Bruhaspati Samal
General Secretary
Confederation of Central Govt. Employees and Workers
Odisha State Coordination Committee, Bhubaneswar
eMail: samalbruhaspati@gmail.com
Mobile / WhatsApp No. 9437022669
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 Old Pension Scheme (OPS) to the National Pension Scheme (NPS), now more commonly referred to as the Unified Pension Scheme (UPS) to which the Central Cabinet approved on 24th August, 2024. This shift has led to significant unrest among government employees, sparking numerous protests and struggle movements across the country.
The Old Pension Scheme was a defined benefit plan, which assured a fixed pension to government employees upon retirement. The pension was typically 50% of the last drawn salary, and the government bore the entire burden of funding these pensions. This scheme provided a sense of security to employees, ensuring that they had a stable income post-retirement.
In December 2003, the Government of India introduced the National Pension Scheme (NPS) as a move to reduce the pension burden. The NPS, which became mandatory for all government employees joining after January 1, 2004, was a defined contribution scheme. Under the NPS, both the employee and the government contribute 10% and 14% of the employee's salary, respectively, to the pension fund. The pension amount, upon retirement, depends on the accumulated corpus and the returns generated by the investments made during the employee’s service period. The NPS shifted the risk from the government to the employees, as the pension amount was no longer guaranteed. The OPS ensured that pensions were adjusted for inflation, which was not the case with the NPS. Employees feared that the NPS would not be able to keep up with the rising cost of living. The OPS was seen as a social security measure, ensuring that retired employees did not fall into poverty. The NPS, being market-linked, was perceived as lacking this crucial aspect of social security.
The introduction of NPS was a significant departure from the OPS, and it was met with considerable resistance from employees, particularly those who had joined the service before 2004 and were still under the OPS. The transition from OPS to NPS sparked a series of protests and struggle movements across the country. Employees, particularly those in the public sector, were dissatisfied with the new scheme, as it did not offer the same level of security as the OPS.
But, ignoring 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), the Union Cabinet, chaired by Hon’ble Prime Minister Shri Narendra Modi approved a new pension system in the name of Unified Pension Scheme (UPS) on 24th 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 1/10th 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.
As seen from the information disclosed so far by the Govt., while the OPS was non-contributory, UPS remains contributory like NPS, i.e. 10% from the employee’s salary (Pay +DA) will be deducted every month. Under OPS, 50% of the last pay drawn or average of the last 12 months salary whichever is higher is given as pension. Instead, 50% of last 12 months average salary has been considered to fix the pension under UPS which may be suicidal in many cases. While minimum service period of 20 years was required to get full pension, UPS goes for 25 years. UPS is silent about the 60% part-withdrawal allowed under NPS. As regards family pension, it was equivalent to the normal pension (50% of last pay drawn) till 67 years even if the pensioner dies before the age of 67. Then it becomes 30%. But under UPS, the family pension is 30% (60% of 50%) from the beginning. In addition, there is no commutation facility and increase in pension under UPS as done under OPS at the age of 80, 85, 90, 95 and 100. Thus, it is a hybrid model of both the OPS and NPS.
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. Though the Union Minister for Labour & Employment held a round table meeting with ten Central Trade Unions (CTUs) on 28.08.2024 to discuss on Employment Linked Incentive (ELI) schemes recently announced in the Union Budget, nothing was discussed on UPS except submission of a detailed memorandum by the CTUs to the Minister on the UPS demanding to restore the non-contributory Old Pension Scheme, to convene the Indian Labour Conference and to reconsider implementation of the four Labour Codes.
The struggle movements of employees in India against the shift of 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.
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