IT News
Imphal, Aug 29:
The All India Federation of University & College Teachers’ Organisations (AIFUCTO) has expressed strong opposition to the recently approved Unified Pension Scheme (UPS) by the Union Cabinet on August 24, 2024. The organization has labeled the new scheme as a “doubtful and desperate effort” by the government to deprive its employees of their legitimate right to the Old Pension Scheme (OPS). AIFUCTO has called on the Union Government to restore the OPS, which they argue provided better security and benefits to employees.
Historically, the OPS was a non-contributory pension system with assured benefits, governed by the Central Civil Service Rules of 1972, later revised in 2021. However, in 2004, the Union Government introduced the National Pension Scheme (NPS) through an Executive Order, applicable to all employees recruited from January 1, 2004. This move was met with resistance from various employee unions, including AIFUCTO, who have been advocating for the reinstatement of the OPS ever since.
The new UPS, according to AIFUCTO, mirrors the NPS in requiring employee contributions to the pension fund, unlike the OPS, which required no such contributions. Under UPS, employees must continue contributing 10% of their salary to the pension fund, while the government will increase its contribution from the current 14% to 18.5%. Despite this increase, the UPS introduces a significant change: the entire pension wealth accumulated must be forfeited to the government, with employees receiving a lump sum payment at retirement equivalent to 10% of their monthly emoluments (basic pay plus DA) for every completed six months of service.
In contrast, the OPS allowed employees to commute up to 40% of their pension into a lump sum payment without requiring a medical examination, provided this option was exercised within a year of retirement. AIFUCTO highlighted that under the new UPS, employees with 25 years of completed service will receive only five months’ worth of emoluments, while those with 10 years of service will receive just two months’ pay at retirement. Additionally, UPS guarantees 50% of the average basic pay over the last 12 months as a pension for those with 25 years of service, but this will only apply to those retiring on or after March 31, 2025, excluding those who retired before this date.
Under the OPS, employees with 10 years of service were entitled to a pension equal to 50% of their last month’s pay, and those who opted for voluntary retirement after 20 years of service also received 50% of their pay as a pension. However, the UPS offers significantly reduced benefits for those with less than 25 years of service. For instance, employees with 20 years of service will receive only 40% of their average basic pay over 12 months, while those with 10 years of service will receive just 20%. Furthermore, the government proposes a minimum pension of Rs 10,000 under the UPS, which is substantially lower than the Rs 14,130 minimum pension under the OPS, calculated as Rs 9,000 plus DA (expected to be 57% as of April 1, 2025).
The new UPS also introduces a family pension, which amounts to 60% of the employee’s pension, translating to 30% of the last pay for those with 25 years of service. For an employee with a minimum pension of Rs 10,000, the family pension would be Rs 6,000. However, the OPS offers a more generous family pension, with 50% of the last pay if the pensioner dies within seven years of retirement, followed by 30% of the last pay thereafter. The minimum family pension under OPS is expected to be Rs 14,130 as of April 1, 2025, significantly higher than the Rs 6,000 offered under UPS.
Another critical issue raised by AIFUCTO is the treatment of dearness allowance (DA) and dearness relief (DR) under the new scheme. While DA/DR is provided to assure pension, minimum pension, or family pension based on the Consumer Price Index (CPI), it remains unclear whether the government will establish a new base index from April 1, 2025, or continue using the existing DA/DR rates as under the OPS. Furthermore, the OPS offers additional pension benefits to pensioners and family pensioners who reach specific age milestones—20% additional pension at 80 years, 30% at 85 years, 40% at 90 years, 50% at 95 years, and 100% at 100 years. These benefits are absent in the UPS.
Moreover, the OPS provided for the revision of pension/family pension/minimum pension whenever a new pay commission was implemented, a provision not assured under the UPS. The OPS also allowed for the commutation of up to 40% of the pension in advance, a benefit not available in the UPS. AIFUCTO fears that there may be additional shortcomings in the UPS, which will only become apparent once the full text of the scheme is officially notified.
In light of these concerns, AIFUCTO has reiterated its opposition to the UPS and urged the Union Government to restore the non-contributory, defined, and assured benefits of the Old Pension Scheme, which they believe offers superior protection and benefits to government employees.
