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Punjab plans to go back to old pension scheme
Move will benefit nearly 1.6 lakh state government employees who joined service after 2004; announcement comes weeks before elections in Himachal Pradesh and Gujarat
After Chhattisgarh and Rajasthan, the Bhagwant Mann-led Aam Aadmi Party (AAP) government in Punjab is mulling to revert to old pension scheme for state government employees.
Chief minister Bhagwant Mann on Monday announced his government’s intent to return to old pension scheme. “My government is considering reverting to the old pension system. I have asked my chief secretary to study the feasibility and modalities of its implementation. We stand committed to the welfare of our employees,” Mann said in a tweet after meeting AAP’s national convener and Delhi chief minister Arvind Kejriwal in the capital.
Once implemented, the move is likely to benefit around 1,60,000 Punjab staffers who joined service after 2004, according to state employee unions leaders.
The announcement has come just weeks before the assembly elections in Gujarat and Himachal Pradesh, where the AAP is working to find a toehold. On Saturday, thousands of government employees in Gujarat had gone on ‘mass casual leave’ to press their demand to return to the old pension scheme.
A great decision: Kejriwal
Kejriwal instantly welcomed Mann’s move. “Wow! A great decision. All employees across India want old pension scheme to be restored,” he tweeted. Congress governments in Rajasthan and Chhattisgarh have already made similar declarations about reverting to the old pension scheme for their employees.
In Punjab also, the return to the old pension scheme has been a long-standing demand of government employees. Ahead of the 2017 assembly elections, the AAP had first promised to do away with the New Pension Scheme (NPS), essentially a contribution-based plan, and reintroduce the old pension scheme. The party reiterated it before the recent polls.
The Atal Bihari Vajpayee-led National Democratic Alliance (NDA) government had introduced the NPS in 2003 and nudged the states to adopt it to reduce their pension liabilities.
After Mann’s announcement, chief secretary Vijay Kumar Janjua said he will study the modalities for restoring the old pension scheme as the employees have to give their contribution under the NPS whereas there was no such requirement in the previous scheme. “We will give our report within one week,” he said.
There is, however, a long road ahead.
Once the state decides to opt for the old scheme to provide assured pension to such employees, it will need to approach the Pension Fund Regulatory and Development Authority (PFRDA) for the withdrawal of funds accrued under the NPS since 2004. “The central government has not agreed to similar requests in the past due to their adverse impact on the scheme,” officials familiar with the procedure said.
Though the employees’ leaders have hailed the chief minister’s move, they seem sceptical about its timing. One of them, Sukhchain Singh Khehra, who heads the Punjab Civil Secretariat Employees’ Union, said it was a step forward, but they would want to wait for the actual restoration of the old pension scheme.
“There are elections in Gujarat and Himachal. As they (AAP leaders) were promising to reintroduce the old pension scheme there without taking any step in Punjab where they are already in power, we had decided to oppose them. Let’s see how things go from here,” he said, sharing the reasons for opposing the NPS where employees have to contribute 10% of their basic salary and 14% is given by the employer (government).
“This corpus is then invested by the pension body in various instruments, including mutual funds and shares, but it is no good as pension that some NPS employees get is nowhere compared to the old scheme,” he claimed.
In the old scheme, pension of employees is decided on the basis of the last pay drawn and is indexed to inflation. Punjab presently has an annual pension bill of ₹12,000 crore, including contribution of the employer’s share towards the NPS. The return to the old scheme would postpone some of this liability to future, one of the officials quoted above said.
