People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 35

August 27, 2006

Govt Employees & Teachers Warn Govt 
Against Privatising Pension


THOUSANDS of state and central government employees, including civilian defence employees and teachers, have taken part in a massive ‘March to Parliament’ rally held at Delhi on August 18, 2006. They were demanding scrapping of the Pension Fund Regulatory and Development Authority (PFRDA) Bill which seeks to privatise pension bill and which is pending for approval in the parliament. Thousands of employees and teachers from almost all states participated in the rally, which was addressed among others by CITU general secretary and MP Chittabrata Majumdar, CPI(M) leader in Lok Sabha Basudev Acharia, CITU secretary and MP Tapan Sen and AISGEF general secretary Sukomal Sen.


This programme was organised as per the decision taken in the national convention of the central and state government employees, defence workers and teachers held at New Delhi on July 26, 2006, which strongly criticised the anti-employees policies of the union government including the move to privatise the pension scheme, till now the best form of social security available to employees, denial of right to strike to the government employees and other urgent issues. 226 delegates representing All India State Government Employees’ Federation, Confederation of Central Government Employees, All India Defence Employees Federation, School Teachers Federation of India and All India Federation of College and University Teachers organizations had participated in that convention. The convention had also endorsed the programmes of action, including general strike on December 14, 2006, as decided by the Sponsoring Committee of Trade Unions on July 25, 2006 and pledged to implement it with joint efforts.


But the national convention on July 26 decided to hold immediate action programmes by the employees working in government sector against pension privatisation including a massive ‘March to Parliament’ on August 18, 2006 and a countrywide strike as soon as the UPA government takes up the PFRDA Bill for adoption in parliament. The response of the employees and teachers to this call has been enthusiastic as seen by the participation in this rally. The PFRDA Bill is a ‘defined contribution’ bill with most unacceptable provision, among others, of 10 per cent wage cut of the employees every month which seeks to replace the almost eight decades old ‘defined benefit’ pension system of the government employees. The employees cannot accept it in any circumstances as this virtually leads to snatching away the pension benefits altogether. The rally warned the government if they dare to take up this dangerous bill, serious consequences would follow, as the state and central government employees will go on a countrywide strike and the entire central and state administration will come to a grinding halt. The speakers at the rally hoped that good sense will prevail on the government and it would not fall in the trap of IMF-World Bank and ruin the economic condition and pensionary security of the employees.


After the march, the leaders led by Chittabrata Majumdar, Basudev Acharia, Tapan Sen, Sukomal Sen along with S K Vyas, secretary general, confederation of central government employees and workers, Sailo Bhattacharya, secretary general, AIDEF, Dr Tewari, secretary general, AIFUCTO and K Rajendran, secretary general, STFI met the prime minister Dr Manmohan Singh and handed over the following memorandum:


Dear Sir,


The central and state government employees and the teaching community are extremely distressed over the decision take by the government of India to introduce a bill under the name “Pension Fund Regulatory and Development Authority” in this monsoon session of the Parliament. They held a rally today before the Parliament to vice their opposition to the ill advised move of the government of India as also many state government to dispense with the existing scheme of guaranteed pension.


We bring the following for your kind consideration and make a fervent appeal that the social security scheme of pension presently available to the government employees must be retained.


The present pension scheme was initially introduced as a substitute to the then existing CPF in 1920s in so far as civilian employees are concerned. In 1957it was made mandatory to all central government employees and the said decision was followed by all the state government too. The government were to set up a public fund and contribute periodically so as to enable the fund to meet the pension liability on behalf of the government. Many governments did not set up such a fund but took away the funds made available from the earlier system of CPF. The fiscal stress experienced by the central government and more so by the state governments on account of the increased pension liability is a direct result of the non-setting up of or non-contribution to the said fund.


The high level expert group set up by the government of India, before introducing the new contributory pension scheme has clearly recognised as was ruled by the Supreme Court of India that:

  1. Pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer and that it creates a vested interest;

  2. Pension is not an ex-gratia payment but is a payment for the past services rendered;

  3. It is a social welfare measure rendering socio-economic justice to those who in the heyday of their life have toiled ceaselessly for the employer on an assurance that in their old age they would not be left in the lurch.


The group had recommended, in fact, a two tier hybrid scheme wherein the first tier is intended to primarily act as a social security scheme with a reward for past services in the form of a defined benefit at 50 per cent of the average emoluments and the second to be a defined contributory plan, which should be voluntary and savings oriented. This the scheme introduced by the government in the case of employees entering government service on or after 1.1.2004 ought to have been in the form of an additional security option and ought to have been voluntary.


It may kindly be appreciated that the government employees who entered service after 1.1.2004 are entitled to the wage determined by the concerned Pay Commissions. The introduction of a mandatory contribution to derive the benefit of newly contemplated (perhaps illusory) pension will thus amount to a wage reduction and will undermine the principle of equal pay for equal work.


The Standing Committee of the Parliament has noted that private individual accounts operated in countries where the contributory pension scheme is in vogue did not bring about any benefit to the employees due to the high administrative cost, lack of portfolio choice, high number of switch-overs and the high fees and commissions charged at flat rate but resulted in the monopolization of pension funds. Moreover there is international experience that in few countries, the fund managers simply swindled the money.


In the light of the above, we once again appeal to you to kindly reconsider the matter and drop the proposal of introducing the contributory pension scheme to the government employees. (INN)