Guest column: Historic decision on pensions in Delhi colleges a blow to CPF

  • Avanindra Chopra
  • Updated: Oct 19, 2016 11:58 IST

In what would come as a beacon of hope to several sections of employees, especially staff of government-aided colleges of Punjab and Chandigarh who are struggling for pension, a double bench of Delhi High Court on August 24, 2016 directed Delhi University to grant relief of monthly pension to hundreds of teachers of DU colleges. The observations made by the court in the case are historic.

But first, a brief look at the facts of the case. With the intention of moving all employees covered under the CPF (Contributory Pension Fund) to GPF (General Provident Fund) cum-pension scheme, the then Central government, accepting the 4th Central Pay Commission Report, had ordered on 1.5.1987 that all central government employees appointed on or after 1.1.86 or in service on that date were to be put in the GPF-cum-pension scheme automatically, unless they specifically opted in writing by 30.9.87 to continue in the CPF scheme. And, as the conditions of service of the DU college staff are ‘analogous’ to the conditions of service of the Central government employees, they became entitled to pension under the said order. But, many teachers stayed in the CPF Scheme by electing to be governed by CPF rules at that time.

Interestingly, it was this set of teachers among others who appealed to the court for pension in place of CPF. One of the arguments advanced by them was that the CPF had lost all value because of the declining interest rates and they were at a ‘grave disadvantage’ in comparison to those who had chosen the GPF-cum-pension scheme. They stated that while the high interest rates that made CPF schemes attractive earlier had come down from 14% to 8 %, pensions were fully indexed to inflation and their nominal value rose twice every year on account of grant of DA. The recommendations of the fifth and sixth pay commissions had further boosted pensions, and the basic pension went up by 20% after the age of 80 and every five years thereafter.

Accepting their plea and dealing a body blow to CPF, the Delhi High Court observes: ‘The ground realities with respect to the nature of benefits that accrue to CPF optees in comparison to GPF/Pension optees paints a stark picture. One should keep in mind that while opting for such schemes, employees cannot gaze into the crystal ball, as it were, and speculate whether the existing state of affairs would continue.

At the time when these options were sought and given, those opting for CPF were reasonably certain that having regard to the nature of contributions and the rate of interest, the end package would compare favourably with pension optees, with respect to returns earned at the stage of superannuation…’

This momentous decision is primarily aimed to bridge the harsh inequity that exists between the beneficiaries of inflation-indexed, pay-commission linked, and age-related pensions, and those dependent on dwindling market-related returns on CPF pittance. Notably, pensions in the last 30 years have increased nearly 30 times, whereas interest on CPF has halved. In this peculiar scenario, the decision based on sensitive reasoning addresses the plight of hardpressed non-pensioners. It also opens a window of opportunity to all other employees reeling under the discriminatory CPF regime.

With the court having decided, it is now the turn of the central and state governments to come forward and extend this benefit of GPFcum-pension to all non-pensioners. This would prevent unnecessary litigation as the harassed employees are likely to approach the courts for appropriate redress of their grievance on the strength of this judgement. This decision reinforces the case of even those employees who were recruited in government service on or after 01.01.2004 and were forced to join the National Pension Scheme (NPS). They have been demanding abolition of NPS as they want to see the old pension scheme back because of the several misgivings they have on ‘market-determined’ returns. Tamil Nadu has already appointed an expert committee to examine the feasibility of continuing the old pension scheme, whereas West Bengal has not implemented NPS at all.

And, amongst the worst sufferers are the staff of government-aided college staff of Punjab and Chandigarh who were denied pension even after the Punjab government had granted them the benefit of switching over from CPF to the GPFcum-Pension scheme in 1996. Unfortunately, the scheme was never implemented and later repealed in 2012. Now, the severely stretched employees of aided colleges of Punjab are fighting for their pension in the Supreme Court. In all fairness, the Punjab government needs to sympathetically consider their case in the light of this judgement.

Meanwhile, the employees of government-aided colleges of Chandigarh have suffered a double setback. Firstly, when the recommendations of the 4th Central Pay Commission were implemented in Chandigarh from 1.1.1986, the benefit of GOI order of 01.05.1987 was not extended to them. And secondly, they lost out when the Punjab government pension scheme was withdrawn.

The Supreme Court opines in a case that ‘pension is not a bounty, but payment of deferred salary’. And our Constitution guarantees that employees are entitled to ‘equal pay for equal work’. Then there is no justification in denying identical ‘deferred salary’ to all similarly placed retired employees.

(The writer is an associate professor at DAV College, Chandigarh)

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