FACTS behind NPS:

History: 

Everything is changing. So are the rules regulating Government Servants/Railway Employees also. Globalisation is bulldozing many Social Security Schemes. Pension Fund Regulatory and Development Authority( PFRDA) is one among them. Government of India Gazatted these new rules on 23.08.2003, and resolved to create PFRDA on 29.10.2003.Thus NDA Govt introduced NPS illegally by an executive order on 20.12.2003 w.e.f. 01.01.2004. 

The UPA-II government led by Congress passed the PFRDA Act, 2013 with the support of BJP ,DMK,AIADMK and all regional and national parties except LEFT parties on 4th in Lok Sabha and 6th in Rajya Sabha of September 2013.However, it was made legal only w.e.f.01.02.2014 through gazette notification. Therefore, in the face of it NPS was illegal up to 31.01.2014.It is to be noted that left parties did not allow the UPA-I to pass the bill until it withdrew support in 2009. They could pass only after left parties’ withdrawal and also after weakening of strength of left parties in Parliament in the 2009 election when UPA II did not need the support of left. 

Features of NPS: 

Under NPS 10% of basic pay(including pay element of running staff) plus DA is recovered. This is under TIER-I account. Government gives equal amount as matching grant as was given before 1957.Both the amounts earned interest until August, 2008.Thereafter it was sent to Bank of India, a nationalized bank. Now it is sent to Axis bank, a private bank. The total amount is distributed to three pension fund managers of LIC, SBI, UTI. They invest 15% in share market and 85% in bonds, both government and private corporate. As per the NPS Act there is no hidden or open guarantee for returns on this investment. As per one of the 8 risks listed by SEBI there is a Risk of Loss of Principal. It is like the game of ladder and snake. In capitalist countries the market is always risky. The amount invested and the return together is called the pension wealth. 

At the time of retirement on attaining 60 years, if the principal and savings are still available, a sum equal to 60% of total is given to the retiree. It attracts taxation unlike old pension. Remaining 40% has to be invested in annuities and the retiree is given option to chose the company in which he may invest in annuity. Investment of 40% of Pension Wealth in annuities is mandatory. In case an employee voluntarily retires or resigns before 60 years he will be paid only 20% of pension wealth and balance 80% of Pension Wealth will have to be invested in annuities for pension scheme. If the total amount of Pension Wealth is Rs.2 lakhs and less the entire amount can be withdrawn. 

TAXABLE: Though it is stated that this 40% or 80% does not attract any tax, to the actual amount of investment, 18% GST is imposed. The PFRDA has listed certain annuity providers like LIC and ICICI. This 40% or 80% amount is called purchase price. That is you purchase a scheme for pension. 

Different Types of NPS Annuities and benefits: 

(i). Default Scheme: According to this scheme the pension will be paid for life. After the death the wife or husband (spouse) will get the same amount until death. If the spouse dies before the NPS subscriber nobody else will get the pension. Neither crippled son nor unmarried or widowed or divorced daughter will get the pension as it is available in old pension scheme. The nominee will get back the invested amount i.e. purchase price will be returned . 

(ii). Another scheme is the one in which gives pension for life. After the death of the subscriber the pension is stopped. Spouse will not get the pension not to speak of crippled son, daughters; unmarried, divorced, or widowed .Above all the purchase price is also lost. That is spouse or nominee will not get back the invested amount. In some other variant schemes also purchase price is lost, not returned. 

Investment in Annuities: What the annuity company does with the purchase price? They invest it 100% in the share market. If there is share market crisis the investment will get wiped out and the company does not guarantee a minimum pension. When Shri. Basudeb Acharia, then MP and CITU leader moved an amendment to the ACT for guaranteeing minimum pension at the rate of 50% of last drawn pay, subject to the minimum pension in the Central Government it was not accepted by the government and was voted out by all other parties. 

ATAL PENSION YOJANA: But in the “Atal Pension Yojana” introduced by BJP government for people in unorganized sector the pension is based on the investment. If one opts for minimum pension of Rs.5000 his accumulated contribution is Rs8.5 lakhs. If the investment in share market earns higher amount then the investor will get more pension than Rs.5000.Government guarantees minimum pension of Rs.5000 in the eventuality of earning lesser amount or is wiped out in the crisis. After the death of the pensioner the spouse will get the guaranteed same amount of pension. After the death of both husband and wife the purchase price is returned to the nominee. 

But this same government refuses to pay minimum guaranteed pension to its own employees. In the aftermath of withdrawal of indefinite strike from 11.7.2016 the government appointed a committee to streamline the New Pension Scheme instead of for abolishing the NPS. But even after two years committee’s report is not made public. However, it is understood that this committee also has rejected the demand for guaranteed minimum pension. 

THE ANNUITY & PENSION: In the default scheme, in which spouse will get the same pension and the purchase price is returned to the nominee, the monthly pension will be Rs.524 for every 1 lakh invested as per npscra.nsdl.co.in website. In terms of 2ndscheme where annuity is payable to life of the subscriber without pension to spouse and without return of purchase price, the pension will be more at Rs.713. As per 3rdscheme where 100% annuity is payable to the spouse without return of purchase price the pension for 1 lakh investment will be Rs.612. As per the 4thscheme where annuity is payable to life and without pension to spouse but return of purchase price the pension will be Rs.527. 

According to pension scheme under LIC, in the default scheme, to get Rs.9166 per month one has to invest Rs.17lakhs plus Rs.30600 as GST.I n the scheme for life without pension for spouse and without return of purchase price you will get Rs 9181 as pension if you invest only Rs.12,50,000 plus 22,500 as GST. 

It is a fact that under the R.S.(Pension) Rules, 1993 and CCS(Pension) Rules minimum guaranteed pension is Rs.9000 and maximum pension is 50% of last drawn pay. And this scheme is available for spouse, crippled son, unmarried, divorced, widowed daughters etc.. Moreover, Dearness Relief is also granted on pension so as to compensate erosion in money value at every six monthly intervals and at the time of implementation of recommendations of Pay Commissions pension & Family Pension also upwardly increased. But annuity does not allow DA/DR and Pay Commissions will not have any say on it and consequently no chance of upward increase. But there is a possibility of Wiping out in market crisis. 

Smt Jayanthy,J AA, whose Basic Pay was Rs.31,000, has retired recently under NPS after putting in a qualifying service of 10 years. She was paid with Rs. 3.8 lakhs against 60% and Rs 2.13 lakh against 40%.She,being a compassionate ground appointee, has no spouse, hence invested for life scheme. She is getting annuity of Rs.1200 per month. Had she been in old pension scheme she would have got Rs.15,500 as monthly pension which is 50% of her last drawn pay of Rs 31,000 plus DA/DR at appropriate rate. To get an equal amount of Rs.15,500 under NPS she should have invested Rs.21,37,800 in annuity and still there will be no DA/DR. In old pension scheme she would have earned Rs.15500+DA as guaranteed amount and it would not be wiped out in the market crisis. Thus there is no guaranteed minimum pension under NPS. There may not be pension due to market risks. 

IMPROVEMENTS AFTER STRUGGLES: Initially there was no provision for payment of gratuity and PF savings under NPS. The scheme did not also have provision for payment of Family Pension, Death Gratuity, extra-ordinary pension etc in the event of death or disability of Government Servant. Withdrawal from TIER-I was not allowed. Though provision indicated for withdrawal from TIER-II account, it does not attract matching grant from government. You can withdraw from Tier-II any amount any number of times for any purpose. 

Court Case and struggles: The Gratuity Act should be applied in cases where there is no provision for gratuity under service rules. As per the provisions of this Central Act no worker in this country, who has put-in a minimum of five years’ service shall go without gratuity as terminal benefit. DREU put-forth this legal position in its case before the Hon’ble CAT/Madras Bench in OA No.575/2011. In the wake of legal battle and the nationwide strike on September 2, 2016 by all Central Trade Unions and Confederation of Central Government Employees the Central Government issued order on 26.8.2016, just before the strike, for granting Death Cum Retirement Gratuity with retrospective effect from 01.01.2004.Had AIRF and NFIR also joined this strike call we could have further achieved improvements like minimum pension guarantee etc. 

Prior to this that too after much criticism and struggles by some Trade Unions against absence of provision for Family Pension, Death Gratuity etc., in the event of death and disability of a Government Servant, the government issued provisional orders on 05.05.2009 for extending the benefit of Family Pension and Gratuity under R.S.(Pension) Rules, 1993. Disabled employee will get disability pension under old pension rules along with gratuity. Both will be effective from 1.1.2004. But even after two years from the date of issue of this order the Southern Railway administration did not implemented it until 2011. It was only as per the Interim Orders of Hon’ble CAT/Madras Bench in OA No.575/2011 ALL SUCH EMPLOYEES got PENSION AND GRATUITY. It was only after these interim orders of Hon’ble Tribunal all pending cases in Southern Railway were settled n favour of families of deceased Railway Servants. Now government insists for an undertaking for surrendering of entire pension wealth in favour of Government/Railways for availing benefits under Railway Services (Pension) Rules, 1993. This is unjustified penal provision, because employees’ contribution is entirely mis-appropriated without taking into account PF components of 60% of NPS accumulated value, which should be paid to the family. DREU has raised this point in its case. 

Provident Fund scheme is also applicable to all workers as per EPF Act. But it is not applicable to Railway Employees because there is separate rules of SRPF for them under IREC-Vol-I. If SRPF is not available to NPS employees as per rules, the Act should be applied to them because no worker should be left without Provident Fund as per this Act. This legal provision was argued in our case. Now the government is proposing to deny this 60% said to be of PF component to the family of deceased employees. Now the Government intends to mandate that entire 100% of pension wealth should be invested in annuity thereby totally denying savings to them. 

However after three years of membership in NPS one can withdraw permanently 25% of his contribution three times in service for marriage of children, purchase of house or for certain diseases producing documentary proof. 

Illegitimate Scheme: DREU has argued in its case that the government recovers 10% of pay and then contributes an equal amount by parliament sanction only to pay pension to the employees. But instead of giving the amount to the pensioners and family members the government hands over this amount to private companies and allows it to gamble and wash off its hands from paying pension directly to the employee. It is not guarantying pension and leaves pensioner in lurch. This is in violation of Article 114 of constitution. According to this article the amount should not be varied or its destination altered. Besides, the contribution of employees is their property and it cannot be handed over to somebody detrimental to their interest. The Hon’ble Supreme Court has ruled that the pension is the right and not a bounty. The pensioner should not be left in lurch. We have also argued that all those appointed up to 31.01.2014 when NPS was illegal should automatically be reverted to R.S.(Pension) Rules, 1993. The Hon’ble Supreme Court has in many cases has ruled against the Acts of Parliament if they run counter to the mandate of constitution. 

AIRF president late Shri.Umraomal purohith was a trusty in NPS TRUST ACCEPTING THE SCHEME AS GOOD SCHEME. After exposed it he came out of this Trust only in 2011.AIRF did not pass a single resolution against the scheme until we exposed them. It was only in march 2011, after 7 years, they passed a resolution in their convention in Chennai. NFIR also supported the NPS and passed resolution against it only in January 2012 in its New Jalpaiguri meeting. 

In case of the Running staff , the 55% Retirement benefits which is accrued to them due to the arduous nature of work also will be nullified in this scheme . 

When Com. R. Elangovan , Working President, DREU went for a campaign meeting about NPS at EMD Shed, UBL in 2011 , he was very BRUTALLY attacked by the so called recognised union leaders. 

AILRSA, AISMA, DREU and NREU are the railway trade unions who realized the threat and vigorously fighting and highlighting the facts from the very beginning. 

The entire central Govt trade union organisations are against the NPS now. AIRF and NFIR should join sincerely with other Central Govt Employees Organisations to cancel NPS and to bring back old pension system. 

We can win: All Central Trade unions are in the warpath against this un-assured pension. There were two strikes on sep 2, 2015 and Sep 2, 2016 when 15 crores and 18 crores workers, respectively, participated in the nationwide strike. They are now planning for two day strike against globalization and new pension. It is our duty to pressurize the Railway Trade Unions( AIRF & NFIR) to sincerely participate with other Central Govt Employees and Central Trade Unions to fight against NPS.

Prepared by C. Sunish.