Review Pension System: Business Standard
http://wap.business-standard. com/article/opinion/letters- review-pension-system- 117072401611_1.html&grqid= RsIVk4X_&hl=en-IN
Business Standard, Letters, July 25, 2017
Review Pension System
Ramanath Nakhate’s letter captioned “United fight for pension” (July 24) gives deep insight into the plight of a section of pensioners who retired from some public sector institutions. The reasons for GOI and organizations like LIC, RBI and PSBs in which pension schemes had been introduced during 1990’s lending a deaf ear to genuine demands for pension revision may be different from those being shared in public. To understand that, one may have to first have a look at the present status of pension scheme applicable to central government employees.
By an executive order issued in December 2003, GOI successfully divided central government employees into three classes for the purpose of pension benefits:
(i) Employees who were in service as on December 31, 2003, who will continue to enjoy the benefits of ‘Defined Benefit Pension Scheme’ which was in existence on that day, for life (Assuming the employee who joined on December 31, 2003 at the age of 25 may retire in 2038 and assuming the person live up to the age of 80, the pension scheme will remain in force till the year 2058).
(ii) Defence Personnel: Serving and new defence personnel (joining after December 31, 2003) will continue to enjoy the benefit of Defined Benefit Pension Scheme.
(iii) Central government employees joining service on or after January 1, 2004 will be covered by a “Defined Contribution-based pension scheme” called NPS (New Pension Scheme, later rechristened as ‘National Pension System’) where employees’ contribution of 10 per cent of salary will be augmented with a matching contribution of 10 percent by the employer. NPS differs from the old Contributory Provident Fund only in regard to certain details in regard to provisions relating to investment/fund management/withdrawal.
The reason given for introduction of NPS was rising pension liabilities. The pension liability may start tapering only after a few more decades. All these call for a comprehensive review of the Indian Pension System to make it capable of ensuring reasonable retirement benefits to all who are in regular employment. NPS is no substitute for the pension scheme it has replaced. Pensioners’ demand for periodic upward revision factoring in the changes in costs and living conditions is genuine.
M G Warrier, Mumbai