Note on the proceedings of the meetings, the NPS Committee had with the Staff Side, JCM.
National Council on 20th January, and 17th March, 2017.
National Council on 20th January, and 17th March, 2017.
As you are aware, the Govt. had set up a committee as per recommendations of the 7th CPC to streamline the procedure and functioning of the NPS. The Staff Side of NC JCM was asked to present their views in the matter. The meeting was on 20th January, 2017. The Staff side made a written presentation to the committee on the subject. (The note was placed on the website). However, it also took the stand that the consultation with staff side could not be held in the manner of a Raj durbar as quite a number of Associations especially representing the organised Group A services and the All India Service officers were also invited to the said meeting. The staff side was assured of an independent hearing. Subsequently the sub-committee III (The Pension Committee had set up three sub committees to interact with various stake holders on different subjects) under the Chairmanship of Ms. Vandana Sharma, Addl. Secretary of the Department of Pension and Pensioners Welfare convened a meeting on 10th February, 2017. The Sub- Committee was more concerned about the applicability of various provisions of the present rules to the NPS subscribers especially those which are punitive in character. In the event of a Government servant being found guilty under the CCS (CCA) Rules, the Government is empowered to restrict, reduce or reject the Pension and other retirement benefits. Prior to the meeting, the sub Committee had asked for views on various issues to be discussed at the meeting. The official Side wanted similar rules in the case of NPS subscribers. The Staff Side had submitted a written Note in this regard. The said Note has also been placed on the website. In the meeting, the Staff Side had made it categorically clear that no such rules could be imposed on the NPS subscriber as the annuity which he purchases on the basis of the contribution made at the end of his service is the product of a financial transaction and cannot be unilaterally altered at the whims of the employer. Once the contributions of the employee and the employer is remitted to the investing agency, the employer ceases to be a stake holder any more in the scheme.
The third meeting was held on 17th March, 2017. The meeting was chaired by the Secretary Pension. The said meeting was to specifically interact with the members of the Staff Side. On behalf of the Staff side, the following comrades took part in the meeting.
1. Com. M.Raghavaiah (Leader, Staff Side)
2. Com. Sivgopal Misra(Secretary Staff Side)
3. Com. KKN.Kutty(Confederation)
4. Com. C. Sreekumar(AIDEF)
5. Com. Guman Singh and (NFIR)
6. Com. Sreenivasan (INDWF)
As indicated earlier, several Associations of Group A Officers had made their presentations. Some of the important points mentioned by them during the discussions were:
1) Discrimination between pre and post 2004 officials-
2) While Govt. determines the quantum of pension subscription and makes it mandatory it refuses to guarantee a minimum return.
3) Atal Pension Yojana offers better and guaranteed benefit to the Subscribers.
4) The Government’s assurance that the employees under NPS will get annuity not less than the minimum pension under the defined benefit scheme and might even be more was made on wrong assumption in as much as -
1) Discrimination between pre and post 2004 officials-
2) While Govt. determines the quantum of pension subscription and makes it mandatory it refuses to guarantee a minimum return.
3) Atal Pension Yojana offers better and guaranteed benefit to the Subscribers.
4) The Government’s assurance that the employees under NPS will get annuity not less than the minimum pension under the defined benefit scheme and might even be more was made on wrong assumption in as much as -
a) 100% of the corpus was taken for computation of annuity whereas as per the scheme only 40% of the pension wealth alone would b e available.
b) Fund expenses are exorbitantly under- valued.
c) No benefit for the family the case of a Pensioner, who dies at an early age under NPS.
d) Annuity is not cost-indexed.
5) Two officers at the level of the Secretary to GOI retiring on the same day in 2037( former recruited in 2003 and latter in 2004 )will have a huge differential in pension. The 2003 recruitee will have pension 3.25 times of the annuity of the 2004 recruitee. Over a period of next 10 years i.e in 2047,(due to cost indexation) the 2003 recruitee will have pension 7.4 times of what the 2004 NPS official receives as annuity.
6) In most of the countries where contributory pension scheme is in vogue, the Govt’s (employer) contribution is 25% of the salary while that of the employee is 10%
7) The NPS Contribution do not enjoy the Tax benefits like PPF, EPF, GPF etc.
5) Two officers at the level of the Secretary to GOI retiring on the same day in 2037( former recruited in 2003 and latter in 2004 )will have a huge differential in pension. The 2003 recruitee will have pension 3.25 times of the annuity of the 2004 recruitee. Over a period of next 10 years i.e in 2047,(due to cost indexation) the 2003 recruitee will have pension 7.4 times of what the 2004 NPS official receives as annuity.
6) In most of the countries where contributory pension scheme is in vogue, the Govt’s (employer) contribution is 25% of the salary while that of the employee is 10%
7) The NPS Contribution do not enjoy the Tax benefits like PPF, EPF, GPF etc.
The Secretary Pension informed the members that the Committee’s mandate is only to make suggestions to streamline the NPS procedures and make the rules simple and transparent. The basic features will not therefore undergo any change. He concluded that neither the scheme would be replaced or discarded, nor any guaranteed minimum pension would be offered. as in both cases Govt. will have to undertake financial obligations. He clarified that the Sub Committees have been set up to expedite the work.
The staff Side in their presentation made out inter alia the following points:
a) The number of employees covered under NPS in increasing day by day and in a decade’s time, they might become significant segment of the Government personnel.
b) All those who are covered by the scheme are extremely critical and resent that their savings are channelled into private hands to help the corporate bodies to make enormous profits.
c) There is no likelihood either now or in any time in future that NPS subscribers will be able to purchase an annuity equivalent to what the pensioners under the Defined Benefit Scheme is entitled. The Government must honour its commitment made to this effect to the staff side in the National Council, when the NPS was introduced.
d) The Committee in its report must at least bring it to the notice of Government that the Staff Side of the JCM is of the firm view that the cosmetic changes in the scheme will not bring about any tangible benefit to the subscribers and the Government must as an interim measure guarantee the pension to NPS subscribers equivalent to what is provided for the personnel covered under the defined benefit scheme.
e) The Staff Side opined that the committee will be well within its term of reference to suggest.
The staff Side in their presentation made out inter alia the following points:
a) The number of employees covered under NPS in increasing day by day and in a decade’s time, they might become significant segment of the Government personnel.
b) All those who are covered by the scheme are extremely critical and resent that their savings are channelled into private hands to help the corporate bodies to make enormous profits.
c) There is no likelihood either now or in any time in future that NPS subscribers will be able to purchase an annuity equivalent to what the pensioners under the Defined Benefit Scheme is entitled. The Government must honour its commitment made to this effect to the staff side in the National Council, when the NPS was introduced.
d) The Committee in its report must at least bring it to the notice of Government that the Staff Side of the JCM is of the firm view that the cosmetic changes in the scheme will not bring about any tangible benefit to the subscribers and the Government must as an interim measure guarantee the pension to NPS subscribers equivalent to what is provided for the personnel covered under the defined benefit scheme.
e) The Staff Side opined that the committee will be well within its term of reference to suggest.
(i) Cost-indexation of annuity as the Contribution made by the subscribers and the Government as employer is 10% of the salary-salary for this purpose being Basic Pay and Dearness allowance. In other words, in every six months contribution increases and therefore it is logical that the annuity is also raised every six months to keep pace with the rate of inflation.
(ii) Minimum guarantee is assured by many countries even under the contributory system of pension and the provision to the contrary in the PFRDA Act must be recommended to be removed.
(iii) It is a welcome step that the Govt. has now decided to extend the benefit of family pension in the case of all NPS subscribers who die in harness. The family pension can therefore be assured at the prevailing rate for all NPS subscribers, if necessary by appropriating a one-time deduction from their pension wealth, at their option, at the time of retirement.
(iv) To introduce the GPF again as a voluntary option.
(v) All NPS subscribers must be provided with a payment slip by the heads of offices indicating the amount deducted, the amount contributed by the Govt. and the date on which the sum has been made over the to the fund managers, irrespective of the communication the subscriber is entitled to get from the PFRDA registry.
(vi) No rules to be framed to link the pension benefit with disciplinary proceedings.
(vii) The present investment pattern prescribed must be reviewed for its viability periodically.
(viii) The Sub Committee which goes into the issue concerning framing rules may be asked to interact with the Staff Side once the draft rules are ready.
(ix) In so far as customer friendly procedures are concerned, the committee may look at the best international practices with a view to adopt and incorporate them.
It could be seen from the deliberations in the committee that nothing short of replacing NPS with Statutory defined Benefit Pension Scheme will bring about anything good for new recruitees. Our endeavour must be in that direction whereby sanctions are generated and compulsions are felt by the Govt as early as possible.
K.K.N. Kutty
Member, Standing Committee
National Council, JCM &
National President, Confederation
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