The Big Breaking News for Government Employees. -Restoration of Old Pension Scheme

Central Government Employees of India have once again written to the Cabinet Secretary requesting for restoration of Old Pension Scheme.

Raising the demand for the restoration of the Old Pension Scheme, the Central Government Employees of India have once again written to the Cabinet Secretary citing the unviable and meager pension under the New Pension Scheme. hey further quoted that there is no Death Relief Provision under the NPS scheme for those employees who meet unfortunate death during their service. This letter has been written to the Cabinet Secretary by the Joint Consultative Machinery (JCM), which is the umbrella Organization for the Employees working under the Union Government. The JCM is a dispute resolution platform with representatives from the employee and government sides.

Employees’ Unions have been demanding the scrapping of the New Pension Scheme which was implemented from 01.04.2004 by the Union Government for those employees who joined from
01.04.2004 onwards. Under this scheme the Old General Provident/ Statutory Provident Fund was replaced by a system of Contributory Provident Fund under which 10 percent of the basic salary is deducted from the salary of the employee and a matching contribution is added by the Government which is then deposited with the PFRDA the Apex body to regulate this Fund. The share of the government has now been increased to 14 percent from this Fiscal onwards.

The Employees’ Unions feel that the payment out of the New Pension Scheme Fund is very small in comparison to the Old Pension scheme. This Payout is based upon the market performance of the Funds in which the accumulations of the Employees Provident Fund. Since there is no guarantee of sustainable performance in any market therefore the risk involved is high. The complete life savings of an employee are left to the mercy of markets which are generally found to be highly volatile.

Moreover, there is no provision for Death Relief under New Pension Scheme even after 18 years of its implementation. Presently Death Relief and Ex-gratia are being paid by applying the provisions of the Old Pension Scheme to the eligible next of kin of the deceased employee. Citing these lacunae of the New Pension Scheme the Employee Unions are opposing the NPS stating it to be highly disadvantageous for the employees.

The demand for the restoration of the Old Pension Scheme has especially become vocal after the announcement of restoring the same by some State Governments. Recently Aam Admi Party Government of Punjab has directed its top administrative authority to look into the practical aspect of implementing the Old Pension Scheme. Earlier, Rajasthan, Jharkhand, and Chhattisgarh State Governments also announced that they will restore the Old Pension Scheme for the State Government employees. This step by some state Governments is being considered by the Central Government employees to build moral pressure on the central government to consider the long pending demand for the restoration of the Old Pension Scheme.

The current letter of the Joint Consultative Machinery to the Cabinet Secretary may be seen as a fallout of these changed circumstances and is expected to do the trick given the approaching elections in some States and then General Elections. Now the empirical data of the payouts under the New Pension Scheme has once again forced the employee’s Bodies to realize how dis-advantageous is the new scheme.

The present Pensions and lump sum retirement benefits under this scheme have been termed to be very
negligible in comparison to those payable under the Old Pension Scheme. Earlier the pension of an employee used to be approximately 50 percent of the salary of an employee whereas under New Pension Scheme the empirical data vouch it to be in the range of 10 to 15 percent of the salary of such employees. On one hand, it adversely affects the life of an employee after retirement who needs more medical care and hence more expenses owing to old age, on the other hand, it has a long-term cascading effect on the psyche towards the importance of a person after retirement.