M. Krishnan, secretary general of the Confederation of Central Government Employees, speaking at the conference of All India Postal & RMS Pensioners Association in Vellore on Sunday.— Photo: C. Venkatachalapathy
The New Pension Scheme (NPS) introduced under the New Pension Fund Development and Regulatory Authority (NPFDRA) Act passed by the United Progressive Alliance-II government with the support of the Bharatiya Janata Party will affect the existing pensioners as well as all those who joined the service prior to January 1, 2004, according to M. Krishnan, secretary-general of the Confederation of Central Government Employees (CCGE).
Speaking on ‘New Pension Scheme and its Impact’ on the second day of the two-day First Foundation All India Conference of the All India Postal & RMS Pensioners Association (AIPRPA) here on Sunday, Mr. Krishnan said that the NPS was introduced by the Centre based on the recommendations of the Bhattacharji Committee which stated that the financial position of the Central government employees would be far better at the time of their retirement since they were getting better wages while in service.
On these grounds the committee recommended the introduction of the contributory pension scheme (CPS). The committee also stated that the pensioners need not be paid any compensation for price rise except the increase in pension which they would get whenever there was a pay hike for the serving staff. Based on this, the then National Democratic Alliance government issued the order introducing the NPS and making it applicable only to those who joined service after January 1, 2004.
The UPA-I government did not cancel the order but gave a legal status to the NDA government’s order by bringing an Ordinance, which however could not be made into a law because of the opposition of the Left parties. But the subsequent UPA-II government passed the NPFDRA Act in Parliament with the support of the BJP.
With the passing of the Act, the employees who joined after January 1, 2004 suffered a 10% salary cut since this 10% went towards the New Pension Fund created under the Act. The General Provident Fund too was withdrawn for this category by the government which stated that the employees who were under the CPS would get 60% of their contribution as pension at the time of their retirement. Under the NPFDRA, the Central government had no pension liability since the Pension Fund created under the Act was to be administered by a private insurance company which would invest the fund in the share market, which only went to benefit the corporates.
“This virtually amounted to privatisation of pension,” he said.
Cautioning existing pensioners and those Central government employees appointed prior to January 1, 2004 who were under the wrong impression that the NPS would not affect them, Mr. Krishnan pointed to a clause in the NPFDRA Act which states that the NPS could, by a notification of the Government of India, be extended to those who were appointed prior to January 1, 2004 too.
The Secretary General said that a committee constituted by the Central government to work out the projected liability for it if it were to make an initial contribution towards the Pension Fund to provide pension to those who joined before the cut-off date stated that the Centre would have to contribute Rs. 3,35,628 crores to provide pension for the next 30 years, which the Sixth Pay Commission said the government could not bear.
So the committee suggested that the government could consider segregating the liability into one for those below 40 years, and another for others. But such a fund too would be managed by a private agency which would invest it in the unpredictable share market.
“So, the Damocles’ sword of the NPS hung on the existing pensioners too”, he said, adding that the Central government employees and pensioners should fight a joint struggle against the NPS.