Why the employees’ unions are denouncing the Centre’s Unified Pension Scheme?

The Union Cabinet, chaired by the Prime Minister Narendra Modi, on 24th August, 2024, approved a new pension scheme named the Unified Pension Scheme (UPS) for the government employees claiming it a very beneficial scheme.

Finance Minister Nirmala Sitharaman states that the newly launched Unified Pension Scheme (UPS) is a new pension scheme, not a rollback of NPS, and is designed to benefit government employees without burdening the government.

Clarifying the objections raised the FM says, “It is not a rollback… it is different from OPS and NPS. It is clearly a new package. UPS is better and will satisfy most government employees. It is tailored in such a fashion that every calculation fits and even the government is not burdened too much.”

She expresses hope that most of the states would adopt UPS “as it has a lot of benefits for employees”.

But why the employees’ unions are not satisfied with this newly launched scheme? Why they are disapproving this?

Centre of Indian Trade Unions (CITU) denounced the Unified Pension Scheme (UPS) approved by Union Cabinet on 24.8.2024 as another dubious desperate effort to deceive the Govt employees of their due full right to Old Pension Scheme known as OPS. CITU urges for restoration of old Pension Scheme.

Let us see- What the newly launched UPS is?

As claimed by the government, the salient features of the UPS are:

Assured pension: 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. This pay is to be proportionate for lesser service period up to a minimum of 10 years of service.

Assured family pension: @60% of pension of the employee immediately before her/his demise.

Assured minimum pension: @10,000 per month on superannuation after minimum 10 years of service.

Inflation indexation: on assured pension, on assured family pension and assured minimum pension.

Dearness Relief based on All India Consumer Price Index for Industrial Workers (AICPI-IW) as in case of service employees.

lump sum payment at superannuation in addition to gratuity.

1/10th of monthly emoluments (pay + DA) as on the date of superannuation for every completed six months of service and this payment will not reduce the quantum of assured pension.

Why the employees’ unions are negating the new scheme?

Criticizing the UPS, in a release issued by Tapan Sen, the General Secretary of Centre of Indian Trade Unions (CITU), the union states that the Old Pension Scheme was non-contributory and with assured pension existing as per Central Civil Service Rules 1972 now 2021. A. B. Vajpayee led NDA Govt had introduced the National Pension Scheme (NPS) in 2004 surreptitiously through an Executive Order for those recruited from 1.1.20O4. The central and state Govt employees and central trade unions opposed it from that day and were on path of struggles against it urging for restoration of OPS. The Pension Fund Regulatory & Development Authority Act 2013 notified in February 2014 enabled statutory basis for the NPS.

CITU further adds the unprecedented struggles by the Govt Employees for restoration of Old Pension Scheme (OPS) and the whole hearted support rendered to such struggles by the Joint Platform of Central Trade Unions and Federations could compel the arrogant BJP regime to shift from its arrogant stance of sticking to NPS, but the package offered by it in the name of so-called UPS reflects the same deceptive ploy of depriving the Govt employees of their legitimate dues on account of pension. Several State Govts also reverted back to the OPS and were urging for their share of state govt Employees contribution to PFRDA to be refunded to their State Govts. Modi Govt had rejected all of such requests of State Govts which reverted back to OPS. It was countered by the relentless struggles of employees and trade Unions. Hence this dubious attempt of deceptive UPS is made by Modi led ND Alliance Govt. The Finance Secretary T. V. Somanathan Committee recommendations to study modifications in NPS, which was also boycotted by several Employees federations, are used for this desperate attempt of UPS – a cocktail of NPS and truncated OPS is approved by the Union cabinet.

The employees’ union says the Modi led ND Govt with its neo liberal pursuit of safeguarding the interests of speculative crony capital has come with this UPS with some modification of benefits with additional contribution of 4.5% from the Govt only to further its investment of pension funds of Rs. 10,53,850 crores called Asset under Management (AUM) of total 99,77,165 employees under NPS as on by 31.7.2024 in the share market.

Quoting the example of Andhra Pradesh government, CITU reminds that the previous Andhra Pradesh State Govt had proposed similar or somewhat better than UPS in place of NPS in the name of Guaranteed Pension Scheme (GPS) with 50% of last drawn pay as pension for minimum 10 years of service with defined contribution and purchase of 40% annuity, which was correctly rejected by all the State Govt employees of AP urging for nothing short of OPS. Now the Union Govt has come with similar rather less beneficial scheme with some modifications in NPS which should are also aptly rejected by vast majority of the employees urging for nothing less than OPS.

The Central Employees Union explains that the UPS is based on the continuity of 10% contributions by the employees with the Government contribution increased to 18.5% from present 14%. While in NPS the subscriber can take 60% and has to invest 40% in an annuity and get pension, under UPS entire pension wealth will have to be foregone to the government. In lieu of which government will give 10% of the employee emoluments i.e., basic pay plus DA for every completed six months of service. For 25 years of completed service the employee will get 5 months emoluments and for 10 years of service will get 2 months of pay on retirement as benefit in addition to gratuity.

In UPS, employee will get 50% of 12 months average basic pay as pension on normal retirement at the age of 60 with the completion of 25 years of service, effective from 1-4-2025 that is for those retiring on 31-3-2025 but not applicable to those retired before it. In OPS for 10 years of service 50% of last month’s pay is pension and for voluntary retirement after 20 years of service employee gets 50% of pay as pension.

The Union further adds that employees with service less than 25 years will get proportionately lesser pension in UPS. Employee with 20 years of service will get only 40% of 12 months average basic pay as pension. For 10 years of service employees will get only 20% of average basic pay as pension. In case of proportionate pension for less than 25 years up to 10 years a minimum pension of Rs 10,000 is proposed by government. While Minimum pension in OPS is Rs 9000 plus DA (which as on 1-4-2025 will be 57% that is Rs. 5130) so minimum pension as on 1-4-2025 will be Rs.14,130. Hence the proposed Rs.10000 pension is half of that of OPS. For less than 10 years of service at the time of superannuation employee is not eligible for any pension.

Criticizing the family pension under newly launched scheme, CITU states that under UPS family pension is 60% of pension i.e., 60% of 50%. It means 30% of last pay for 25 years of service at the time of superannuation. For employee with minimum pension of rupees 10,000 it will be 60% of it, i.e., Rs 6000. Minimum pension of rupees Rs 10000 applies only to superannuation and not for family pension. But under OPS family pension is 50% of last pay if the pensioner dies before 7 years after retirement or before 67 years of age. There after family pension will be 30% of last pay. Minimum pension as on 1-4-2025 will be Rs.14130. But in UPS minimum family pension will be only Rs 6000.