Old Pension Scheme has become a poll promise; why are Punjab govt staff opposing it?
Hundreds of Punjab government employees staged a protest against the Aam Aadmi Party (AAP) government in Chandigarh last week demanding details of the old pension scheme (OPS) which had been notified earlier this month sans details.
Hundreds of Punjab government employees staged a protest against the Aam Aadmi Party (AAP) government in Chandigarh last week demanding details of the old pension scheme (OPS) which had been notified earlier this month sans details.
The Sanjha Mulajam Manch Punjab, an association of protesting state government employees, gathered in Chandigarh’s Sector 17 and tore copies of the government notification on OPS.
The AAP government had issued the notification on November 18 for the implementation of the Old Pension Scheme but was devoid of details, which it said “shall be notified in due course of time”. However, protesting employees called the move an “eyewash”, saying the AAP government issued the notification with an eye on Gujarat elections.
Sukhchain Singh Khehra, president of Punjab Civil Secretariat Employees’ Union, said the notification was not appropriate.
“The AAP government has issued the notification without amending the Civil Services Rules and mentioning the detailed pension policy. Also, no date has been given in the letter from which the old pension scheme is going to be implemented,” he said, while addressing the gathering.
Also read: Cong, AAP make old pension scheme restoration demand major poll plank in Gujarat
A Sanjha Mulajam Manch spokesperson demanded that the government complete the necessary amendments and procedures for the restoration of the old pension scheme before the Gujarat elections.
Delhi Chief Minister and AAP chief Arvind Kejriwal has promised to bring back OPS in Gujarat if his party comes to power in the upcoming assembly elections. The Congress too has promised the same in the poll-bound state. A number of states have come up with the promise to bring back the Old Pension Scheme, which was scrapped by the BJP-led Centre under former Prime Minister Atal Bihari Vajpayee in 2003.
Two Congress-ruled states Rajasthan and Chhattisgarh and JMM-ruled Jharkhand have decided to implement OPS while BJP-ruled Himachal Pradesh has promised to restore the scheme if voted to power in the state.
BSP MP Shyam Singh Yadav too had proposed bringing back the old pension scheme for the whole country.
Old Pension Scheme details
Under the old pension scheme, the government paid the pension, which was equal to half of the last salary drawn and which was later adjusted to the pay commission of the time. The pension came from a corpus the government maintained.
The Centre under former Prime Minister Atal Bihari Vajpayee scrapped the policy and introduced the New Pension Scheme (NPS) in 2003, which Punjab adopted in 2004.
The NPS is a participatory scheme wherein employees contribute a portion from their salaries and the government matches up. These savings are pooled into a pension fund managed by the Pension Fund Regulatory and Development Authority (PFRDA).
On retirement, subscribers can withdraw the accumulated amount in part or full or use it to buy insurance or other income generating funds.
However, many people find it a hassle to manage funds through different financial instruments and do complain that the remaining funds may sometimes not suffice for their requirements.
Funding issues
One of the fears of the Punjab government employees is how the government will fund the Old Pension Scheme and whether the state will be able to get back the government’s share of around ₹17,000 crore from the PFRDA.
The PFRDA would have invested the amount in various schemes, bonds or corporate stocks for a long period of time. Taking it out immediately may not be possible. As such reviving the OPS itself will take a very long time.
The OPS would also put an additional burden on the Punjab government’s finances which would have to maintain a corpus of ₹1,000-1,500 crore. According to reports quoting sources, the state government is working on building a corpus for the pension scheme.
Punjab Chief Secretary VK Janjua was quoted as saying by the Indian Express that the government was committed to paying pensions under OPS. “We have given a guarantee to the employees that we will revert to OPS. We are working on it. We will organise funds and then roll the scheme out.”
However, critics of the Old Pension Scheme have pointed out that bringing it back will impose a higher burden on the exchequer and future taxpayers.
