Unions of government employees in some states are pressing for restoration of the Old Pension Scheme (OPS), abolished by the central government in 2004. It had a defined benefit (DB) of half the last drawn salary upon retirement and this continued life-long and the family would continue getting it even after the pensioner’s death. OPS was replaced by a contributory pension scheme, named National Pension System (NPS), under which a cut is made from salaries of employees during their service period towards payment of pension. Both central and state governments are bearing huge burdens in relation to the pension scheme for their staff — a system that had its origin during the British period. The change in the pension scheme was introduced as part of Reforms by the central government based on recommendations from a ministerial group that found there was a “quantum jump” in the government’s burden related to pensions after the Fifth Pay Commission report was implemented.
The Economic Survey of the central government in 2004-05 had noted that some 89 per cent of the people in India lived without any pension. Herein lies the rub. Demand is gaining ground that there should be massive overhaul of the pension system in India, and that the aged and the invalid across the board be brought into the governmental scheme of monthly pensions of the order of Rs 10,000 or more. This can be the basis on which the entire gamut of issues relating to pensions can be re-considered and reforms introduced in ways that the government’s burden can be reduced. While the Vajpayee-led NDA government had set the ball rolling in the early 2000s, the Modi-led NDA governments have not taken the matter forward. At the same time, some Congress governments in states like Rajasthan, Chhattisgarh, Himachal Pradesh and the AAP government of Punjab have reverted the pension scheme to the old (OPS) format. This was one promise that the Congress had made to win the Himachal polls this time. Government employees in states like Maharashtra, Andhra Pradesh etc are applying pressure on the government to revert to OPS.
Any government would be doing a disservice to the nation and the cause of Reforms if, on pressure from the employees, it reverts to the old system. Good governments function on the basis of principles; weak leaderships bend to the will of pressure groups. Selfish leaders go to any extent to win favours of segments of the electorate to remain in or grab power. No segment of the population should be extended favours over and above what is normally required. The cause of national growth demands as much.