THE Centre of Indian Trade Unions (CITU), in a statement issued on August 25, denounced the Unified Pension Scheme (UPS) approved by the union cabinet on August 24, 2024, as another dubious and desperate effort to deceive government employees of their rightful claim to the Old Pension Scheme (OPS). CITU urges the restoration of the old pension scheme.

The old pension scheme was non-contributory with an assured pension, as per the Central Civil Service Rules, 1972, and later, the 2021 rules. The A B Vajpayee-led NDA government introduced the National Pension Scheme (NPS) in 2004 through an executive order for employees recruited from January 1, 2004. Central and state government employees, along with central trade unions, have opposed it since its inception, continuously struggling for the restoration of the OPS. The Pension Fund Regulatory and Development Authority Act of 2013, notified in February 2014, provided a statutory basis for the NPS.

The unprecedented struggles by government employees for the restoration of the OPS, supported wholeheartedly by the Joint Platform of Central Trade Unions and Federations, have compelled the BJP regime to reconsider its rigid stance on the NPS. However, the new package offered under the so-called UPS is viewed as a deceptive strategy to deny government employees their legitimate pension rights. Several state governments have also reverted to the OPS and demanded a refund of their contributions to the Pension Fund Regulatory and Development Authority (PFRDA). The Modi government has rejected all such requests from states that reverted to the OPS, countering the relentless struggles of employees and trade unions. This dubious attempt to introduce the deceptive UPS is another effort by the Modi-led NDA government. The finance secretary TV Somanathan Committee's recommendations to study modifications in the NPS, which were boycotted by several employees' federations, have been used to craft the UPS – a mix of the NPS and a truncated OPS –approved by the union cabinet.

The Modi-led NDA government, with its neoliberal agenda of safeguarding the interests of speculative crony capital, has introduced the UPS with some modifications, including an additional 4.5 per cent contribution from the government. This move is primarily aimed at furthering the investment of pension funds, amounting to Rs 10,53,850 crores (called Assets Under Management or AUM) from a total of 99,77,165 employees under the NPS, as of July 31, 2024, in the share market.

The previous Andhra Pradesh state government had proposed a similar or somewhat better scheme than the UPS, in place of the NPS, called the Guaranteed Pension Scheme (GPS). The GPS offered 50 per cent of the last drawn pay as a pension for a minimum of 10 years of service, with a defined contribution and the purchase of a 40 per cent annuity, which was rightly rejected by all state government employees in Andhra Pradesh, who demanded nothing less than the OPS. Now, the union government has introduced a similar but less beneficial scheme with some modifications to the NPS, which has also been appropriately rejected by the vast majority of employees, who continue to demand the restoration of the OPS.

The UPS is based on a 10 per cent contribution from employees, with the government’s contribution increased to 18.5 per cent from the current 14 per cent. Under the NPS, subscribers could take 60 per cent of their pension wealth and had to invest 40 per cent in an annuity to receive a pension. However, under the UPS, the entire pension wealth must be surrendered to the government. In return, the government will provide 10 per cent of the employee’s emoluments (basic pay plus DA) for every six months of completed service. For 25 years of service, the employee will receive five months' emoluments, and for 10 years of service, two months' pay will be given on retirement as a benefit, in addition to gratuity.

Under the UPS, an employee will receive 50 per cent of 12 months’ average basic pay as a pension upon normal retirement at the age of 60, provided they have completed 25 years of service. This will be effective from April 1, 2025, and will apply to those retiring on or after March 31, 2025, but not to those who retired before that date. In contrast, under the OPS, for 10 years of service, 50 per cent of the last month's pay is provided as a pension, and for voluntary retirement after 20 years of service, the employee receives 50 per cent of their pay as a pension.

Under the UPS, employees with less than 25 years of service will receive a proportionately lower pension. An employee with 20 years of service will receive only 40 per cent of their average basic pay over the last 12 months as a pension. Employees with 10 years of service will receive only 20 per cent of their average basic pay as a pension. For those with less than 25 years but more than 10 years of service, the government has proposed a minimum pension of Rs 10,000. In contrast, the minimum pension under the OPS is Rs 9,000 plus DA (which, as of April 1, 2025, will be 57 per cent, or Rs 5,130), making the minimum pension Rs 14,130. Therefore, the proposed Rs 10,000 pension under the UPS is significantly lower, almost half of that under the OPS. Additionally, employees with less than 10 years of service at the time of superannuation are not eligible for any pension under the UPS.

Under the UPS, the family pension is set at 60 per cent of the employee's pension, which is 60 per cent of 50 per cent, resulting in 30 per cent of the last pay for employees with 25 years of service at the time of superannuation. For an employee receiving the minimum pension of Rs 10,000, the family pension would be Rs 6,000. The minimum pension of Rs 10,000 applies only to superannuation and not to the family pension. In contrast, under the OPS, the family pension is 50 per cent of the last pay if the pensioner dies within seven years after retirement or before reaching 67 years of age. Thereafter, the family pension would be 30 per cent of the last pay. The minimum family pension as of April 1, 2025, will be Rs 14,130 under the OPS, while under the UPS, the minimum family pension will only be Rs 6,000.

DA/DR (Dearness Allowance/Dearness Relief) will be provided for assured pensions, minimum pensions, or family pensions based on the consumer price index, similar to how it is calculated for serving employees. However, it is not yet clarified whether a new base index will be established from April 1, 2025, or if the same percentage of DA/DR as applicable to serving employees and OPS pensioners will be granted. Under the OPS, if a pensioner or family pensioner reaches 80 years of age, an additional pension of 20 per cent is given; at 85 years, 30 per cent; at 90 years, 40 per cent; at 95 years, 50 per cent; and at 100 years, 100 per cent. The same DA applies to this additional pension as well. In the UPS, this additional pension benefit is not available. Further, under the OPS, pension/family  pension/minimum pension is revised whenever a new pay commission is implemented, whereas there is no such assurance under the UPS. The commutation of pensions (i.e., withdrawal of 40 per cent of the pension in advance) available in the OPS is also not available under the UPS. For employees who die or become permanently disabled, become all class unfit under the NPS, the OPS is already applicable. Employees have the option to choose either the UPS or NPS, but once chosen, the decision is final.

There may be many more shortcomings in the UPS that will only become apparent once the full text of the scheme is notified.

Therefore, the CITU denounces the UPS and urges the union government to restore the non-contributory, defined, and assured Old Pension Scheme (OPS). CITU calls for extending full support of the government employees' struggle for the restoration of the OPS.