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Scrap PFRDA, Assure Minimum Pension Rs.3,000: Item No. 4 – Explanatory Notes – Charter of Demands – All India Strike 2nd Sep, 2015

New Contributory pension scheme & Universal social security cover: Item No. 4 – Explanatory Notes – Charter of Demands – All India Strike 2nd Sep,

Item No. 4. Universal social security cover for all workers

(v) Scrap PFRDA Act an re-introduce the defined benefit statutory pension
scheme. (6)Assured enhanced pension not less than Rs. 3000/- P.M. for the entire
working population.

In the unorganized sector, there is no system of providing social security once
the worker reached his advanced age and become unable to put in physical labour.
In most of the developed nations, the provision for social security coverage was
negotiated and obtained for the workers as a social obligation of the
Government. Various schemes have been introduced by the State Government to
address this issue due to the pressure exerted by the working class. But it
varies in content and benefit. The need for a universal social security system
was raised by the Trade Unions long time back. The advent of the new economic
policies witnessed the erosion of even those system which were available in a
few States. The pension is considered a deferred wage and rightly so. A worker
is entitled to the said benefit for he has provided to the society and added to
the Nation’s wealth when he was physically young and fit. The Government
employees had all along enjoyed the benefit of pension and the said statutory
pension was considered as deferred wage by the highest court of the country.
There had been substantial improvement over the years, especially after the 5th
CPC’s recommendations were accepted and implemented. The introduction of the New
contributory pension scheme has precluded the employees who were recruited after
1.1.2004 from the defined benefit statutory scheme of pension. It has been our
consistent and united demand that the Government must retrace and abolish the
new pension scheme and bring back the defined benefit pension scheme for all
employees. Not only the demand was not considered, but it got a legislation
passed in the Parliament with the support of the present ruling party. We give
hereunder a brief resume of the New Contributory Pension scheme and its adverse
impact and the need to resort to an incessant struggle to bring back the old
defined benefit pension scheme.

The New Contributory pension scheme

The defined benefit scheme of pension was introduced replacing the then existing
contributory system decades back. . The Government decided to reconvert the same
into a contributory scheme on the specious plea that the outflow on pension had
been increasing year by year and is likely to cross the wage bill. By making it
contributory, the Government expenditure on this score is not likely to get
reduced for the next four decades because of the reason that as per the
announced scheme, the Government is to contribute the same amount to the fund as
the employees make. Coupled with this stipulation the Government is also duty
bound to make payment for the existing pensioners and for all Central Government
employees who were in service prior to 1.1.2004. The contribution collected from
the employees who are recruited after 1.1.2004 is to be managed by a mutual fund
operator for investment in the stock market. It is the vagaries of the stock
market which will then determine the quantum of pension or in other words
annuity, which would not be cost indexed. Before the introduction of the new
scheme and the PFRDA bill, the Government had set up a committee under the
chairmanship of Shri Bhattacharya, the then Chief Secretary of the State of
Karnataka. The bill was unfortunately drafted and presented to the Parliament
disregarding even the recommendation of the said committee to the effect that
the Govt. should consider introducing a hybrid system by which the employees
will have either a defined benefit pension or opt for a higher return through
stock exchange investments. Despite the non-passage of the bill and the
consequent absence of a valid law to support the Pension Regulatory authority,
the Govt. converted the existing pension scheme into a contributory one through
executive fiat and invested a percentage of the fund so generated from the
employees’ contribution in the Stock market. India is a young country and the
expenditure on statutory pension has remained over a long period not more than
5% of GDP which the country/Government can afford to spend. The Government must
rescind the PFRDA specifically for the following reasons.
(a) The new pension scheme is going to make social security in old age uncertain
and dependent on market forces.
(b) The scheme has been compulsorily imposed on a section of employees and hence
it is discriminatory.
(c) Such scheme had been a failure in many countries including Chile, UK and
even USA. In USA entire pension wealth has been wiped out leaving pensioners
with no pension. In Argentina the contributory scheme which was introduced at
the instance of IMF was replaced with the defined benefit pension scheme.
(d) The PFRDA Bill has provisions empowering the Govt. and the Authority to
cover employees now left out and to amend the existing entitlements of pension
(e) In majority of the countries, “pay as you go” is the system of pension.
(f) The contributory scheme does not give any guarantee for a minimum pension of
50% of the pay drawn at the time of retirement of the employee. Nor does it
provide for the protection of his family members in the form of family pension
in the event of death
The Supreme Court had declared pension as one of the fundamental rights. The
government should therefore not replace it with annuity, which is detrimental to
the interest of the employees and ensure that the employees recruited after
1.1.2004 is covered by the existing statutory defined benefit scheme and annul
The recent decision of the Cabinet to allow FDI in pension fund operations has
made the real intent of the PFRDA unambiguously clear. The FDI will facilitate
the mutual fund operators to invest the funds outside India thereby making
Indian Savings available for development of a foreign country. It is now clear
that the decision behind the contributory pension scheme was the pressure
imposed by imperialist powers and more specifically IMF. It has, therefore, to
be opposed at all cost. The Govt. must not be allowed to go ahead with its
intention of induction of FDI in pension fund companies.

(viii) No labour reforms which are inimical to the interest of the workers.
(i) Effect wage revision of the Central Government Employees from 01.01.2014 accepting memorandum of the staff side JCM; ensure 5-year wage revision in future; grant interim relief and merger of 100% of DA; Include Gramin Dak Sevaks within the ambit of 7th CPC. Settle all anomalies of 6th CPC.
6. Stoppage of disinvestment in Central/State PSUs. . Stoppage of contractorisation in permanent perennial work and payment of same wage and benefits for contract workers as regular workers for same and similar work.
(v) No outsourcing, contractorisation, privatization of governmental functions; withdraw the proposed move to close down the printing presses, the publications, form stores and stationery departments and medical stores Depots; regularize the existing daily-rated/casual and contract workers and absorption of trained apprentices.
(vi) Revive the JCM functioning at all level as an effective negotiating forum for settlement of the demands of the Central Government Employees.

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  • Anonymous 9 years ago

    Retired in 2013. I am getting only 1700 which is not even enough to my medicines. I am an diabetic patient. And also no medical facility. Hence I request to raise the pension with linked da. It should be paralally increaased to that minimum pension Rs 3000 p.m.