People's Democracy

CITU Opposes Legislation To Set Up Pension Fund Regulator

THE Centre of Indian Trade Unions (CITU) has opposed the decision of the union cabinet, as announced by the finance minister, to introduce a legislation in the winter session of the parliament for setting up a separate authority for regulating pension schemes. The CITU secretariat in a statement issued on November 12 termed the government move as “ill conceived and against the interests of the workers”.  It deplored that the present UPA government was only pursuing the decisions of the earlier NDA regime, which decided to establish such a pension fund authority.

The proposal for a separate pension authority was first mooted by the ‘Project OASIS’ report of the Dave committee, set up by the social justice and empowerment ministry. The CITU pointed out that the tripartite Central Board of Trustees of the Employees Provident Fund had, in a special meeting held on February 8, 2000 under the chairmanship of the then labour minister, unanimously held: “the (said) report is investment centric and not social security or social insurance centric and contains a number of recommendations and suggestions, which are inconsistent with the ground reality or practical considerations.” The CBT was “unanimously of the opinion that the proposals in the report … would seriously jeopardise the safety and future savings of the workers as well as the whole concept of social security and social insurance.”

In October 2001, the Insurance Regulatory and Development Authority (IRDA) also mooted proposals for a new pension fund regime. Subsequently, the NDA regime decided to discontinue the ‘defined benefit’ pension scheme applicable to the government employees and introduced a new ‘defined contribution’ pension scheme, effective from January 1, 2004, for the new recruits in government service. The NDA regime also set up an interim pension fund authority.

The CITU secretariat observed that the basic thrust of the new pension regime is to channelise pension fund contributions to the equity market in varying proportions under three different options of risk bearing. Moreover, the new scheme had been made mandatory. This new contribution defined scheme has no provision for any minimum pension payable and the government will not stand guarantor for the scheme.

“It is a cruel joke to term this ‘innovation’ as a pension reform intended to serve the unorganised sector workers. This is nothing but a ploy to hand over social security contributions of the workers to the speculators in the share market, while the government seeks to abdicate its responsibility to ensure social safety for the workers”, stated the CITU.

It reminded that the National Common Minimum Programme had committed: “The UPA government firmly believes that labour-management relations in our country must be marked by consultations, cooperation and consensus, not confrontation. Tripartite consultations with trade unions and industry on all proposals concerning them will be actively pursued.”

Saying what the government now intended to do was a blatant violation of this commitment, it criticised the government move to proceed with legislative measures to put in place retrograde changes in the present social security arrangements, which are by no means satisfactory or adequate. The CITU urged the government to halt this move and hold meaningful consultations with the trade unions to address the issues of social safety net. (INN)