People's Democracy

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


No. 31

July 31, 2011




‘Withdraw PFRDA Bill Or Face Industrial Actions’


K K N Kutty


SEVERAL organisations of central and state government employees, as school, college and university teachers, and pensioners have come together to press for the urgent demands of the sections they represent and, as a part of this process, they organised a national convention at New Delhi on July 22. These organisations, represented through their delegates at the convention, included the All India State Government Employees Federation (AISGEF), Confederation of Central Government Employees and Workers (CONFDN), All India Railwaymen’s Federation (AIRF), All India Federation of University & College Teachers Organisations (AIFUCTO), BSNL Employees Union (BSNLEU), School Teachers Federation of India (STFI), All India Defence Employees Federation (AIDEF) and Bharat Central Pensioners Confederation (BCPC).




AISGEF’s senior vice president Sukomal Sen presented the declaration for consideration by the house; CONFDN president S K Vyas supported it. A presidium consisting of R G Karnik (AISGEF), S K Vyas (CONFDN), N Narayana (STFI), P R Menon (AIRF), Sardara Singh (AIDEF) and V A N Namboodiri (BSNLEU) conducted the proceedings of the convention. Besides the leaders of the participating organisations, those who addressed the convention included Basudeb Acharia, Tapan Sen (general secretary, Centre of Indian Trade Unions), M K Pandhe (senior vice president, CITU), Bhatnagar (All India Insurance Employees Association) and Pradeep Biswas (Bank Employees Federation of India).


More than 700 delegates representing various organisations participated in the convention. The declaration adopted unanimously by the convention urged upon the central government and state government employees as well as the teaching community to participate in a series of programmes, culminating in a strike, to compel the government to withdraw the Pension Fund Regulation and Development Authority (PFRDA) Bill. On this issue, these organisations will submit a memorandum to the prime minister, signed by a million people and detailing the reasons as to why the bill needs tot be withdrawn. After a series of state level conventions, these organisations will hold a huge rally in front of the parliament, and rallies in front of the respective Raj Bhawans, between August 1 and September 6, 2011 when the parliament is expected to be in session.


The convention set up a steering committee, consisting of leaders of the participating organisations, to spearhead the movement. This will meet in the first week of August to decide upon the date of the proposed strike.


Taking serious note of re-introduction of PFRDA Bill in the last session of parliament, the national convention’s declaration said this is a most dangerous conspiracy dictated by the IMF and World Bank which would demolish the social security to the employees and workers in their old age and would work only to fatten the private profit at the cost of savings of employees and contributions from the national exchequer.


The convention noted that the neo-liberal globalisation has been aimed to advance the interest of global capital at the cost of a majority of the world’s population who are faced with falling incomes, greater social and economic insecurity and greater restriction on the democratic rights. India adopted the neo-liberal economic policies in 1991, since when our economy underwent a thorough restructuring to advance free trade, unrestricted foreign investment, deregulated market, unhindered foray of finance capital, privatisation of public enterprises, changing work structure, free say for entrepreneurs in the matter of employment, gradual reduction of all welfare measure, annulling of labour welfare measures, withdrawal from all social security measures, privatisation of pension funds etc. But resentment over these policies, especially from the working people, has also grown and the Indian working class has assiduously built up united resistance against these policies. Virtually total unity of the Indian working class was brought about on September 7, 2010, when they organised a one-day general strike and later on February 23, 2011 when half a million people staged a rally in front of the parliament. But insensitive to the growing pauperisation of the working people and emboldened by its electoral victory, the UPA-2 government has continued unabated its pursuit of the pernicious policies and introduced various bills in the last session of parliament, including the resurrection of the PFRDA bill, to marshal the pension fund for maximising private profit.




An important point the convention notes is that the Supreme Court of the country proclaimed as an enforceable right the concept of defined and adequate pension as deferred wage, capable of providing socio-economic justice to the employees after their retirement, but now this concept stands dismantled. For, under the new dispensation, pension would be fluctuating and not defined, or it may even be a vanishing phenomenon depending upon the vagaries of stock market. The terms of reference for the study group set up by Sixth Central Pay Commission (CPC) to go into the pension structure amply indicates a future migration even of the existing employees to the new contributory pension regime.


The wage structure of government employees has been designed on the premise that it is to be depressed in order to enable the government to meet the pension liability in future. A corollary flowing from this fact is this that the pension liability as a deferred wage is inherent in the existing wage structure. Therefore, the imposition of the new, contributory pension scheme on the employees who have entered service on or after a cut-off date is illegal because it would deny them their deferred wage as pension which was to be earned by them on account of a depressed wage structure. They are now being compelled to contribute in order to earn an undefined and uncertain annuity.


The pension fund created by the employees’ subscription and the employers’ contribution which directly flows from the exchequer (which is nothing but tax revenue of the government) is thus to be made available for the stock market operations. This is not only unethical but also a blatant diversion of public fund for private profit to foreign as well as Indian capitalists.


It is feared that, if enacted into a law, the PFRDA Bill will empower the government to alter or even deny the existing employees and pensioners the statutory defined pension benefit, as is to be done in the case of those who are appointed after the cut-off date.


It is stated that the prime objective of the introduction of a contributory pension scheme is to substantially reduce the outflow on account of pension liability. The major pension liability of the government is accounted for by the armed defence personnel. They and the paramilitary forces are, however, excluded from the purview of the contributory pension scheme, and rightly so. Thus the government is bound to meet their pension liability from the Consolidated Fund of India.




The study commissioned by the Sixth CPC has found as unsustainable the government’s argument about covering the civil servants in the ambit of the new pension scheme. In a report, S Chidambaram, actuary, has pointed out that over a period of 34 years (2004-38) the government’s liability on account of the contributory pension scheme would in fact increase from the existing Rs 14,284 crore to Rs 57,088 crore and is likely to taper off only from 2038 onwards. The exchequer is bound to have an increased outflow for the next 34 years and will be called upon to bear the actual pension liability of the defence personnel and the personnel of paramilitary forces, besides making the contribution to the pension fund of the civil servants recruited after the cut-off date. The specious plea that the exchequer is bound to gain due to the contributory pension scheme is thus not borne by facts.


Since most of the state governments have chosen to switch over to the contributory pension scheme, their pension liability too is bound to increase three times by 2038. 


The first version of the PFRDA Bill was placed before the parliament by the NDA government in 2003. The Sixth CPC set up in 2006 a committee to go into the financial implications of the increasing number of pensioners and suggest alternative funding methodology. In its report submitted in 2007, the committee came to the conclusion that “the existing systems of pension are increasingly becoming complicated after the introduction of the new pension scheme” and warned that “caution has to be exercised in initiating any further reforms.” In the light of this conclusion, the rationale of the reintroduction of PFRDA Bill in 2011 is fallacious. When enacted into a law, the bill will make the existing pensioners’ future financially insecure and put them at the mercy of the stock market’s vagaries.


This is the reason the said organisations are opposing the new pension scheme and PFRDA Bill, and are demanding that the defined pension benefit must be extended to all the government employees, whether regularly appointed or not.


The national convention urged upon all organisations of central and state government employees and teachers to unite and organise a signature campaign on a petition to be submitted to the prime minister. In case the PFRDA Bill is not withdrawn and government employees are not brought under the statutory pension scheme, it would be imperative for employees and teachers to organise industrial actions including a strike.