Why New Pension Scheme Should be Scrapped ?
Pension Fund and Regulatory & Development Authority (PFRDA) Bill will have an adverse impact on the pension and retirement benefits of the Government Employee. Moreover Contributory Pension Scheme will be drain on exchequer.
The guiding principle adopted in determining the pay package of Civil Servants is to spread out the wage compensation over a long period of time, because of which, the wages during the work tenure is low to enable pension payment on retirement. This makes pension a “Deferred Wage”, which the Supreme Court has upheld as such in their landmark judgement in the case of D.S. Nakara V/s Union of India.
As the Bill does not implicit or explicit assurance of a minimum pension except marked based guarantee, the Civil Servant even after the contributing huge sums to Pension Fund may end-up with no annuity, if the invested company becomes bankrupt or the equity market crashes. Moreover, the annuity which would be the pension under the new scheme, being not cost indexed, will make it difficult for the pensioners to make the both ends meet.
The committee set up by the VI CPC has concluded that the New Contributory Pension Scheme will increase the outflow from the exchequer from Rs. 14,284 crore to Rs 57,088 crore by 2038. The committee has also observed that pension liability of the Government, which was .05% of the GDP in 2004-05 under the Defined Benefit Scheme, is likely to decline if the same is not replaced by the Contributory Pension as envisaged in PFRDA Bill.
The Committee has ultimately recommended that the existing “pay as you go” pension, which is presently in vogue, will be ideal and may be continued.
Since New Pension Scheme is neither in the interest of the country, as it increases the outflow on account of pension liability, nor to the Civil Servants it does guarantee a minimum pension, therefore AIRF desires that New Pension Scheme may be scrapped.