Formation of Committee to Analyse Pension Sytem of Central Govt Employees
Ministry of Finance, Govt of India has formed a committee led by Finance Secretary T V Somanathan to review the existing pension system for government employees. The committee will conduct a detailed an analysis of existing framework and structure of the National Pension System (NPS) and suggest if there are any necessary changes.
Earlier several times the NPS has been modified with several changes. The team will take fiscal implications, impact on budget and protect citizens to maintain fiscal prudence. Members of the committee will include the secretary for the Department of Personnel and Training, the special secretary for the Department of Expenditure and the chairman of the Pension Fund Regulatory and Development Authority.
Restoration of Old Pension under Active Consideration : Govt invited suggestion for Joint Forum
Based on the representation of the Joint forum of Restoration of Old Pension for Central Govt Employees, Ministry of finance has issed an OM to the Forum to submit a detailed suggestion in writing for placement before the Committee constituted for the purpose.
Copy of the letter of MoF is as below :-
The extract of the representation already submitted by the Joint Forum for restoration of old pension for central govt employees may be gone through :-
Summary of Representation submitted by Joint Forum of Restoration of OPS
The JFROPS is basically constituted to achieve the single point demand of Restoration of Old Pension Scheme by ensuring withdrawal of the No Guaranteed NPS. You will appreciate that the Government Employees work day and night and play a very important role in the Economic and Industrial Growth” of our National apart from serving the People of the Country in their Health Care, imparting Education to the Future Generations of our country and the dedicated service by the Para Military Forces for maintaining peace and harmony. You will also appreciate that during the Covid-19 Pandemic Period, when the entire country was on Lockdown,
it was the Central Government Employees and State Government Employees who worked as Frontline Warriors in support of the efforts of the Government to control and curb the Pandemic, and in the process thousands have lost their lives while working in the most unsafe conditions, In any Natural Calamity and Disaster, It is the Government Employees who are in the forefront in Rescue operations risking their own life. Many Civilian Employees in Railways and Defence Units, Para Military Personnel die every year due to accidents while on duty and other reasons while performing their duties for the Nation, while many sustain injuries, consequently become disabled. Therefore, they deserve a better treatment from the Government especially after retirement.
With this brief Introduction, we draw your kind attention to the major and important demand of the Central and State Government Employees Which Is agitating their minds I.e. “To Scrap the No Guaranty National Pension System and Restore the Defined and Guaranteed Old Pension Scheme”. Here we would like to draw your kind attention towards the judgement of the Hon’ble Supreme Court delivered on 17/12/1982 by the 5 Member Bench of the Apex Court which had declared “Pension is a Right which is enforceable by Law”. The relevant portion of the Judgment in WP No.5939-41 under Article 32 of the Constitution of India known as D.S. Nakra and other vs. Union of India is given below for your kind ready reference
“Para 31: From the discussion three things emerge (1) that pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer and that It creates a vested right subject to 1972 Rules which are statutory in character, because they are enacted in exercise of powers conferred by the Proviso to Art.309 and Clause (5) of Art. 148 of the Constitution; (II) that pension is not an ex-gratia payment, but it is a payment for the past service rendered; and (ii) 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 assurance that in their old age, they would not be left in the lurch…”
Sir, the Contributory Pension Scheme at present called as National Pension System (NPS) is implemented to the Central Government Employees including Para Military Forces recruited on or after 01.01.2004 replacing the time tested Defined and Guaranteed Old Pension Scheme under CCS (Pension) Rules, 1972. The Government has exempted only Army, Navy and Air Force from the Contributory Pension Scheme. Subsequently the various State Governments also implemented the Contributory Pension Scheme to their Employees. Right from the day when Government announced the NPS during the year 2003, the entire Central Government Employees Organization and State Government Employees Organizations rejected the NPS and continuously demanding for Restoration of Defined and Guaranteed Old Pension Scheme.
The Staff Side of the National Council JCM which represents the Central Government Employees had raised this issue in the 44th Ordinary Meeting of the National Council JCM held on 28th of May 2005. In this meeting, the Official Side stated that Pension is becoming a liability to the Government and this liability is likely to go up substantially in future. Therefore the Government has introduced the Contributory Pension Scheme. The Staff side in the same meeting have reiterated that Pension is not a liability and it is a inherent right of the Government Employees and that the NPS was complex and does not guarantee the safety for Investments and that pension cannot be treated as a liability and hence they would not accept the new scheme and prefer to disagree. Again the issue was discussed in the 45th meeting of the National Council JCM held on 14th October 2006,
in this meeting also the Staff Side categorically stated that “The New Pension Scheme that has been imposed on the New Entrants to Government service recruited from 01.01.2004 is not acceptable as the same is subject to the vagaries of the Stock Market”. The then Cabinet Secretary, who was the Chairman of the JCM, stated that, it would not be possible to withdraw or disband the NPS. Thereafter the matter was further discussed in the Standing Committee meeting of the National Council JCM held under the Chairmanship of Secretary (Personnel), DOP&T on 14th December 2007, consequently, from the Government Side the following assurance was given, as recorded in the minutes of the meeting.
“For employees who had entered w.e.f. 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 employees and the Government.”
Since the above assurance remained only on paper and the NPS Covered Employees, who started retiring during the years 2014 and 2015, were paid only a very-very meagre Pension of Rs.950/- per month without any linkage with DR, the matter was represented before the 7th CPC, and the 7th CPC recorded all the concerns expressed by the Staff Side against NPS and recommended to appoint a High-Level Committee to review the implementation of NPS. The Government accordingly appointed a High-Level Committee and the Staff Side of the National Council JCM appeared before the Committee and placed our considered views and justifications for withdrawal of the NPS.
The Chairman of the Committee assured us that he will recommend for a Defined and Guaranteed Pension Scheme. Till date we are not aware of the recommendations of the committee and during the year 2019 the Government enhanced its contribution to the Employee’s Pension Fund to 14% from 10%. This Improvement has also not made any impact on the pension from NPS and even today after 20 years of the implementation of the NPS, the employees retiring from NPS are getting pension in the range of Rs. 2000/- to Rs. 4000/- per month and there is no compensation for Price Increase / Inflation. It is to be noted here that after implementation of the 7th CPC recommendations the minimum pension for Central Government Employees under the Old Pension Scheme is Rs. 9000/- + DR.
In the Old Pension Scheme, 50% of the Last Basic Pay drawn by the Employees is straight away given as Pension, and In addition to the same, to compensate the price rise/Inflation two installments of Dearness Relief in a year on Percentage basis on the Basic Pension is given to the Pensioner. In the NPS, there is no such Defined and Guaranteed Pension, but it is only a Defined Contributory Pension. This is a total discrimination and violation of Article-14 and 16 of the Constitution of India, since on the basis of the date of Appointment the Government employees have been divided into two classes, one group getting Defined and Guaranteed Pension equivalent to 50% of their last pay drawn without any Contribution whereas the other group is getting a meager pension with contribution which depends on the vagaries of Market. The following comparative statement will give a clear picture how the employees recruited on or after 01.01.2004 are being discriminated and how their retired life at old age is left in the lurch.
|Old Pension Scheme (OPS)||New Pension Scheme (NPS)|
|Non-Contributory, Defined and Guaranteed||Contributory and No Guarantee for minimum|
|After 10 years of Qualifying Service, 50% of the Last Basic Pay of the Employees is Guaranteed as the Basic Pension||Pension No Such Guarantee and Pension Depends on the accumulated Funds in the Pension account i.e. 40% of the Corpus should be invested in annuities of SBI, LIC, ICICI and HDFC & the return is only 7% per annum approximately|
|To compensate Price Rise / Inflation depending upon the Consumer Price Index two installments of Dearness Relief on the Basic Pension is given every year i.e. on 1st of Pension remains Static January and 1st of July.||No Compensation for Price Rise and the pension remains static|
|While on Retirement / Superannuation 40% of the Pension can be Commuted and taken in advance and the same will be restored back after 15 years from the date of Commutation||No such provision is available|
|After death of the Pensioner, Family Pension is eligible for the Spouse, Unmarried Daughters, Divorcee Daughters, Widow Daughters, Physically Challenged and Mentally Retarded Childrens are eligible for Family Pension||Family Pension Provision is available in the NPS only if an employee die in service depending upon the option given by him. However, Family pension is not available after the death of the pensioner.|
|20% Additional Basic Pension after 80 years and less than 85 years of age. 30% Additional Basic Pension-after 85 years to less than 90 Years of age. 40% Additional Basic Pension – after 90 years to less than No such provision 95 years of age. 50% Additional Basic Pension – after 95 years to less than 100 years of age. 100% Additional Basic Pension-after 100 years or more||No such provision|
|Pension is Revised/Enhanced after every Pay Commission or whenever Pay hike in basic pay with NPS based on the accumulated fund in the retrospective effect takes place after superannuation.||No such provision exists, since Pension in Corpus on the date of Retirement / Superannuation.|
“Sir, recently the Government appointed a Committee under the Chairmanship of the Finance Secretary for proposing improvement in the NPS, The Staff Side of the National Council JCM met the Committee and have insisted that any improvement In the NPS Is not golng to match the Old Pension Scheme and hence the Committee may consider recommending for restoration of Old Pension Scheme to the Employees recruited on or after 01.01.2004.
Sir, from the above it is amply clear that the NPS Scheme is a disaster for the Central Government and State Government Employees and it takes away the old age security of the Government Employees who during their heyday of their life ceaselessly toiled for the nation on an assurance that in their old age they will be taken care by the Nation/ Government. The Government as a Model Employer/Good Employer cannot ‘abdicate its responsibility as an employer but also its constitutional duty as a welfare state. Therefore, we humbly submit before your honor to kindly consider all the above facts and take a dispassionate and judicial and equitable decision to scrap the no guaranteed NPS and to restore back the Defined and Guaranteed Old Pension Scheme under CCS (Pension) Rules, 1972 and the corresponding pension rule of the State Government Employees who are recruited after undergoing various selection procedures on or after 01.01.2004.
Sir, we may also please be given an appointment by your honor at a convenient date to the representatives of the JFROPS, so as to enable us to place our views before the Hon’ble Prime Minister of India.
The letter has been submitted to Smt. Nirmala Sitharaman, Hon’ble Finance Minister (Govt. of India), North Block, New Delhi — For kind information and favourable action please & all Hon’ble Members of Parliament with a request to support our cause for restoration of Old “Pension Scheme in the Parliament.