People's Democracy

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


No. 25

June 20, 2010



Govt must Clinch Policy Issues


On May 26, Tapan Sen, MP and general secretary of the Centre of Indian Trade Unions (CITU), sent a letter to Mallikarjun Kharge, the minister of labour and employment in the government of India, regarding the employees pension scheme. The text of the letter follows.

I AM constrained to invite your attention to the following recommendation/observation of the standing committee on labour on employees pension scheme 1995, which was tabled in the parliament on February 20, 2009.

Recommendation (Para 76)

“The committee note that EPS 1995 is a contributory scheme wherein the employers’ contribution towards the pension of the employee is diverted at the rate of 8.33 percent from the total contribution of 12 percent made towards social security obligations. Under the EPS, no contribution is taken from the member, i.e., the employee for the pension scheme. The government contributes at the rate of 1.16 percent to the pension fund. Admittedly, neither of the above rates of contributions has been revised for the last 14 years. The non-revision in the rates of contributions even after one and a half decade, speaks volumes about the callous attitude of the government towards the workforce. More so, when this segment of the workforce has contributed enormously in the economy of the country leading to increase in leaps and bounds in the revenue collection of the government. The committee, therefore, strongly recommend that the formula regarding rate of contribution should be revised at periodic intervals wherein the rate of contribution from the government should at least be fixed at half of the rate of contribution which is being made by the employer or the employee towards the pension scheme.”

Recommendation (Para 79)

“The committee observed that the pension payable categories of pensioners under the scheme is extremely insignificant. It is as low as less than Rs 100 in a large number of cases rendering the pension scheme a mock exercise in social security. The committee feel periodic review of the payable pension is an innate and inalienable component of pension scheme. Moreover, commutation of pension is also the right of the pensioner at the time of superannuation. It does not add to the burden of the pension fund as it correspondingly reduces the payable pension for a certain period. The notification of the government withdrawing the facility of commutation of pension in the considered view of the committee is not only improper but ill conceived and anti-worker as it has further compounded their miseries.

“The committee is also of the view that EPS 1995 has outlived its utility due to its inherent shortcomings like inadequate wage ceiling, low rate of contribution, inept actuarial valuation, payable DA. The committee has been apprised that the government has constituted a committee under the chairmanship of the additional secretary to the government to look into the viability of the present rate of benefits and their possible revision. Regrettably, however, no timeframe has been fixed for the committee to submit its report. The stakes involved in the terms of reference of this committee are too well known and hence, a deadline should have been fixed to accomplish the task. The committee, therefore, strongly recommends that the government shed its lackadaisical approach towards the welfare of the worker and take positive steps in right earnest for linking the present EPS 1995 with price index, restore the commutation facilities as originally envisaged in the scheme and amend the scheme as such having bearings on rate of contribution, wage ceiling and also fix a reasonable decent amount as minimum pension in consultation with the central trade unions.”

In response to the above, the ministry of labour and employment furnished its reply on November 9, 2009, wherein it was informed that an expert committee under the chairmanship of special secretary (labour and employment) consisting of actuaries, expert of finance and representatives of all stake holders is reviewing the employees pension scheme 1995 as a whole and a decision/action regarding enhancement of the government’s contribution would be considered after the receipt of the recommendations of this expert committee.

You will agree that in view of relentless price rise, plight of the present pensioners has become unbearable and the government has to take a proactive step immediately to implement the recommendation of the standing committee in consultation with all central trade unions. I further urge that the consultation should start forthwith to clinch the basic policy issues, specially the need of additional contribution of fund by the government, and the expert committee’s report can only supplement the consultation process. Further, I have no doubt that you will take all necessary steps to expedite the submission of expert committee’s report without any further loss of time.