NPS to OPS: Abolition of NPS and for Restoration of OPS

NPS to OPS: Abolition of National Pension System and for restoration of Old Pension Scheme

GoI reply to General Secretary, AIDEF on abolition of National Pension System and for restoration of Old Pension Scheme

F.No-20/07/2017-PR

18.03.2019

To
Shri C. Srikumar, General Secretary,
All India Defence Employees’ Federation,
S.M. Joshi BhavanI, Survey No. 81 ,
Dr. Babasaheb Ambedkar Road,
Khadki, Pune – 411 003.

Subject: Representation received for abolition of National Pension System and for restoration of Old Pension Scheme – reg.

Sir,
Kindly refer, to your representation dated 03.11.2018 on the subject cited above.

In this connection, it is started that the introduction of National Pension System (NPS) was a policy decision of the Government of India in view of the Increasing pension liability on the economy.

Your concerns In this regard have been noted. It Is informed that based on the feedback received from time to time from the subscribers covered under NPS and other stakeholders, the Government of India, based on the Committee of Secretaries recommendations, has recently approved the following proposals for streamlining NPS for Central Government employees.

Enhancement of the Government’s contribution from the existing 10% to 14% of the employee’s pay + DA While keeping the employee’s contribution at the existing 10%

Providing freedom of choice for selection of Pension Funds and pattern of investment to subscribers

Payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004-2012

Providing tax deduction to the contribution made under Tier-II of NPS under Section 80 C for deduction up to Rs. 1.50 Iakh provided that there is a lock in period of 3 years

Increase In the tax exemption limit for lump sum withdrawal on exit from the existing 40% to 60% making the entire withdrawal exempt from Income tax.

4. It Is further assured that keeping in view the concerns of NPS subscribers, the Government will continue to do its best to ensure that the Interests of the subscribers are protected to the best extent.

Yours faithfully,
(Abhay Garg)
Under Secretary to the Government of India

Source: Confederation

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PROPOSAL TO INCLUDE IN THE ELECTION MANIFESTO OF YOUR PARTY WITH REGARD TO THE SCRAPPING OF THE NATIONAL PENSION SYSTEM WHICH HAS TAKEN AWAY THE PENSION RIGHT OF THE CENTRAL GOVERNMENT EMPLOYEES ….

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10.3.12 The Commission has examined these concerns raised by the stakeholders. The Commission also interacted with Chairman, PFRDA, and representatives of the Department of Pensions and Pensioners Welfare (DPPW), Department of Personnel and Training (DoPT), Department of Expenditure (DoE) and the Department of Financial Services (DFS).

10.3.13 In so far as the future value of pension under NPS is concerned, the Commission notes that this would depend upon a combination of factors:
(i) performance of the invested fund, which in turn would depend on the asset mix of the investment and general economic situation of the country,
(ii) cost of financial intermediation,
(iii) contribution rates,
(iv) period of contribution,
(v) performance of the fund manager and
(vi) development of the annuity market.

Grievances against the NPS

The NPS has now been in effect for over 10 years. During this period, there has been perceptible progress in putting together the architecture and providing information to subscribers. Major concerns, however, remain. Broadly, these are as under:

i. The larger federations and staff associations advocated scrapping the NPS on the ground that it discriminates between two sets of government employees.

ii. Individuals covered under NPS have pleaded for reverting to the OPS on the grounds of uncertainty regarding the actual value of their future pension in the face of market related risks.

iii. Individuals have pointed out that under NPS, the effective salary becomes less since the employee has to mandatorily contribute 10 percent of pay towards the pension fund.
iv. Individuals have stated that grievance redressal facility is not effective and consultation with stakeholders has been non-existent. This communication gap has generated insecurity in the minds of stakeholders including staff and Group ‘A’ officers of Central Government as well as All India Service Officers.

v. Associations have complained that Family Pension after the death of the employee is not ensured in the NPS. Moreover, if an employee dies at an early age, the family would suffer since annuity from the contribution would be grossly inadequate.

vi. Individuals have complained that NPS subscribers have no recourse to GPF for their savings. Their personal savings (10% of salary) are considered part of a larger corpus. It has been pointed out that the justify approach would be to consider only government’s contribution and the returns earned on it as the effective amount available for purchase of annuities.

vii. Associations have pointed out that unlike the facility under GPF, it is not possible to take refundable advances under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere.

viii. Grievances also relate to tax treatment under NPS. While contributions and accumulations in NPS are exempt, lump sum withdrawals from NPS at any time are
taxable at par with any other income. In addition, there is a service tax liability on any amount utilised for purchase of annuity.

ix. It has been pointed out that though NPS became effective from 2004, detailed instructions were issued only in late 2009 and in many cases the credit of contributions began from 2012. In the case of AIS officers in some States, contributions by the concerned State Government are yet to be fully made and deployed. The net result of this has been that contributions for the period 2004-2012 have not been made in full or have earned simple interest and did not get any market linked returns. Because of the prevailing confusion, contributions made by some AIS officer have been returned to them without interest. This will have a huge impact on the eventual corpus as the benefits of compounding were not available for the first 8 -9 years.

x. Individuals, in their presentation before the Commission, stated that annuities under NPS have no compensation for inflation unlike dearness relief under OPS. Further, in the case of OPS there is a revision in basic pension itself after every Pay Commission. This too is not available in respect of annuity of NPS subscribers.

xi. It has been pointed out that government employees are not given freedom of choice in choosing their fund manager based on performance and track record as the contributions are divided in a pre-specified ratio among selected Pension Fund Managers. It has been stated that government employees have no say in asset allocation
of their money.

xii. Concerns were raised that the contribution of 10% + 10% will not be sufficient to create a corpus which provides reasonable assurance that pension will be 50 percent of the last pay drawn.

Authority : http://7cpc.india.gov.in/

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NFIR
National Federation of Indian Railwaymen

No. IV/NPS/PFRDA BILL/Part I

Dated : 24/10/2015

The Suresh Prabhu,
Hon’ble Minister for Railways
(Railway Board)
Rail Bhavan
New Delhi

Sub: Exemption of Railway employees from New Pension Scheme/National Pension System (NPS)-reg.

Ref: GS/NFIR’s letter No. IV/NPS/PFRDA BILL dated 26/08/2015 addressed to the Railway Board (MS).

The Government of India had introduced New Pension Scheme (NPS) applicable to the Central Government employees appointed on or after 01/01/2004. Under the scheme, 10% of the Pay of each employee is deducted from his/her salary every month and equal amount is contributed by the employer and credited to the NPS Trust controlled by the PFRDA. However those who were appointed prior to 01/01/2004 have been covered under “Liberalized Pension Scheme” and their pensionary benefits like Pension, Family Pension etc., are guaranteed by the Government. While the New Pension Scheme now being re-named as “National Pension System” is not applicable to Defence Forces, the same had unfortunately been made applicable for Railway employees with effect from 01/01/2004.

2. The duties, responsibilities, risk involved, remoteness, arduous and hazardous conditions of railway employee are akin to that of Army Personnel and therefore NFIR has been urging upon the Government as well the Railway Ministry to exempt Railway employees from New Pension Scheme. The Federation was compelled to take strike ballot on pending demands, among them “Abolition of New Pension Scheme” was one of the most important issues. Responding to the demands, the Railway Board (CRB, MS, FC) had held separate meeting with the Federations on 7’th February 2014, wherein the justification for exempting railway employees from New Pension Scheme was discussed, consequently the Railway Ministry had agreed to approach the Government. Hon’ble MR Shri Mallikarjun Kharge had sent communication to the Finance Minister on 29th March, 2014 explaining case and justifying that the Railways deserves to be exempted from NPS. Unfortunately, there has been no positive decision from the Government till now.

3. In this context, NFIR also brings to your kind notice that the JCM (Staff Side) as well the Federations have decided to launch industrial action as the Government has not responded to the charter of demands of Central Government employees. During the meeting with you on 6th August,20l5, we have also mentioned some of the issues continued unresolved when CRB and Member Staff were present.

Railway Board (CRB, NPS & FC) held another meeting with the Federations on lst October 2015 on eight short listed demands which include “Exemption of Railway Employees from New Pension Scheme”. After discussions, the Railway Board has agreed to pursue the case with the Government again. In this connection, NFIR has earlier sent a communication with full details to the Railway Board (MS) vide letter No. IV/NPS/PFRDA BILL dated 26/08/2015 (copy enclosed) to facilitate Railway Ministry to prevail upon the Government to grant exemption to Railway from NPS. Federation is confident that the Railway Ministry is taking necessary action on the inputs given by the NFIR for presenting the case before you.

4. It is, however, shocking to note that a notice has been issued by the National Pension System Trust (NPS Trust) to all the subscribers under NPS that the Trust will start recovering fee/charge @ 0.01% of the AUM on daily accrual basis to meet its expenditure w.e.f. 1st November 2015. (Copy of Notice dated 19/10/2015 is also enclosed) This provocative and arbitrary decision has generated deep sense of disappointment and anger among railway employees”

In view of the above, NFIR invites your kind attention to the communication dated 29th March 2014 of your predecessor (Shri Mallikarjun Kharge) to the Finance Minister and in-puts given by the Federation vide letter dated 26/08/2015 for taking special initiative at the level of Government for exempting Railway employees from “New Pension Scheme” (NPS) as a special case.

With regards.

Yours Sincerely
sd/-
(Dr.M.Raghavaiah)
General Secretary

Source: NFIR

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BPMS Resolutions adopted in CEC Meeting held in Hyderabad

BHARATIYA PRATIRAKSHA MAZDOOR SANGH
(An All India Federation of Defence Workers)
(An Industrial Unit of B.M.S.)
(Recognized by Govt of India, Min of Defence)
Central Office: 2A, NaVin Market, Kanpur – 208001

REF: BPMS/ RESOLUTION/ 10(7/1/M)

Dated: 21.09.2015

To,
The Secretary,
Govt. of India, Min of Defence,
South Block, DHQ PO,
New Delhi – 110011

Subject: Resolutions adopted in the Central Executive Committee meeting of BPMS.
Respected Sir,

With due regards, it is submitted for your kind information that the Central Executive Committee meeting of this federation has held on 08th & 09”” Sep. 2015 at Dr APJ Abdul Kalam Complex, DRDO Township, Kanchanbagh, Hyderabad and 03 Resolutions have been unanimously adopted by the CEO of the federation & the same are enclosed herewith for your kind consideration and further necessary action please.

This federation is in full hope to get favourable consideration in this regard.

Thanking you in anticipation.

Sincerely yours

(M P SINGH)
General Secretary

RESOLUTION No. 1: Payment of Gratuity to NPS Beneficiaries

In spite of our strong opposition, the Government has made the New Pension Scheme applicable to all recruits after 01-01-2004. While continuing our opposition to the scheme, BPMS have given several inputs from time to time to ensure that maximum benefit be given to the employees.
As a part of this, the entire bye-laws and other issues pertaining to the formulation of the New Defined Contribution Pension System (popularly known as the NPS) was studies and it was found that as per clarification issued by the Ministry of Finance (Department of Economic Affairs) the NPS is a replacement for only Pension, and thus, other benefits provided to employees like Gratuity remains constant i.e. the employees enrolled under NPS are also eligible for Gratuity as per provision of extant law.

After vigorously pursuing the issue, the Department of Pension & Pensioners Welfare had issued O.M. No. 38/41/06/P&PW (A) DT. 05-05-2009, with the approval of Cabinet to provide for Invalid Pension, Family Pension, Disability Pension, Extra-Ordinary Family Pension, Retirement Gratuity and Death Gratuity in respect of NPS subscribers on provisional basis.

Consequent thereof, BPMS has been consistently demanding that this “Provisional” basis be converted into a PERMANENT BASIS feature of the NPS. The Government has, now vide DC. No. 1(4)/E-2006 DT. 17-08-2015 of JS (Pers) of the Ministry of Finance (Department of Expenditure) circulated a note proposing that the budget for the payment of gratuity be projected from the office of the Controller General of Accounts.

Subsequently, the issue has been earmarked to various Ministries, who in turn have further asked comments from various channels.

The federation having taken stock of the present situation feels that asking comments etc. is not required on a Policy decision and demands that the feature of payment of Gratuity to all NPS subscribers upon Retirement or Death, be made a Permanent feature, without further loss of time.

This resolution is therefore, unanimously adopted at the Central Executive Committee Meeting of the Federation on September 08th, 2015.

RESOLUTION No. 2: Minimum Guaranteed Benefits under NPS

In spite of our strong opposition, the Government has made the New Pension Scheme applicable to all recruits after 01-01-2004. While continuing our opposition to the scheme, BPMS have given several inputs from time to time to ensure that maximum benefit be given to the employees.

Even after a lapse of more than 10 years since the arbitrary implementation of the scheme, the Government has failed to formulate a policy ensuring “Guaranteed Minimum Pension” to the subscribers of the NPS.

Having examine the issue in detailed, BPMS now demands that without any further waste of time, the Government should frame a policy to ensure that irrespective of the financial/market conditions at the time of Retirement and/or Death of the NPS subscriber, he should get a minimum guaranteed pension equivalent to FIFTY PERCENT of his last drawn Basic Pay plus dearness relief for neutralization of price rise.

This Central Executive Committee Meeting of the Federation held at Hyderabad, on September 08th, 2015, hereby RESOLVES, to call upon the Government to frame a policy to ensure that the NPS subscribers receive a minimum guaranteed pension equivalent to FIFTY PERCENT of his last drawn Basic Pay plus dearness relief thereupon at par with Central Government Employees/Pensioners.

RESOLUTION No. 3: One time relaxation & removal of ceiling for Compassionate Appointment

The Government has imposed an arbitrary limit of 5% only for filling up of vacancies on compassionate grounds, subject to several conditions. As a result of this decision, many families are living in distress and the very concept of helping the families of those employees who die in harness, stands defeated due to imposition of this ceiling.

The Federation has been taking up the issue at all levels to relax the ceiling to enable the deserving candidate get employment and thereby provide help to the families of the deceased. Having examine the issue in detailed, BPMS now demands that without any further waste of time, the Government should frame a policy to ensure that as a onetime measure, all existing cases of compassionate appoints are provided suitable employment assistance immediately.

This Central Executive Committee Meeting of the Federation held at Hyderabad, on September 08th , 2015, hereby RESOLVES, to call upon the Government to frame a policy to ensure that one time measure, all existing cases of compassionate appoints are provided suitable employment assistance immediately and to further scrap the artificial ceiling of 5% with immediate effect.

(M P SINGH)

Source: BPMS

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