Dear Comrades,
STEERING COMMITTEE OF
GOVERNMENT EMPLOYEES ORGANISATIONS ON PFRDA BILL
C/o AIRF, 4, State Entry Road, New Delhi – 110001
9868244035
PRESS STATEMENT
Thousands of State
and Central government employees, Railway workers, Defence workers, BSNL,
University and School teachers today participated in a massive March to
Parliament against the PFRDA Bill and to submit a petition to the Prime
Minister to which millions of employees have subscribed their signature. The
rally was addressed by the leaders of various organizations of employees and
several Members of Parliament.
A seven member
delegation consisting of Coms. S K Vyas, (Convenor, Steering Committee) Shiv
Gopal Mishra, (General Secretary, AIRF), KKN Kutty, (Secy. General,
Confederation of Central Government Employees & Workers) S.N. Pathak, (President,
AIDEF) P. Abhimanyu (General Secretary, BSNLEU) Rajendran (General Secretary,
STFI) and Sukomal Sen (Sr. Vice President, AISGEF) met the Hon'ble Prime
Minister today along with Com Basudeb Acharya, MP and Com. Tapan Sen, MP and
General Secretary of CITU. The delegation appealed to the Prime Minister to
reconsider the government's policy of privatisation of pension funds and
withdraw the PFRDA bill which seeks to replace the existing defined benefit
Pension Scheme of government employees. The concern and anxiety of the
government employees over the financial security in the evening of their life
was also brought to the notice of the Prime Minister.
The petition to the
Prime minister elaborated the various reasons as to why the present bill will
be neither in the interest of the employees nor will benefit the Government
Exchequer (Copy enclosed).
The Hon'ble Prime
Minister assured the delegation of the consideration of the petition and the
feasibility of providing a guarantee for a minimum pension which the Standing
Committee had recommended but unfortunately not found approval of the Cabinet.
The Prime Minister informed the delegation that his Government would not do
anything to harm the interest of the employees.
The rally was
concluded at 2.30 PM. On behalf of the Steering Committee, Com. Vyas announced
that the employees will organize two hour walk out on the next day the
Parliament takes up the PFRDA Bill for consideration.
SK VYAS
Convener
STEERING COMMITTEE
OF GOVERNMENT EMPLOYEES ORGANISATIONS
ON PFRDA BILL.
13.C Feroze Shah Road
New Delhi. 110 001
Dated: 25th November, 2011
Phone: S.K.Vyas .
Convenor: 91-98682 44035.
To
The Hon'ble Prime
Minister of India,
New Delhi
Sub: Request for Scrapping of
PFRDA Bill
Sir,
We submit this Petition to
bring to your kind notice and through your good office to the attention of the Honorable
Parliamentarians of our country certain aspects of the re-introduced PFRDA
bill, which will have adverse impact on the exchequer in general and on the
prevailing service conditions of the Civil Servants. We pray that our
submissions in this regard may please be caused to be considered earnestly and
the implication of the provisions of the bill critically analyzed and examined
and take decision to kindly withdraw the Bill from the Parliament.
We submit the following for
your critical and objective analysis of the Bill :
1. The concept of old age security for civil servant in
the form of pension has a very ancient origin dating back as early as third century BC, the
quantum being half of the wages on completion of forty years blemishless
service to the king.
2. In the last century, one of the measures taken by
the colonial rulers to attract talented personnel to the Royal service was the
introduction of pension scheme for civil servants in 1920. The Royal commission
through its various recommendations improved the scheme and the 1935 Government
of India Act provided it statutory strength.
3. The land mark judgment of the Supreme Court in D .S.
Nakara and others Vs. Union of India (AIR-1983-SC-130)(applicable
to the Central and State Government employees, teachers, and all stake holders of pension system)
conceptualized pension stating that pension is neither a bounty nor a grace
bestowed by the sweet will of the employer, but a payment for the past services
rendered. It was construed as a right step towards socio-economic justice and a
concrete assurance to the effect that the employee in his old age is not left
in the lurch.
4. The fifth Central Pay Commission which was set up by
the GOI in 1993 to go into the wage structure and pension scheme of the Central
Government employees referring to the Judgment of the Supreme Court cited,
observed (Para 127.6) that
"pension is the statutory,
inalienable and legally enforceable right earned by the civil servant by the
sweat of the brow and being so must be fixed, revised, modified and changed in
the way not dissimilar to salary granted to serving employees."
5. The guiding principle adopted in determining of pay
package of civil servants is to spread out the wage compensation over a long
period of time whereby wages paid out during the work tenure is low in order to
effect payment of pension on retirement. As such civil service pension is
rightly termed as deferred wage. While in the organized private sector the
employer is required to contribute equal share to the Provident Fund of the
employees, the Government neither contributes to the Provident Fund of the
civil servants nor takes any pension subscription from him.
6. In an unwarranted intervention in the Statutory
defined benefit Pension system, the IMF in their work paper (WP/01/125,(2001)
propounded the creation of a pension fund by eliciting subscription from the
Wage earners at the earliest stage of their employment so as to fetch an
annuity decent enough to sustain him at the old age. In fact it was a
suggestion for a retrograde change over from the defined benefit pension scheme
to a defined contributory system. While suggesting so, they have categorically
stated that India does not suffer demographic pressure experienced by major
countries, for India's population beyond the age of 60 was about 7% in 2004
which rose to 8.6% in 2010 and is estimated at 13.7% in 2030 and 20% in 2050.
7. The New contributory pension scheme enunciated by
the Government of India and adopted by most of the State Governments is covered
by the PRFDA bill. The bill inter alia, envisages a social security scheme for
all who desire to have an annuity at his old age which is voluntary and not
mandatory. However, in the case of Civil Servants, who are recruited to Government
service after the prescribed cut -off date ( 1.1.2004 in GOI service) the
scheme is mandatory in as much as the employee is bound to subscribe 10% of his
emoluments to the Pension Fund and the Govt. being the employer would
contributes equal amount. No employee is entitled to opt out of the scheme.
8. Despite the inability to bring in a valid enactment,
the Central and all State Governments other than those of West Bengal, Kerala
and Tripura through illegal executive orders decided to impose the contributory
pension system arbitrarily on the Central and State Government employees .While
the Govt. of India notification excluded the personnel in the armed forces and
para-military establishments, the Governments of the Left ruled States of West
Bengal, Kerala and Tripura consciously continued with the existing defined
benefit pension system.
9. The PRFDA Bill stipulates that there will not be any
explicit or implicit assurance of the benefit except market based guarantee.
The subscriber is thus exposed to the following risks at the exit.
a) If there is a major market shock, the subscriber to
the New Pension scheme may end with no ability to purchase an annuity.
b) Since annuity is and cannot be cost indexed, the
real worth of the annuity might fall depending upon the inflationary pressure
on the economy.
c) As per the scheme, the subscriber is to make the
choice of investment portfolio. The Civil Servant being mostly uninformed in finance
and investment related matters, he might end up in making wrong choices which
would eventually rob him of the old age pension.
d) The subscriber is perforce to contribute to the
charges of the investment managers, whose priority often is as to how much
profit they could make through investment of the huge corpus of pension fund in
the volatile share market.
10. The pension fund created by the employees'
subscription and the employers' contribution which directly flows from the
exchequer ( which is nothing but tax revenue of the Govt.) is made available
for the stock market operations which is not only unethical but also blatant
diversion of public fund for private profit, both Foreign and Indian
capitalists.
11. In the case of Civil Servants recruited after the
cut-off date, the new scheme replaces the existing much better "defined
benefit" pension scheme. In the process, the Government has created two
classes of civil servants viz. the one with a defined benefit pension scheme
and the other with the contributory pension scheme in which the employee is to
part with 10% of his emoluments to become entitled for an old age social
security subject to the vagaries of share market permits. Since in both the
cases, the pay, allowances, perks, and other benefits, privileges, duties and
responsibilities are the same it amounts to wanton discrimination of one
against another which is not sustainable in law, rather violative of the
existing constitutional provisions.
12. The wage structure presently designed for those who
are recruited prior to the cut- off date and after is on the same premise and
is depressed to enable the Govt. to meet the pension liability in future. By
imposing the new contributory pension scheme on the employees who are recruited
after the cut- off date the Govt. not only denies the statutory defined pension
benefit to them but also compel them to contribute for earning an undefined
annuity, which must be characterized as highly discriminatory.
13. Those who are covered by the contributory pension
scheme will become entitled for an annuity, a portion of the accumulated
contribution is able to purchase, basing upon the accretion to the fund from
the investment. There is, however, no guaranteed minimum amount of pension for
those who are covered by the new scheme, whereas the civil servants covered by
the existing scheme do get a defined and guaranteed minimum pension and on his
death his family members (wife, widowed and unmarred daughters and unemployed
sons below the age of 25) become entitled for family pension. The
discrimination factor is thus compounded.
14. The PFRDA Bill when enacted, it is rightly feared,
will empower the Government to alter or even deny the present employees and
pensioners the statutory defined pension benefit as has been done in the case
of those who are appointed after the cut-off date.
15. It is stated that the prime objective of the
introduction of the contributory pension scheme is to substantially reduce the
outflow on account of pension liability. The major pension liability of
Government is accounted for by Armed Defence personnel. They are however
excluded from the purview of the contributory pension scheme. The personnel in
the Para Military forces are also
excluded from the ambit of the new Scheme. While doing so, (no doubt to attract
the people to serve in the armed forces for security of the Nation) the Govt.
is bound to meet the pension liability from the consolidated fund of India. The argument advanced by the Govt. to cover
the Civil Servants in the ambit of the new Pension scheme has been found to be
unsustainable by the study commissioned by the 6th CPC. Shri S. Chidambaram, Actuary, in his report,
(Annexure to "A study of Terminal benefit of Central Government employees
by Dt. K. Gayatri, Centre for Economic Studies and policy, Institute for Social
and Economic change, Nagarbhavi, Bangalore) has pointed out that the Government
liability on account of contributory pension scheme would in effect increase
for a period spanning for the next 34 years from the existing Rs. 14,284 Cr. To
Rs. 57,088 Cr. ( 2004-2038) and is likely to taper off only from 2038 onwards.
The exchequer is bound to have an increased outflow for the next 34 years and
will be called upon to bear the actual pension liability of defence personnel
and personnel of para military forces, besides making the contribution to the
Pension fund of the Civil Servants recruited after the cut off date. The
specious plea that the exchequer is bound to gain due to the contributory
pension scheme is therefore not borne from facts.
16. Of the present pension liability of the Govt. of
India, which in 2004-05 was 0.51% of the GDP, 0.26% is accounted for by the
Defence( which is 50% of the total pension liability.) The study report of the
Centre for Economic Studies has concluded that the pension liability as a
percentage to GDP which is just 0.5%
presently is likely to decline given the growth rate of Indian economy.
17. Since most of the State Governments have chosen to
switch over to "contributory pension scheme" , in fairness ( from the
Study conducted by the Centre for
Economic Studies and policy) it can be concluded that the pension liability
of all the State Governments are bound to increase to three times of what it is
today by 2038.
18. The first version of the PFRDA Bill was placed
before the Parliament by the NDA Government in 2003. The 6th CPC set up the Committee to go
into the financial implication on account of the increasing number of
pensioners and suggest alternative funding methodology in 2006. The said
Committee came to the inescapable conclusion (report submitted in 2007) that
"the existing systems of pension are increasingly becoming complicated
after the introduction of the New Pension scheme" and warned that "caution
has to be exercised in initiating any further reforms" In the light of the
conclusion of the said study report which revealed the fact of serious
escalation in the pension payment outflow, the rationale of the re-introduction
of the PFRDA bill in 2011 covering the civil servants is incomprehensible.
Undoubtedly, the Bill when enacted into law will through the existing
pensioners to a financially insecure future and the existing workers to the
vagaries of the stock market. We, therefore, earnestly pray to your good-self
to bring back all the civil servants including teachers irrespective of the
date of entry into Government service as also those irregularly appointed
within the ambit of the existing statutory defined pension benefit scheme.
We may, in fine, quoting the
concluding paragraph (Page 76 of the report of the Centre for Economic Studies
and Policy – Institute for Social and Economic Change) of the Committee set up
by the 6th CPC
"Mainly given the fact that the future
liability although may be large in terms of absolute size is not likely to last
very long and does not constitute an alarmingly big share of the GDP which is
also on the decline. It appears that pursuing the existing 'Pay as you go' to
meet the liability will be an ideal solution."
appeal you, for the detailed
reasons adduced in the foregoing paragraphs, that the new pension scheme
enshrined in the PFRDA Bill may be withdrawn from the Parliament both in the
interest of the Civil Servants and the exchequer.
