Introduction of Contributory Pension Scheme in Kerala
The Kerala government, earlier this month, replaced the “Defined benefit based” pension scheme by the “Defined contribution based” pension scheme. State government employees went on a six-day strike to protest against the new scheme, which was introduced without taking the employees’ views into consideration
The six-day old strike by state government staff and teachers in Kerala, which was called off on 14th January, was the first serious agitation against replacement of the “Defined benefit based” pension scheme in government service by the “Defined contribution based” pension scheme, through the back door. As all strikes so far by government employees in India, the calling off was just a face-saving compromise, without much result to report home. Still, the issues the strike successfully brought to surface and the eagerness of the state government to somehow get back the employees for work, makes the six-day strike a cause for a re-look at the New Pension System. It was introduced by the Centre for central government employees, excluding majority of defence employees from 2004, legislative support for which is still ‘hanging’. Kerala finance minister KM Mani reportedly had negotiations with employees’ representatives till 12.40am on 13th January night which was followed with a wrap-up discussion between employees’ leaders and chief minister Oomen Chandy which lasted till 1.40am the next day.
There was broad understanding between the government and employees on the following:
- • The Contributory Pension Scheme (CPS) will be applicable only to employees joining service from 1 April 2013.
- • There will be arrangements to look into the problems that arise on implementation of the CPS.
- • The problems of employees with low emoluments and short service period will be examined.
- • The Parliamentary Standing Committee has recommended guarantee of minimum pension to be not less than that eligible under EPF Pension scheme.
- • When central regulations are in place, there will be a provision to guarantee the minimum pension.
- • The state government will approach the PFRDA (Pension Fund Regulatory and Development Authority) to include the State Treasury Deposit as an eligible avenue for depositing pension funds.
- • It will be clarified in the new notification that employees in service up to 31 March 2013 will be eligible for statutory pension under the existing regulations.
• There will not be any disciplinary action for having participated in the strike.
Whatever be the arguments in defence of the CPS, a time-tested social security arrangement, available to a section of employees, is being dismantled without any credible alternative system in place. When one refers to social security arrangement, one has in mind all pensionary benefits including family pension. While in the private sector and profit-making public sector undertakings, employees have an opportunity to bargain and settle remunerations based on their skill and market realities, government employees and those employed in quasi-government and statutory bodies are a helpless lot, whose bargaining power is stifled in the name of public interest. It is in this context that they deserve special treatment, at least in respect of social security arrangements like pensionary benefits. The cost savings for the Government of Kerala, if any, will accrue only from the date of retirement of the first employee who joins after 31 March 2013. Till such time, there will be an additional outgo to the extent of the employer’s contribution to the fund in respect of employees joining service from 1 April 2013.
As for the central scheme, NPS has not been made applicable to defence employees who constitute a major proportion of central government employees.
To access other articles by MG Warrier, please click here.
(MG Warrier is a freelancer based in Thiruvananthapuram.)
More in Moneylife
PK's Romp through India's Financial Sector +6835 views
TODAY'S TOP STORIES
Safe And Smart Financial Advice For Students
- PACL Scam: The Australian connection
- Liquidate Helios & Matheson
- The other side of intolerance
- Punjab police probes 'sexual exploitation' against hockey skipper Sardar Singh
- Now, Good Samaritans can help victims without the worry of harassment
- Big data help banks but benefits should be passed on to customers as well
What's your say?
What you said
Thanks for casting your votes! View Previous Polls