Mumbai: Under pressure from state employees and opposition parties, the Maharashtra government Tuesday announced the formation of a three-member committee to conduct a comparative study of the old and new pension schemes and submit a time-bound report.
The move came after opposition leaders boycotted Tuesday’s proceedings in the legislative council as a mark of protest against “government inaction” and Leader of the Opposition Ajit Pawar raised the issue in the assembly.
According to state government employees’ unions, an approximate 17 lakh government employees in Maharashtra also went on an indefinite strike Tuesday, demanding a return to the Old Pension Scheme (OPS).
The OPS was discontinued by the Atal Bihari Vajpayee-led National Democratic Alliance (NDA) government in 2003 and replaced by the New Pension Scheme (NPS). But demands to return to the OPS have been gaining strength across the country, with several non-Bharatiya Janata Party (BJP) governed states — Himachal Pradesh, Rajasthan, Chhattisgarh, Jharkhand, and Punjab — already having made the switch.
The promise of the OPS also emerged as a major poll plank in some assembly elections this year.
Speaking in the Maharashtra assembly Tuesday, Chief Minister Eknath Shinde said, “There is a need to hold further discussions. Our government is empathetic to this demand and I would, yet again, urge the government employees to sit with us and hold discussions as only through a dialogue can all issues be resolved and a good decision taken.”
“We can promise that employees won’t lose out on any benefits post retirement under the prevailing New Pension Scheme. In fact, if one retires in the middle of his service period, he will also get all the benefits he would following the completion of his full tenure,” he added.
Pawar meanwhile argued that the government must find an immediate solution to the issue. “If essential services are halted [because of the strike by government employees], it will hamper daily activities and ordinary people will have to suffer. Hence, the government needs to find a path immediately,” he said.
Former Chief Minister Uddhav Thackeray has also issued a statement demanding that government employees receive what they are entitled to.
“Government employees are on strike demanding the restoration of the Old Pension Scheme. This government has blocked it. Why can’t it implement the Old Pension Scheme? Some states have already implemented it. The employees must get what they are entitled to,” he said in the assembly Tuesday.
For Nitin Patel, a 38-year-old government employee working as a senior clerk at Mumbai’s St. George’s Hospital, the pension worry is one he has borne for over a decade — ever since he joined the service in 2012. Since then, he and his colleagues have been raising the issue through various platforms, he said. He is among the workers currently on strike to protest the issue.
“Employees have been fighting over this issue for the past 18 years. So many governments come and go. When they are in opposition, they favour the OPS but when they are in power, they try to divert the issue over funds,” said Patil, secretary of the St. George’s Hospital’s employees’ union.
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OPS vs NPS
Under the OPS, government employees who have worked for at least 20 years get 50 per cent of their last drawn salary as their pension. There are no contributions made through this period, and pension payments are due at the time of retirement.
The NPS, implemented in 2004 by the NDA government, introduced a system where the government and employees contribute 10 per cent and 14 per cent of the employee’s salary, respectively, towards a pension fund. The Pension Fund Regulatory and Development Authority then invests this fund in diversified portfolios. The idea is that these contributions will grow and so the government can use them to pay pensions when it needs to.
The consensus view among economists is that moving back to the OPS would entail future fiscal distress for states — or “fiscal harakiri” as the State Bank of India (SBI)’s October 2022 Ecowrap put it.
“It seems that the states moving back to the old schemes want to save money currently and use the amount to give freebies to gain popularity,” the SBI report said. “However, it must be emphasised that the money for pensions would be collected from the taxpayers in future. It also seems unfair that only a certain section of people (government employees) get this benefit of pension.”
Employees on strike in Maharashtra, however, insist they will be unable to survive on the “meagre” pension due to them post-retirement under the new scheme.
“Under OPS, an employee with, say, over Rs 50,000 per month salary at retirement, was eligible to receive a pension of over Rs 25,000 per month. But the same person under NPS would get Rs 1,800-2,400 per month. How will we survive with this meagre money,” asked Patil
He added, “You can understand that Rs 1,800-2,400 won’t be sufficient to buy the [LPG] cylinder also. And if we are getting Rs 1,800 per month after at least 20 years of service, you can understand that they have cheated us,” he added.
States that have returned to OPS
Meanwhile, in Himachal Pradesh, Chief Minister Sukhvinder Singh Sukhu had announced a return to the OPS for 13.36 lakh government employees in the state during his first cabinet meeting in January. Returning to the OPS had been a key poll promise by the Congress in the run-up to last year’s assembly election.
The Aam Aadmi Party government in Punjab had also announced a return to the OPS in September last year, but in November government employees in the state had protested, claiming the notification did not mention details of the scheme and standard operating procedures (SoP). In January, the Punjab government notified a panel to formulate an SoP for the OPS.
ThePrint has earlier reported how the NPS had become an albatross around the BJP’s neck, threatening to ruin the party’s poll prospects in many states.
Sources in the BJP had told ThePrint that the party was facing a strong push to bring back the OPS from its own leaders and allies in states such as Karnataka, Maharashtra, Madhya Pradesh, and Haryana, especially after losing the Himachal assembly election to the Congress last year.
In Maharashtra, the OPS-NPS issue was also one of the reasons cited for the BJP’s loss in the legislative council teachers’ and graduates’ seats election last month.
Deputy CM Devendra Fadnavis had said in the winter session of the assembly that the OPS wouldn’t be revived. But a month later, during a campaign in Aurangabad, he said the government would see if it could be financially worked around.
(This is an updated version of the copy.)
(Edited by Poulomi Banerjee)
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