On August 24, 2024, the Central government announced a Unified Pension Scheme (UPS) for all government employees. This announcement has come in the wake of massive and sustained struggles waged by government employees, who have been demanding restoration of the old pension scheme that was applicable for those who joined government service before 1 January, 2004.
The spokespersons of the government are promoting the UPS as one that fulfils the demands of the agitating government employees. The agitating employees however, have pointed out that the UPS falls short of OPS in many ways. They have declared their determination to continue their struggle for the restoration of the OPS.
A brief review of the OPS, NPS and UPS
The old pension scheme (OPS)
Government employees appointed prior to 2004 receive their post retirement benefits through the Old Pension Scheme (OPS). The pension is defined on the basis of the last salary received by the employee. The government pays the equivalent of 50% of the last salary drawn to employees after retiring, and to their dependent family members in case of death. It also pays Dearness Allowance based on All India Price Index for Consumers as well as a fixed medical allowance. After the age of 80 the employee gets an additional pension of 20% of the basic pension.
Under the OPS, an employee is eligible for full pension after completion of 20 years of service.
In the OPS, the entire pension amount was borne by the government. Government employees are not required to contribute to their pension fund during their service.
The National Pension Scheme (NPS)
The National Pension Scheme (NPS) was made applicable for all employees employed on or after January 1, 2004. The annulment of the OPS and the implementation of the NPS was justified by the government by the argument that the OPS was becoming a “rising financial burden” for the government, which would “not be sustainable in the long run”.
Under the NPS, the post-retirement income of the employee is totally dependent on returns for investments made in the share market.
In the NPS, the employees’ contribution was 10% of the salary, and initially, the government also contributed 10%, which was later increased to 14%. At retirement, employees received 60% of the total accumulated amount, and the remaining 40% was invested in the stock market, from which pension was drawn as annuity.
Unlike the OPS, the NPS does not guarantee any fixed post-retirement income. This scheme led to many employees receiving a pension of less than ₹5,000.
The Unified Pension Scheme (UPS)
The Modi government formed a committee under Finance Secretary T. V. Somanathan to reform the NPS. This committee did not organise a single meeting with the organisations of government employees who have been agitating against the NPS for restoration of the OPS. The report of the Somanathan Committee has not been placed before the public. It has proposed an alternative to the NPS which it calls the Unified Pension Scheme (UPS). Some key features of the UPS have been publicised by the government.
It is being presented as an attempt of the government to address the concerns of a guaranteed pension income, while making it based on contribution by the employee.
Under UPS, employees contribute 10% of their salary, while the government contributes 18.5%. Employees will receive 50% of their average basic pay of the last 12 months of service as a pension. However, this is only applicable if the employee completes 25 years of service — five years more than under the OPS. Families of employees who meet this service period and subsequently pass away will receive 60% of the pension as a family pension. Additionally, the UPS sets a minimum pension of ₹10,000 for those who complete 10 years of service. It includes periodic dearness relief adjustments, whose details have not been specified.
Guaranteed pension for all working people is a human right
Article 25.1 of the Universal Declaration of Human Rights, adopted by the UN General Assembly 76 years ago in 1948, reads:
“Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”
It is the duty of the Indian state to ensure the above. The Indian state has refused to fulfil this duty.
The vast majority of working people do not have any form of social security, to take care of their needs “in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”
The Indian bourgeoisie is boasting about Viksit Bharat (developed India) by 2047. What kind of Viksit Bharat is being promised, where mass unemployment is rampant, and majority of working people have no social security worth the name?
Apart from pension for government employees, the Indian state has floated many different pension schemes targeted at different sections of working people. Some of these are the Employees’ Provident Fund (EPF) which includes EPS-95, Atal Pension Yojana (APY), Pradhan Mantri Kisan Maan-Dhan Yojana (PM-KMY) for small and marginal kisans, and social security pensions such as widow pension and pension for the differently-abled, etc. In the majority of these the post-retirement incomes are paltry (between Rs 1000-2000 a month) which cannot satisfy even the most basic needs of health care, nutrition and shelter for the elderly workers.
The debate over whether a guaranteed pension income ensured by the state is a ‘financial burden’, ‘not sustainable’, etc. and the demand of the working class for a universal, guaranteed pension as a human right, reflects a clash between two opposing outlooks.
One is the outlook of the bourgeoisie which is ruling in our country. The bourgeois ruling class regards pension paid to workers as a drain on public expenditure. It views working people who have retired as parasites, denying the fact that they have contributed to creating the wealth of society during their working life. At the same time, the bourgeoisie demands that the government continue to hand out every kind of tax concession and incentive to the capitalists at the expense of the public treasury. The government is ever ready to write off lakhs of crores of rupees looted by the capitalists in the form of “bad loans”.
The other is the outlook of the working class. According to this outlook, it is the duty of the state to ensure social security for all working people.
Pension is a form of social security for a worker after she or he has retired from work at a certain age or due to disability or other circumstances. It must be universal, applicable to all working people. It must ensure a dignified existence to the worker when she or he is no longer able to work, and continuously upgraded for rising cost of living.
The majority of working people of our country are not eligible to any pension or social security after retirement. They have contributed to society through their working life. They contribute to the state exchequer through direct as well as indirect taxes. It is the duty of society to ensure that they are taken care of in their old age, or when they suffer injuries and are unable to work any longer. The demand for universal pension for all retired workers is a just demand of the working class.
The state has to ensure that a portion of the surplus value extracted from the workers by the capitalists is put into a pension fund for workers. For workers who do not have fixed employers, like construction workers, etc. the state must take up the responsibility of building a pension fund for their life after retirement. On no account must the pension funds of workers be invested in speculative or other activities.
The demand for a minimum pension for all working people, including kisans and agricultural workers, which will ensure a dignified life for people in their old age, has been resonating all across the country. As a militant and organised contingent of the working class, government employees must fight for the demand that an adequate and defined pension is a universal right, which the state has to guarantee to all those who work, including the kisans, agricultural workers and all workers in the private and informal sector.