The Way Forward in the present Indian Pension Scenario”- S Suryanarayanan, BPS-Patron, New Delhi
I thank Shri M V Krishna Mohan, Honorary President, Central Government Pensioners’ Forum (AP&TS), and the organizers of the Silver Jubilee Celebrations of the Central Government Pensioners’ Forum (A.P. & T.S.), for giving me an opportunity to share a few thoughts. It will be an all-embracing one, covering not only the pension scheme as applicable to the present retirees but also Central Government employees who joined service on or after 1.1.2004, Public Sector employees, the public-at-large, the aged, the disabled, the widows, and the unorganized sector. This would enable a proper comparison across all the schemes for drawing appropriate lessons for the way forward.
The pension that the present Central Government retirees now draw is what is known as a ‘defined-benefit’ one. It is one in which the pensioner gets a defined benefit at/after retirement but has not contributed specifically for his pension during service. From its humble beginnings more than a century ago, it has reached its present cost-of-living compensated, social-security-oriented, status on the principle that a pensioner should be able to maintain a reasonable standard of living, thanks to the path-breaking judgment in the D S Nakara case, and the ceaseless efforts put in by a large number of pensioners’ Associations/Federations through memoranda to, and meetings with, successive Pay Commissions and the powers-that-be. It now serves about 2 corers of pensioners, and about 5 crores out of a population of 130 crores, that is about 4% of the population. As employees who joined service on or after 1.1.2004 are not governed by this scheme, the numbers will go on shrinking with the passing years, with the percentage of these pensioners coming down further to a negligible figure in the years to come. In line with trends the world over, Government of India decided to do away with the above-mentioned ‘defined- benefit’ scheme altogether and introduced the contributory National Pension Scheme for all its employees who joined service on or after 1.1.2004. While the scheme was initially designed only for government employees, it was opened up for all citizens of India between the age of 18 and 60 in 2OO9. The Scheme is administered and regulated by the Pension Fund Regulatory & Development Authority (PFRDA). Government have been adding, from time to time, a number of incentives to make the Scheme more popular, with the latest being an increase in Government contribution to 14%, as against 10% by the employee, and making the scheme more flexible and dynamic in its operation by giving flexible options to the investor. While current figures for the number of persons covered by this Scheme are not readily available, coverage had crossed 1.41 crores as on Dec. 2016, and the figures would only go up, thanks to the incentives. One can therefore reasonably conclude that the figure will be much more than the shrinking numbers of pensioners under the ‘defined-benefit’ scheme, sooner than later.
In the Interim Budget for the year 2019-20, the Government have come up with a Scheme for the 10 crore people in the unorganized sector. They could get a monthly pension of upto Rs. 3000 after they attain 60 years of age, on monthly ‘contribution’ of Rs. 50-100. This is also a ‘defined-contribution’ scheme. Public sector defined benefit schemes are occupational pension schemes that provide a set level of pension at retirement, the amount of which normally depends on the years of service and earnings at retirement or in the years immediately preceding retirement.
The non-contributory defined- Indira Gandhi National Old Age Pension Scheme (IGNOAPS) reaches nearly 2.5 crores of the population. This number will definitely go up, one estimate being 12.3 corers of senior citizens by 2018. This scheme is for senior citizens who are below the poverty line. The government is planning to increase the pension from Rs.200 to Rs.500 per month. For people above 80 years of age, the increase is likely to much higher.
The Indira Gandhi National Disability Pension Scheme (IGNDPS) introduced in 2009 for mentally as well as physically disabled people provides for a pension of Rs. 300 per month for such persons between 18 and 59 years of age. The Government is likely to change the eligibility criteria from 18 years to the person’s date of birth and from 80% disability to 40% disability.
The Indira Gandhi National Widow Pension Scheme (IGNWS) for widows in the age group 40-59 and below poverty line, provides for a pension of Rs. 300 per month. The Government is in favor of instituting widow pension for those aged 18-39 years and also for paying a one-time grant for remarriage.
Against this backdrop, one should be prepared for a scenario in which the Government’s eyes and ears are more focused and tuned to the needs of the pensioners coming under the ‘defined-contribution, public
sector, old age, disabled, the widows, and the unorganised categories, in view of their larger numbers and age—profiles, rather than those of the shrinking numbers of people under the ‘defined-benefit’ scheme, in a system where the powers-that-be need to seek a fresh mandate from the people every five years. Real change needs to be brought about therefore in public perception and help/support by the ‘defined-benefit pensioners by positively reaching out to their families and care-givers first and to the nation-at- large next and by being seen to be doing their utmost proactively to give back to society what society has been giving them. They have to enlarge the scope of their actions from one of espousing only the financial, social and legal imperatives to one of working unitedly with all sections of the population to bring about a symbiotic and empathetic relationship between them and their care-givers and the public at large. The truth of the adage, only giving begets receiving, has to be seen by these pensioners in this context. It is therefore very necessary for this class of pensioners to adopt nuanced approach with the Government for meeting their just needs- not demands.
Such a nuanced approach by the ‘defined-benefit’ pensioners should, as a minimum, entail the following:
They should use the powers of persuasion and moderation while dealing with the Government, rather than adopting an aggressive and confrontational approach.
They should speak in one-voice. The presently large number of heterogeneous voices only weakens their case, especially as the Government could well afford to take a ‘let-us-see’ approach with these pensioners in view of their weaker bargaining position.
S Suryanarayanan, BPS-Patron,