The Atal Bihari Vajpayee led NDA government introduced a National Pension Scheme (NPS) replacing the erstwhile existing secured pension for retired employees or the Old Pension Scheme (OPS). The NPS since its beginning has been a scheme linked with the fluctuations of the market, thus making old age benefits for our citizens extremely insecure. The NPS was implemented with passage of time in different states other than West Bengal. The old age vulnerability introduced by the NPS subsequently generated a mass anger among employees. The mass nature of the movement forced several state governments to re-introduce the OPS. The Rajasthan State government introduced OPS first in 2022, subsequently Chhattisgarh, Jharkhand and Himachal Pradesh governments reintroduced the OPS in their respective states. All the state governments that re-introduced the OPS were non-BJP governments. The Modi-led BJP government at the centre, through PFRDA (Pension Fund Regulatory and Development Authority), tried to create obstacles to the process by refusing to return the money collected in the name of NPS from the same employees since 2004.
At a time when the percentage share of India’s old age population is increasing due to the inevitable demographic transition, the attempts by the Modi government to push the future of Indian workers in insecurity and vulnerability speaks a lot about its anti-people nature. If on the one hand, India’s youth is being denied all opportunities of dignified employment, their future too is being pushed into darkness.
The movement against NPS reached its peak on 1st October, 2023 when lakhs of government employees assembled at Ramlila Maidan in New Delhi to demand restoration of the Old Pension Scheme. It became a major agenda for the 2024 Lok Sabha election and was incorporated in the election manifestos of almost all opposition parties. The election result of Uttar Pradesh that gave a decisive mandate against the incumbent BJP showed the massive impact that the movement against NPS had generated.
Under pressure of the movement against NPS, the central government constituted a committee for reforms of NPS under the chairpersonship of the then Finance Secretary Mr. T.V. Swaminathan in 2023. It is this committee that had finalised the details of the new scheme now introduced in the name of Unified Pension Scheme (UPS). But this again is nothing but a ploy to deceive and divide the government employees.
Salient Features of UPS
A retired employee will receive a pension amounting to 50% of the average Basic Pay over the last 12 months before retirement for a Minimum qualifying service of 25 Years. The pension will be proportionate for those with shorter service periods with a minimum requirement of 10 Years of Qualifying Service. Sixty percent of the Pension received by retired persons will be assured for the family of the retired person in case of the death of a retiree. This scheme envisages an assured Minimum Pension of Rs. 10,000 per month on superannuation after a minimum of 10 Years. The DA will be given on pension as in case of serving employees. A Lump - Sum Payment will be given at Superannuation, in addition to Gratuity, 1/10th of monthly emoluments (Pay +DA) as on the date of superannuation for every completed six months of service.
Difference: UPS vs OPS
The OPS was a defined benefit scheme, which was not contributory. Pension was interpreted by ILO and various courts as deferred wages that have not been given to employees in the tenure of their service. UPS, like NPS, continues to be a contributory one where the employees are forced to contribute 10% of their monthly salary, which is a sum of their Basic Pay and the DA.
Under OPS where railway servants became entitled to Pension on completion of Qualifying Service of 10 Years in accordance with Rule 69 (2) of the Pension Rules, Pension shall be paid at 50% of the emoluments or average emoluments received during the last 10 months, whichever is more beneficial to them. The concept of pro-rata pension has ceased to exist w.e.f. 01-01- 2006. Under UPS Qualifying Service of 25 Years is necessary for 50% Pension and there will be pro-rata pension for lesser periods of service.
Definition of family meant for Family pension under OPS include the Widow/Widower, Son, Unmarried/ Widowed/ Divorced Daughter and any parents who were wholly dependent on the Government Servant before death. Under the UPS, the family includes widow and widower only. Under OPS family pension is 30% of the last pay drawn. Under UPS family pension is 60% of the Pension. The final amount may actually be higher under OPS. It is to be noted that the term “60% of pension as family Pension” under UPS is being used to misguide the employees.
Under OPS there is a provision for Commutation of a maximum of 40% of Pension. The commuted portion will be reduced from Basic Pension but Dearness Relief is given on the Commuted Portion also and after 15 Years the Commuted Portion is restored. The commuted Value is roughly Rs. 98 against one rupees of commutation. No provision for commutation exists under UPS. There is a lump sum payment at the rate of 1/10th of monthly emoluments (Basic + DA) for every 6 Months of qualifying service. If a Railway Servant retires after completion of 25 Years of service she will get lump sum money of 5 months emoluments only. There is a huge gap between the commutation and the Lump sum.
The minimum pension under OPS was fixed at Rs. 9,000 on 01. 01. 2016, within one or two years it will be at least Rs. 15,000 at the time of pay revision. So there is nothing to cheer about Rs.10,000 as the minimum pension under UPS. Under the OPS, additional pension is added at the rate of 20, 30, 40, 50, and 100 percent after attaining the age of 80, 85, 90, 95, and 100 years of age respectively. Moreover, under OPS, revision of pay is also applied to pension but there is no clarification in UPS about it.
The Central Govt. was forced to introduce an assured pension in the name of UPS in the face of the relentless struggle of Government Employees but UPS has no match against OPS. After the introduction of UPS, now there will be three types of pension -
NPS where the employee's contribution is 10% of (Basic + DA) and Govt contribution is 14%;
UPS where employees' contribution will be 10% and Govt contribution 18.5%; and
OPS (Defined Benefit Scheme) where no contribution from employees is needed.
The demand of the anti-NPS movement is scrapping of NPS and restoration of OPS. Determined and relentless struggle against NPS forced the Central Govt to make a retreat from its old stand. Now, the movement must be spearheaded toward achieving the ultimate goal of restoring OPS. The move of the Central Govt for introducing UPS will create confusion among the employees on the question of exercising their option for switching over from NPS to UPS. Thus, setting up any short time limit for exercising the option should be resisted by the unions and employees organisations. The united struggle against NPS/ UPS and for OPS must be won.
(Authors are associated with EREU and IREF respectively)
