (Pay + DA) as on the date of superannuation for every completed six months of service which will not reduce the quantum of assured pension. Soon after the Press Release of UPS while negligible positive responses are there from those supporting the BJP led NDA Govt., all the Central Trade Unions, Service Unions / Associations / Federations / Confederations involved in the pension movement for last 20 years have condemned the arbitrary action of the Govt. and released Press Notes demanding restoration of OPS.

The movement to restore OPS started from the very moment of introduction of the NPS through an Executive Order by the BJP led NDA Govt. on 23^rd December, 2003. The Confederation of Central Govt. Employees and Workers with the support of as many as 126 Unions / Associations / Federations under its affiliation having more than 1.5 crores workers, employees and pensioners across the Nation vehemently opposed it.  Subsequently, many other independent federations and Central Trade Unions extended their solidarity to the movement. Several new organizations formed with the support of NPS beneficiaries later jumped to the movement. The matter was severally discussed in the National Council JCM. Being pressurized continuously, though the Govt. brought some changes in NPS like Family Pension, DCRG, partial withdrawal including increasing its own contribution from 10% to 14%, the same couldn’t appease the employees who only demanded restoration of OPS in toto. Subsequently, the National Council of Joint Action (NJCA) was formed comprising the Railway Federations, Confederation of Central Govt. Employees and Workers, All India State Govt. Employees Federation, All India Teachers Federation and Para-military Pensioners Association etc and the Pension Movement was accelerated from December 2022 which compelled the Central Govt. to constitute a Pension Committee under the Chairmanship of the Finance Secretary to improvise the NPS. When no positive solution did come out after several discussions with the Pension Committee, the Joint Forum of Restoration of OPS under the banner of NJCA submitted memorandum to the President, Prime Minister, Finance Minister and the Cabinet Secretary of India to go on indefinite Strike from 1^st May, 2024. With the intervention of the Prime Minister of India, it was assured to the Staff Side to consider their suggestions in favour of the employees. The proposed strike was postponed.

The most unfortunate thing during the last two decades of uncompromising struggle of the employees is that the BJP led NDA Govt. arbitrarily introduced the NPS in the absence of any Act clearly violating the constitutional provisions guaranteed under CCS (Pension) Rules, 1972, now 2021 and  the historic judgement dated 17^th December, 1982 of the Hon’ble Supreme Court of India in D S Nakra versus Union of India which categorically states, inter alia, "Pension is neither a bounty, nor a matter of grace depending upon the sweet will of the employer, nor an ex-gratia payment”. Going one step ahead, the Congress led UPA-I Govt. after coming to power in May 2004 brought the Pension Fund Regulatory Development Authority (PFRDA) Bill in 2005 which couldn’t be materialized due to strong opposition by the left party MPs supporting the Govt. at that point of time. After withdrawal of their support from the UPA-I Govt., the UPA-II Govt. reintroduced the above Bill in 2011 and could be able to pass the same with the support of NDA MPs on 19^th September 2013 and implemented PFRDA Act 2013 on 1^st February, 2014.  Again when BJP led NDA Govt. came to power in May 2014, it continued to run the NPS accusing the Congress led UPA Govt. During the 20 years of continuous struggle for restoration of OPS both the UPA Govt. and NDA Govt. were / are in power for 10 years each. Had the UPA Govt. shown little interest for employees’ welfare in protecting the social security of the pensioners, it could have been refrained from bringing the PFRDA Bill / Act and thus, there would have not been any possibility of UPS. So both Congress (UPA) and BJP (NDA) are equally responsible to snatch away the constitutional rights of the employees and pensioners.

Under the circumstances, the above decision of introducing UPS is just a bolt from the blue for the employees and pensioners since except restoration of OPS, nothing such as UPS was there in the agenda. Witnessing the result of the relentless struggle for last 20 years in vain, the entirety of workers, employees and pensioners of both the Central and State Govt. are getting annoyed. Now all the Service Unions / Associations / Federations / Confederations including Central Trade Unions are determined to accelerate the Pension Movement once again till OPS is restored. We have given a Table of Comparison which aptly speaks the positive aspects of OPS and negative aspects of both the NPS and UPS so far as social security to a pensioner is concerned. India, with its vast and diverse population, has always faced the challenge of ensuring social security for its workforce. One of the most contentious issues in this domain has been the transition from the OPS to the NPS, now more commonly referred to as the UPS, a hybrid model of OPS and NPS. This shift has led to significant unrest among government employees, sparking numerous protests and struggle movements across the country.  

The struggle movements of employees in India against the shift OPS to UPS reflect the deep-seated concerns about social security and financial stability post-retirement. The success of the proposed UPS depends on its implementation and acceptance by the workforce. The government will need to strike a delicate balance between fiscal responsibility and social security to ensure that the interests of both the state and its employees are protected. As India continues to evolve, the debate over pension schemes is likely to remain a contentious issue, with employees and their unions continuing to fight for what they perceive as their rightful dues. The outcome of this struggle will have significant implications not just for the future of pension schemes in India, but also for the broader relationship between the state and its employees.

A Comparison between OPS, NPS and UPS

Parameter	Old Pension Scheme (OPS)	National Pension Scheme (NPS)	Unified Pension Scheme (UPS) (Proposed)
Type of Scheme	Defined Benefit Scheme (Non-contributory)	Defined Contributory Scheme	Hybrid Scheme (OPS+OPS)
Minimum  service for full pension	20 years	Not Applicable	25 years
Minimum service to get pension	10 years	Not Applicable	10 years
Minimum Pension	9000	Not Applicable	10000
Pension Calculation	50% of the last pay drawn or average of last 10 months salary whichever is higher	Based on contributions and market returns	Guaranteed minimum pension (50% of last 12 months average salary) + market-linked returns
Government Contribution	100% (Government-funded)	14% of basic salary + dearness allowance	18.5% of basic salary + dearness allowance
Employee Contribution	No contribution required	10% of basic salary + dearness allowance	Same as NPS (10% of basic salary + dearness allowance)
Inflation Adjustment	Yes, pension is adjusted for inflation (Dearness Allowance - DA)	No automatic adjustment for inflation	Likely to include inflation-linked adjustments as OPS
Family Pension	Yes. Normal pension continues up to 67 years if the Pensioner dies before 67 and thereafter 30% of the normal pension.	No guaranteed family pension	Proposed to include a guaranteed family pension. 60% of the 50% of last basic pay drawn as normal pension, i.e. 30% from the beginning
GPF	Yes	No	No
Gratuity	Yes	No	Yes
DCRG	Yes	Yes	Yes
Increase in Pension	Additional pension of 20% at the age of 80, 30% at 85, 40% at 90, 50% at 95 and 100% at the age of 100 i.e Pension will be doubled at the age of 100	No such provision	No such provision
Market Risk	No market risk, as pension amount is fixed	High market risk, as pension depends on market performance	Reduced market risk due to guaranteed minimum pension
Withdrawal and Vesting	Pension starts immediately upon retirement, no withdrawal before retirement	Limited withdrawal (60% of the corpus) allowed before retirement;	No withdrawal proposed. Entire corpus (10% of the employees + 18.5% of Govt.) may be retained.
Portability	Not portable between jobs	Portable between jobs	Expected to be portable like NPS
Financial Burden on Government	High, due to long-term liabilities	Reduced, as the burden is shared with the employee	Balanced approach, reducing burden while ensuring minimum security
Coverage	Central and state government employees who joined before 2004	All central and state government employees joining after January 1, 2004	Likely to cover all NPS members with additional benefits from1st April 2025.
Security and Assurance	High security, guaranteed pension	Low security, uncertain pension based on market performance	Moderate security, with a guaranteed minimum pension and market-linked benefits
Cost of Living Adjustments	Yes, adjusted to cost of living (through DA)	No automatic adjustments	Proposed to include cost of living adjustments
Legacy Issues	High government liability over time	Lower liability due to shared risk	Aims to balance legacy issues with employee satisfaction

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NB: Published in Kalinga Chronicle on 31.08.2024