New Pension Scheme
(Defined Contributory Pension Scheme)
PRELIMINARY STUDY REPORT
JGS (Finance & Administration) /IRTSA
Pension – Greatly Valued
Defined Benefits Pension & GPF
Types of Pension
(2) Family Pension
(3) Voluntary Retirement (VR )
COMMUTATION OF PENSION
New Pension Scheme(Defined Contributory Pension Scheme)
CONTRIBUTION TO TIER-I
To leave the scheme before 60 years of age
Six Pension Fund Managers
Comparison of Earnings of
Old Pension Scheme and NPS
Right for dignified life stripped
- In a single swoop the idea of pensions being rights of workers, has been thrown into the neo-liberal dustbin.
- Fundamental issue of stripping of employees’ right to a life of dignity
- The return under NPS is market driven.
- There is no guaranteed/defined amount of return.
- The returns generated through investments are accumulated and is not distributed as dividend or bonus
Why Armed Forces kept away
- If the expected return under NPS is much higher than the return under existing old Pension Scheme, why does not the government allow the members of the Armed Forces to exercise this option? Armed force are the most valued functionaries of the nation. That the members of the Armed Forces are being kept under old pension scheme does indicate that there is something shady in the argument that NPS would earn better; at least the government itself is not convinced that NPS would give better benefits to its employees. One can never be sure that the returns from equities would always be better than the guaranteed returns.
Govt arguments not true
- While introducing the NPS, the Government had argued in the same way as one would find in the IMF Report (2001).
- Briefly speaking, the argument is that DBS is unsustainable because the pension expenditure is increasing at a very high rate.
- Thus, over 1993-94 to 2004-05, the pension expenditure of the GOI has increased by 21 per cent; for the state governments, the rate of increase is still higher (27 per cent over the same period).
Is DBS unsustainable in India
- What the Government did not mention is that the government’s pension expenses as a percentage of GDP is quite negligible in India (less than 0.1 per cent).
- In South Korea or in Hongkong it is about 2 per cent.
In Italy, France and Germany where the coverage under DBS pension is wide, the pension expenses as percentage of GDP is much higher in these countries.
- In Italy it is 14 per cent; in France and Germany the ratio is 12 per cent. In Japan 9 per cent of the GDP is spent on DBS pension.
- One wonders how it becomes unsustainable in India where the expenses on DBS pension is so low.
NPS SHOULD GO
- The argument that DBS would render all governments ‘bankrupt’ thus appears to be untenable.
- Why should the small pensioners who usually do not have savings to tide over the crisis should be driven to uncertain situation?
- Global capital does not have any moral obligation to honour the right of the citizen to live with dignity even in the retired life.
M. SHANMUGAM, Central President,
# 4, Sixth Street, TVS Nagar,
Padi, Chennai- 600050.
Email- [email protected]
K.V.RAMESH, Zonal Secretary, IRTSA,
G3-LIKITH HOMES, 3-Lakshmanan Nagar west street,
Email: [email protected]