Centre has no liability since fund created will be administered by private insurance firm
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.
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
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.
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.
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.
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 The General Provident Fund too was withdrawn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
“This virtually amounted to privatisation of pension,” he said.
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.
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
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.
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.