Truth About Pension in Government Sector
Truth about pension in organized sector
It
is the general understanding in public that Pensioners’ in the organized sector
(i.e C.G., State Govt , Local bodies, PSUs & industries) are well off .(This may
be true only for those retired as IAS & equivalent). Very few in
general public may be aware that over 28lac pensioners in organized sector get
less than Rs 1000/ PM as pension.
Let us first understand what is
Pension:
Pension weather contributory or non contributory is a Social
security tool. Thus the amount of Pension has be linked with sustainability&
the right to live with dignity .
Pension
as per Article 366 (17) of the Constitution of India; means a pension, whether
contributory or not, of any kind whatsoever payable to or in respect of any
person, and includes retired pay so payable, a gratuity so payable and any sum
or sums so payable by way of the return, with or without interest thereon or
any other addition thereto, of subscriptions to a provident fund.
According
to Pension described in section 60 of the CPC and section 11 of the Pension
Act. There are three important features of ‘pension’. Firstly, pension
is a compensation for past service. Secondly, it owes its original to a past
employer-employee or master-servant relationship. Thirdly, it is paid on the
basis of earlier relationship of an agreement of service as opposed to an
agreement for service. This relationship terminates only on the death of the
concerned employee.
Pension
is an area where clarity of vision is often obscured by ill- considered
notions. However, the Supreme Court of India has, in the landmark judgement of
D.S. Nakara and others vs. Union of lndia (AIR 1983, SC 130) clarified all the
issues connected to pension
While
examining the goals that a pension scheme should seek to sub-serve, the Apex
Court held that,"A pension scheme consistent with available resources must
provide that the Pensioner would be able to live :
(I)
free from want,
with decency, independence and self respect and
(II)
at a standard equivalent at pre retirement level
The Court
observed “We owe it to the pensioners
that they Live, not merely exist”The
Court held that pension is neither a bounty nor a matter of grace
depending upon the sweet willof the employer It is not an ex gratia
Payment, but a payment for past services rendered. It is a social
welfare measure, rendering socio-economic justice to those who in the heyday of
their life ceaselessly toiled for the employer on an assurance that in
their old age they would not be left in the lurch
The Vth CPC in
their report commented “It needs to be averred emphatically that pension is not
in the nature of alms being doled out to beggars. The senior citizens need to be
treated with dignity and courtesy befitting their age. Pension is their
statutory, inalienable, legally enforceable right and it has been earned by
the sweat of their brow. As such it should be fixed, revised, modified and
changed in ways not entirely dissimilar to the salaries granted to serving
employees”
According to
Govt.In organized sector two types of Pension schemes are prevalent i.e. 1.Non
contributory (defined benefit) 2.Contributory.(defined Contribution)
Let me first tell you about so-called noncontributory
Pension Scheme for govt. employees:
An employee in the
organized sector covered by so called non- contributory Pension scheme in fact
during his hey days contributes to his old age security in three ways i.e
1.By tirelessly
toiling, for the development of the country during the entireperiod of his/her
productive years.
2.By accepting
Lower salaries. As salaries of pensionable employees are by design kept on
lower level:.In the context of Civil Servants Pension
payments, the principal guiding the
fixation of pay package is one intentionally spreading out the compensation
over long period of time, whereby the wages paid out during the work tenure is
kept low by design and pension payments during the retirement phase compensate
for the low wages. (This has come out in studies got conducted by
Central Pay commissions.)
3. By foregoing
every month with interest the matching contribution by employer to his/her PF(
which is to the tune of 8.33To 10% of his/her monthly emoluments)
Therefore, it
is a big lie to say that pension system in vogue in organized sector In India, is
the defined benefit i.e the system is essentially non-contributory in nature
and any particular year’s pension liabilities are met from the government’s
annual revenue expenditure account for that year.
In-fact,
Government is trying to shy away from paying our pension & medical bills,
because it is wasting tax payers money &Pensioners’ contributions on
subsidies, populist schemes & Scams.
The Scheme of payment
of pension was introduced: as it was greatly advantageous to the government.
(i)Government saved thousands of million by stopping matching contribution
to provident fund.
(ii)One third the commuted part of pension was
permanently retained by the government, till 1986 . Even after 1986 in
restoring the commuted portion after 15years, Govt. retains the substantial
balance with itself ( As per calculations the amount commuted would be got back
by the government in ten years)
(iii)Due to delayed payment of arrears Govt. retains millions of rupees on a/c
of death of pensioners/family pensioners during the intervening period. Thus
enormous amount of money has been
with the government for very long period. Had the government created a corpus
out of these savings & invested properly, today pension would not have been
a burden
Every time when pay commission is constituted or pay
commission recommendations are implemented Media creates a big hype of
financial burden.
Let’s see what
actually the pay commissions have been giving to aam pensioner :existing Basic Pension+ DR + Squeezed portion of DR as fitment benefit. Yes the squeezed portion of DR as DA/DR paid is never sufficient to
take care of inflation.
In fact there is no
disruption of finances on account of
increase in salaries/pensions of lower & middle level government
employees / Pensioners due to pay commission recommendations.
Pay
Commissions
are constituted once in
10 years and the government is made to
effect increase in salaries of
its employees at the end of 10 years as the dearness allowance
(DA/DR) does not adequately take care of inflation. So at the end of 10
years, the government is benefitted from a squeeze in real pay/pension because the DA was never enough...So you have a increase,"
(by way of fitment benefit)(Montek Singh27.02.2008)
Ours is a socialist country where in difference
between haves & have nots should go on reducing progressively But Pay
commission after pay commission has been shredding this basic fiber of
socialistic state. In-fact every pay commission has been bestowing more &
more benefits to serving & ex Bureaucrat compared to lower & middle
grade employees &Pensioners The Sixth Central pay Commission created major
discrepancy byraising the pay & pension of higher grade Bureaucrats i.e.
IAS & equivalent by 3.37 times &
in their case in the name of modified
parity Pre & post 1.1.2006 pensioners
have been brought at par while denying same benefit to all other pensioners. As a result
(of this among retirees from
lower & middle grades)though/even after retired/retiring from
same post, same rank, same pay, with same length of service & same
seniority , there is now a difference in pension of pre & post 2006
retirees ranging from few hundred to few
thousand per month. Leaving the poor lot crying for parity.
Remedy:
Govt.should honor in letter & spirit the Supreme
Court landmark judgement of D.S. Nakara and
others vs. Union of lndia (AIR 1983, SC 130) and should not adopt differential
formulae on the basis of date of retirement in revising Pensions
Er. S.C.Maheshwari
Secy. Genl. Bharat Pensioners Samaj
Source: http://www.karmayog.in/nl/truth-about-pension-organized-sector
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