Tag: Pension scheme

21% Informal Workers Leave PM Pension Scheme, Inflation, Cost of Living Main Factors

The total subscribers under the scheme fell to 4.43 million on July 11, down 1.19 million from 5.62 million on January 31.

New Delhi: Nearly 21% informal workers have unsubscribed from the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), the Union government’s pension scheme meant for unorganised workers, in less than six months, the Economic Times reported.

The total subscribers under the scheme fell to 4.43 million on July 11, down 1.19 million from 5.62 million on January 31, as per government data. This has raised questions about the viability of the scheme, the Economic Times report said.

According to experts, high inflation and rising cost of living has increased the workers’ difficulties and could be preventing them from contributing to the voluntary pension scheme.

“Stubbornly high prices have raised the actual cost of living, making it difficult for these workers to sustain the burden of monthly contribution under the scheme,” labour economist K.R. Shyam Sundar told the Economic Times . “It would not be surprising if these are permanent exits, with workers actually withdrawing their contribution along with the interest earned on it as high prices continue to pinch on their pockets,” Sundar added.

The scheme guidelines state that a subscriber will be allowed to withdraw their share of contribution with savings bank interest rate if they exit the scheme in less than 10 years.

However, if a subscriber exits after 10 years or more but before superannuation at the age of 60 years, the beneficiary’s share of contribution along with accumulated interest as actually earned by the fund or at the savings bank interest rate, whichever is higher, will be credited to the beneficiary, the report said.

The scheme, launched with the aim of extending social security benefits to unorganised workers, caters to those in the 18-40 age group and earn less than Rs 15,000 per month.

CAPF Personnel Should Be Covered by Old Pension Scheme, Says Delhi HC

A division bench of Justices Suresh Kumar Kait and Neena Bansal Krishna, hearing 82 petitions against the lack of OPS benefit for CAPF personnel, asked the Union government to issue necessary orders within eight weeks.

New Delhi: The Delhi high court has said that benefits of the Old Pension Scheme will be applicable for all CAPF personnel, LiveLaw has reported.

A division bench of Justices Suresh Kumar Kait and Neena Bansal Krishna, hearing 82 petitions against the lack of OPS benefit for CAPF personnel, asked the Union government to issue necessary orders within eight weeks.

The petitioners had also sought quashing of an Office Memorandum of February 17, 2020 to the extent it does not grant benefit of old pension scheme to the personnel who have been appointed pursuant to notifications/advertisements dated January 1, 2004, Hindustan Times has additionally reported.

The judgment came on Wednesday, January 11.

Central Armed Police Forces or CAPF include the Central Reserve Police Force, Border Security Force, Sashtra Seema Bal, Central Industrial Security Force and Indo-Tibetan Border Police.

Earlier, employees of the CAPF were outside the ambit of this pension scheme.

The court noted that the December 22, 2003 notification for a New Contributory Pension Scheme (NPS) said that “the system would be mandatory for all new recruits to the central Government service from 1st of January 2004 (except the armed forces in the first stage).”

The court thus held that this meant that the NPS was not applicable to the Armed Forces and that the Armed Forces were to be covered by the Old Pension Scheme that was already in place.

The court also cited the Supreme Court’s decision in Akhilesh Prasad Vs. Union Territory of Mizoram to observe that it is clear that the CAPF is part of the armed forces.

“Also, the Ministry of Home Affairs, Government of India, vide Circular dated 6th August, 2004 clarified that the Central Forces under the administrative control of the Ministry of Home Affairs have been declared as Armed Forces of the Union,\” said the court.

 

In UP, Will Promises to Restore Old Pension Scheme Sway Government Employees?

Though sections of government employees have been opposing the National Pension Scheme 15 years, the issue has come into the political discussion ahead of the assembly elections.

Lucknow: The Samajwadi Party’s (SP) pledge to restore the old pension system (OPS) if voted to power is igniting a fresh debate on the retirement benefits for the more than 12 lakh Uttar Pradesh government employees, who may have a significant influence on the assembly elections.

Soon after the election notification was issued in January, the SP announced its intent to reimplement the OPS by withdrawing the market-linked National Pension Scheme (NPS).

The announcement has buoyed state government employees who have been protesting against the NPS since it was implemented 15 years ago.

The NPS was introduced by the Union government in 2004 and then implemented by the Uttar Pradesh government on April 1, 2005. It is a contribution-based pension system. Under the old system, the pension was fixed at 50% of the last basic salary drawn by an employee, along with other benefits and hikes. The employees also receive an assured amount, regardless of how much they contributed to her pension during her working life.

Under the NPS, the pension value depends on the corpus amount saved by the employee at the time of retirement and is also subject to a rise or fall in investment value. In the NPS, the pension benefit is determined by factors such as the number of contributions made, the age of the member, the type of investment, and the income drawn from that investment.

In November 2021, tens of thousands of government employees and teachers gathered in Lucknow to protest against the Adityanath government for the restoration of OPS. They likened the NPS to “gambling” and called it “national problem scheme”.

Despite the mega protest in the state capital, the government did pay much attention and put the issue on the back burner. This decision may now prove costly during the election season.

The top brass of the ruling Bharatiya Janata Party (BJP) was stunned by the SP’s pledge, which could influence the voting behaviour of 12-14 lakh voters.

Following the footprints of the SP, Mayawati, the Bahujan Samaj Party chief, also vowed to restore the scheme for government employees and teachers in UP if voted to power. She made the announcement after the first phase of the elections at a rally in the Auraiya district.

Congress also jumped into the game with the promise of a “mid-way” solution between OPS and NPS.

To control the damage, on January 28, the Yogi Adityanath government, which had been ignoring the pension issue since 2017, called a review meeting through its chief secretary Durga Shanker Mishra.

During the review meeting, chief secretary Mishra tried to convince the employees that the NPS was more beneficial than the OPS. But the meeting failed as the employee unions rejected all the arguments in favour of the NPS.

According to the state employees, the government tried to convince them that the amount received post-retirement under the NPS was much higher and more beneficial than what could be obtained by investing the money in any other saving scheme. The meeting was attended by the leaders of various employee unions. Employee leaders felt that the meeting was an indication that the BJP still favoured the market-linked NPS.

Polling officials collect election materials at a distribution centre on the eve of the second phase of the Uttar Pradesh assembly elections, in Moradabad, February 13, 2022. Photo: PTI

’15 years of struggle’

Kamlesh Mishra, the president of UP Rajya Karmachari Mahasangh, an umbrella body of employees unions, said, “All the state government employees will support the political forces that are vocal for the restoration of the OPS.” He asked if the NPS is more beneficial than the OPS, then why did the government not implement it for the pensions of MLAs and ministers.

The Wire contacted the employee unions for their take. They say that the OPS is their pending demand, and after a 15-year struggle, the issue has come into the political discussion ahead of the assembly elections.

Employees of the power department are enthusiastic about the promise to restore the OPS. Shailendra Dubey of the All India Power Engineers Federation said it was a long pending demand of the UP government employees, who have been protesting against the NPS, which is also subject to the rise or fall of the market. Dubey anticipated that retired employees also stand with the working employees on the issue of the OPS, and this might affect their voting behaviour.

Aseef Siddiqi, an employee leader in the Public Works Department (PWD), said OPS is questioning the social security of more than a million government employees. “We chose to work in the government sector to secure our post-retirement, but without an assured pension, how do we survive post-retirement?” says Siddiqi.

Sumeet Patel of the All India State Employees Federation said recently retired government employees are not able to even pay their monthly power bills with the pension they are getting under the NPS. “Is it not an injustice to us? If any employee retires with the OPS, he will get around Rs 25,000 to Rs 50,000 per month as pension, while the same government employee retiring under the NPS will receive hardly Rs 1,500-Rs 3,500 per month,” Patel said.

Pradeep Sharma, associate professor at the Shia Degree College of Lucknow University, opined that the Yogi government has shown a cold shoulder to restoring the OPS and now its impact would be reflected in the electoral outcome. He says, “The OPS issue has now become a movement in the past few years as the majority of retiring employees have been receiving pensions under the NPS and its disadvantages have become apparent to them.” Earlier, the retired employees were covered under OPS as they were appointed before 2005.

Political analysts say the OPS issue is influencing government employees as well as aspirants preparing for government jobs. Nagendra Pratap, a senior political commentator, says, “The OPS is social security for the employees of the organised sector, so it is more significant for them than any other issue.” Many parties have promised the OPS, but only the party with the best chance of winning will benefit from it.

Chhattisgarh Government Scraps Pension Scheme for MISA Detainees

Under the scheme, people who spent three months in jail under MISA during the Emergency were being given Rs 10,000 per month.

Raipur: The Congress government in Chhattisgarh has scrapped the pension scheme launched by the earlier BJP administration for those detained under the Maintenance of Internal Security Act (MISA) during the Emergency, drawing criticism from the main opposition party.

According to a gazette notification issued by the General Administration Department on Thursday, Loknayak Jaiprakash Narayan (MISA/Defence of India Rules (DIR) detainees) Samman Nidhi Rule, 2008, has been repealed.

The scheme was meant for people jailed under these provisions, including MISA, during the Emergency (which was in force from June 25, 1975, to March 31, 1977), an official here said.

Under the scheme, people who spent three months in jail under MISA during the Emergency were being given Rs 10,000 per month. Those imprisoned for six months were getting Rs 15,000 per month and those jailed for over six months Rs 25,000, officials said.

Notably, the state government, in January last year, had suspended the scheme from February 2019 stating it will be continued after physical verification of the beneficiaries and reassessment of the disbursement process.

Hailing the decision, state Congress spokesperson Vikas Tiwari said the scheme was meant to keep BJP-RSS leaders happy and now the money being paid to its beneficiaries will be spent on employment schemes for youths.

Tiwari was the one who had urged Chief Minister Bhupesh Baghel to scrap the scheme after the Congress came to power in the state in December 2018.

The then Raman Singh government (in 2008) had launched the scheme to keep the BJP and the RSS happy in the name of giving honour to MISA detainees.

“Now the huge amount of funds being spent on this scheme will be utilised for employment schemes for youths,” he said.

Senior BJP MLA and Leader of Opposition Dharamlal Kaushik dubbed the Congress government’s move as anti-people and murder of democracy, and demanded restoration of the pension scheme.

The ruling Congress has been taking anti-people decisions one after another which is highly condemnable, Kaushik said.

At present, there are around 300 people who were getting pension under the scheme in the state, he said.

The scheme was launched by the BJP for those who fought for fundamental rights crushed by the Congress government at the Centre during the Emergency, Kaushik added.

This “inappropriate” move is also a violation of a recent Chhattisgarh high court order directing release of pension for MISA detainees, BJP MLA said.

During the Emergency imposed by the then Prime Minister Indira Gandhi, thousands of people were detained across the country under MISA, which gave sweeping powers to law enforcement agencies.

Modi Launches Pension Scheme for Small, Marginal Farmers and Traders

Farmers who are currently between the ages of 18 and 40 can enrol in the scheme and are required to make monthly contributions varying from Rs 55 to Rs 200.

New Delhi: Prime Minister Narendra Modi launched the Pradhan Mantri Kisan Mandhan pension scheme for small and marginal farmers (whose land holding is upto two hectares) while speaking in Ranchi in poll-bound Jharkhand.

Under the scheme, eligible farmers who opt for the scheme will receive Rs 3,000 a month after they reach the age of 60. The total outlay of the scheme for the next three years will be Rs 10,774 crore. There are a little over 12 crore small and marginal farmers in the country, according to the 2015 agriculture census.

Also read: Centre May Promote Farmer Producer Organisations, But Will They Address Agrarian Distress?

Farmers who are currently between the ages of 18 and 40 can enrol in the scheme and are required to make monthly contributions varying from Rs 55 to Rs 200. The government estimates that 5 crore farmers will be eligible to benefit from the scheme. The Centre will make a contribution to the fund of the same amount as the farmer.

The amount that the farmers are required to pay can either be deducted from the instalments that they are due under PM-Kisan or they can register and pay at common service centres.

Scheme for traders

Modi also launched the National Pension Scheme for Traders and Self Employed Persons under which traders and entrepreneurs whose annual turnover does not exceed Rs 1.5 crore will be also be provided a pension of Rs 3,000 per month after reaching the age of 60. Persons between the ages of 18 and 40 will be eligible.

The beneficiary should not be an income tax payer to be eligible for the scheme. Those who are eligible can enrol for the scheme through the 3.5 lakh common service centres across the country, a government press release said.

Also read: In India’s Breadbasket, Mounting Debts Are Driving Farmers to Daily Wage Labour

Under this scheme too prospective beneficiaries will have to make a monthly contribution which will be matched by the central government. The government is targeting to be able to enrol 25 lakh traders in 2019-20 and increase enrolment to 2 crore by 2023-24.

The Confederation of All India Traders (CAIT) has appreciated the efforts of the government but it said that more needs to be done. It has urged the Centre to also include traders who are currently between 41 and 55 years of age.

Jharkhand Survey Pokes Holes in Modi’s Claims on Digital Service Delivery

Experiences of citizens are in massive contrast to the prime minister’s notion that Common Service Centres are providing ‘anytime-anywhere connectivity and services’.

“Didi, iss duniya mein vishwas naam ki koi cheez nahi hai. (There is nothing called trust in this world),” said Alok Marandi*. He is among the many supposed beneficiaries of services provided by Common Service Centres (CSC) under the National e-Governance Plan.

In his 2018 Independence Day speech, Narendra Modi defined these CSCs as “Centres that are rendering ‘anytime-anywhere connectivity’ services to every citizen in villages through optimal utilisation of information technology.” The prime minister’s rhetoric, however, could not be further from the truth.

Marandi has to walk 3-4 hours to reach the closest CSC – called Pragya Kendras (PK) in Jharkhand – to collect his pension. Once there, most of his time is wasted standing in long queues due to poor internet connectivity. At other times, his biometric authentication fails and he is forced to return at a later date.

During the Interim Budget Speech on February 1, Piyush Goyal added to the prime minister’s narrative by mentioning the large-scale employment CSCs provide – “More than 3 lakh Common Service Centres employing about 12 lakh people, are digitally delivering several services to the citizens.”

What he fails to comment on, however, are the functioning, quality or accountability measures required to sustain such centres – without which, the aim of creating ‘Digital Villages’ will remain unfulfilled.

What are CSCs?

Common Service Centres were rolled out in 2006 with the aim of digitising the delivery of government services through private village-level entrepreneurs (VLEs), who own and operate the CSCs. One of the larger intentions of the programme is to ‘bring public services closer home.’

In 2015, under the ‘Digital India’ programme, the earlier plan was revamped with an updated objective of one CSC per gram panchayat. At first glance, it appears that such a public-private partnership model at the central level would come with many benefits, such as easy access to services for rural citizens and profit incentives for VLEs to these provide services.

Ground reality

A field survey – where the author was a research assistant – was conducted in June 2018 led by Rahul Lahoti and Rajendran Narayanan from Azim Premji University and Inayat Sabhikhi, an independent researcher who is now with Harvard Kennedy School.

The study included ten districts of Jharkhand and sought to assess the effectiveness of the policy across two broad areas – the experience of VLEs in operating the Pragya Kendras, and the citizens’ experience of using them. Over two weeks, student and community volunteers spoke with 401 users and 61 VLEs.

The findings from the survey are unflattering vis-a-vis the prime minister’s claims and his larger promises of job creation.

Experience of village-level entrepreneurs

Despite the promise of an entrepreneurship-based model which incentivises profit, the survey showed that VLEs were unhappy with the present commissions/rates of services. The rates were not enough to cover their initial set-up costs, which amounted to Rs 87,000 on average per kendra.

With a meagre reported earning of Rs 3000 per month, it will take years to even recover their initial set-up cost, let alone live sustainably.

Further, such low earnings have been the cause of VLEs overcharging customers. While this practice has been acknowledged, there has been no attempt by the government to address it.

Sign pointing the way to a Pragya Kendra. Credit: Student volunteer

Owing to the low earnings, nearly 90% of the VLEs said they prefer a fixed-salary model with a minimum amount of Rs 18,000 per month, over the current variable commission model. As per one VLE, Rahul Kumar*: “Agar salary mile to free me certificates bana denge. Gaon gaon ja kar bana denge (If we get a salary, we will not just make certificates for free but also home deliver them)”.

It is evident the VLEs want financial stability and do not see a future in this model.

Experience of customers

The citizens’ experiences are in massive contrast to the prime minister’s notion that these centres are providing ‘anytime-anywhere connectivity and services’. The results highlighted that one in every four users could not use the kendra closest to them due to electricity/network issues.

This poor doorstep delivery of services is amplified by a lack of transparency and accountability. For instance, three out of five users never received a receipt or were unaware of it and three out of four users did not know that they could file a complaint about the same.

Also read: In ‘Digital India’, Not Even 2.5% Panchayats Have Commercial Broadband

More importantly, in the context of Aadhaar failures, 42% of the biometric authentications failed in the first attempt, compelling many to return later.

The survey results are particularly helpful in understanding the conflicting nature of the twin stated objectives of the kendras – social commitment towards citizens and a sense of enterprise for VLEs.

While some citizens might have benefitted, most haven’t. For instance, more than 55% of users said it took longer than expected to get work done and almost all services were overcharged.

List of government, educational and digital services available at Pragya Kendras. Credit: Student volunteer

Shortcomings

At the same time, results from the VLE survey made it clear that the current model is not financially sustainable for them. How then are they expected to run a profitable business (as promised to them) as well as serve as agents of socio-economic development? While the government does supposedly maintain an online record of the transactions at the VLE, there has never been an attempt to seek citizen feedback to establish the veracity of the claims made by the VLEs.

Essentially then, instead of serving the interests of citizens and VLEs – the two most important stakeholders in the process of service delivery – the CSC policy has placed them at odds. Furthermore, the goal of any new government policy should not be to regress and embody the shortcomings of previous delivery systems.

As in this case, with the introduction of Pragya Kendras, Marandi should not be standing in the same long queue he previously experienced at banks. His pension should be readily available to him at the beginning of every month at his Panchayat Bhawan.

Pragya Kendra located inside the Panchayat Bhawan, as per the CSC guidelines. Credit: Student volunteer

Unfortunately, the introduction of PKs not only epitomises the problems in previous delivery systems but also creates more complex ones such as the regular failure of biometric authentication.

The way ahead

To build upon these shortcomings, stakeholders and the public came together to suggest recommendations at a post-survey workshop in Jharkhand. A key reform that emerged here was, the CSC policy of “single door” should be expanded to a “no wrong door”, i.e rather than being a substitute with other options closed off, it should be a genuine centre where people like Marandi can access information, apply for benefits, expect services on time and should definitely not be turned away.

The programme can be transformed if backed by supporting infrastructures like public data on services, technology interfaces in Hindi and local languages, bringing service delivery through CSCs under existing legal frameworks like the Right to Guaranteed Services Act, regular updates on software changes in a systematic manner and free government services.

*Name changed.

Anognya Parthasarathy is a student of Master’s in Public Policy Programme, National Law School of India University, Bangalore.

Why Govt Employees Are Up in Arms About the New Pension Scheme

Unlike the old scheme, government employees are now forced to fund half of their pension themselves. This has caused indignation and sparked widespread protests.

New Delhi: On November 16, Union minister Piyush Goyal was reportedly hounded out of an event in Lucknow by railway employees. Among other issues, the protesters were angry about the new pension scheme and demanded the restoration of the old system.

Not just Uttar Pradesh, unrest against the scheme has been brewing across the country and often manifests in mass protest demonstrations.

Forget sustenance, several recently retired government employees say they can’t even pay their monthly electricity bills with the pension amount.

Many of these employees covered under the new contribution-based pension system are receiving as little as Rs 700-800 as monthly pension while the minimum guaranteed amount in the old defined benefit scheme is Rs 9,000. They are now required to pay 10% of their monthly wages which is matched by the government and invested in equity shares. Retirement pensions are dependent on the returns on that accumulated investment.

In the old system, the entire pension amount was borne by the government while fixed returns were guaranteed for employee contribution to the General Provident Fund (GPF). The government pays 50% of the last drawn salary plus dearness allowance (DA) as pension to employees after retiring, and to their dependent family members in case of death.

What is the new pension scheme and how is it different from the old one?

The National Pension System (NPS) is a defined contribution scheme mandatory for all new recruits to the Central government (except armed forces) joining on or after January 1, 2004. All state governments, except West Bengal, have also made it mandatory.

In 2009, the scheme was extended to all Indian citizens from 18-60 years of age, however, the 10% government contribution is only for government employees. An independent Pension Fund Regulatory and Development Authority (PFRDA), set up in 2013, regulates the NPS.

The NPS has two tiers – Tier 1 is mandatory for all government employees and has a fixed lock-in period. Subscribers can only withdraw the accumulated wealth after they retire, i.e., are 60 years old. A recent amendment allows them to withdraw 25% of the employee contribution in case of emergencies.

Even at the time of retirement, subscribers can withdraw only 60% of the total amount, which is taxable, and it’s mandatory to invest the rest 40% to buy a lifelong annuity scheme through an IRDA-regulated insurance company. If they leave the scheme or retire before attaining the age of 60, 80% of the pension wealth has to be invested in the annuity scheme.

Also read: 10,000 Elderly People From Across India Come Together to Demand a Universal Pension

Tier 2 is a voluntary account, more of a substitute for the GPF where one can withdraw any amount at any time. The government does not contribute anything in the tier 2 account.

Unlike the pension and GPF in the old scheme, the NPS does not guarantee any fixed returns as it is market-linked.

Teething troubles or discriminatory by design?

Since the NPS covers employees recruited after December 2003 and the age of retirement is 60, most employees are yet to avail the new pension benefits.

On being asked why they were protesting more than a decade after the old scheme was replaced, the employees say they initially had little understanding of the scheme as there were no active efforts to educate them or raise awareness about it.

They were told that NPS was better as the government was also matching their contributions. “Many employees have been protesting from the start but NPS was forced on us nevertheless. Such large-scale movements take time. We were fewer in number and it took time to organise,” Manjeet Singh Patel, Delhi state president of the National Movement for Old Pension Scheme (NMOPS), told The Wire.

A protest against the new pension scheme. Credit: YouTube

Many experts and supporters of the scheme argue that just like a standard Systematic Investment Plan, long-term capital gains under NPS would be better than before. However, protesting employees argue that for those retiring after 10-12 years under NPS, the accumulated wealth is too less to provide substantial amount as pensions.

Also read: Why the Modi Govt Needs to Re-Evaluate its Strategy on PF Withdrawal Norms

“The total accumulated wealth in my NPS account on retirement was Rs 3.25 lakhs even when I got 13% interest rate on it. After 60% of it was paid to me on retirement, I am receiving less than Rs 700 every month as pension through the annuity scheme,” R.P. Bhatia, a former employee of the Haryana electricity board, told The Wire.

Bhatia was made permanent in November 2006 and retired in 2013. NPS was enforced in Haryana from 2006 itself. He says his colleagues who were recruited not long before him are receiving over Rs 15,000 as pension under the old scheme.

To be sure, employees did not need to contribute anything to avail pension in the earlier scheme. Under NPS, employees have to fund half of their pension themselves.

If they want a GPF-like option where there’s no strict lock-in period, they have to additionally deposit money in the tier 2 account. They say this leaves them with less disposable income and even then, they live in constant anxiety of losing their money in the equity market.

“If the government wanted to encourage us to invest in mutual funds, we should have been educated about it and it should be optional for those willing to risk it. The government is forcing us into it instead of providing a safety net,” Patel added.

Also read: In Jharkhand, the Elderly Struggle For Meagre Pensions

In addition to these issues, government employees from many parts of Uttar Pradesh allege their contribution hasn’t even started being deducted from their salaries. “How will we get returns from the market when our money hasn’t even been deducted from our accounts to be invested,” Ajit Verma, a 32-year-old government employee from Lakhimpur Kheri in UP, told The Wire. He adds that this is the case in many blocks of his district.

Speculative benefits instead of safety net

“The minimum pension amount under the old scheme is Rs 9,000 which has been calculated keeping in mind entry-level minimum wages. Real pension amounts are much higher as nobody retires on entry-level wages. In the new scheme, even those who have worked for a decade are getting as little as Rs 1,000-2,000. This is a disastrous policy,” Tapan Sen, general secretary, Center of Indian Trade Unions, told The Wire.

Sen also alleges that both the Congress and BJP governments, through this scheme, have been using public money to help those who profit through speculation in the share market at the cost of vulnerable government employees.

In addition to nervousness because of a mistrust in market-linked schemes, the employees also feel they are being discriminated against as armed forces recruits are still covered under the old scheme and they feel their fellow colleagues covered under the old scheme are getting a better deal.

Clearly defined pension amounts and a safety net in the form of fixed interest rates on GPF were the main attractions for a government job for these employees who typically spend their whole working lives in the public sector.

Current state of economy adding to woes

The current state of the economy does nothing to inspire confidence in these employees as they see their interest rates dip in the aftermath of events like demonetisation and Goods and Services Tax.

“We were told that our money in the market would also help avoid a 2008-like economic slowdown. How are we to trust this logic when people like Vijay Mallya and Nirav Modi run away with thousands of crores of public money? When even our pension fund managers like SBI goes into massive losses?” Vijay Kumar, national president of the NMOPS, told The Wire.

A rare moment of unity among government employees

As word spreads of an organised movement against the new pension scheme, employees from various government departments and states are joining in. Leaders of the movement say this is one of the rare issues that has united government employees from very diverse sectors and geographical locations.

Workers from the banking sector are also lending their voice to the protest. A charter of demands submitted to the Indian Banks’ Association by the All India Bank Officers’ Confederation also demands scrapping of the NPS.

“Either we go to the old scheme or this scheme can itself be converted into an assured pension scheme. We have also given a workaround on how it can be done. If invested properly, it is possible to guarantee assured income. Instead of investing in the market, the fund can be used in lending activities. Retail lending can alone fetch 12-15% interest and we can avoid the whims of the market,” Thomas Franco, former general secretary of AIBOC, told The Wire. Even while suggesting how to ease anxieties regarding market volatility, Franco’s preference remains going back to the old scheme.

Since no concrete action was taken to address their concerns even after multiple appeals to all concerned authorities, the NMOPS has planned to mobilise lakhs of government employees from across India and march to the parliament on Monday.

In Jharkhand, the Elderly Struggle For Meagre Pensions

Beneficiaries of government pension schemes are burdened with issues like irregular pension payments, high collection costs and discontinuation of pensions due to Aadhaar-related issues.

Beneficiaries of government pension schemes are burdened with issues like irregular pension payments, high collection costs and discontinuation of pensions due to Aadhaar-related issues.

Villagers gather at a village in Jharkhand. Credit: Sambhavna Biswas

Villagers gather at a village in Jharkhand. Credit: Sambhavna Biswas

Aalo Devi’s life was greatly affected by the passing of her husband. While walking under the bright sun, she tells me softly that her son is deaf and doesn’t do any work at home. At night, when everyone is asleep, she drinks a few cups of hariya (country liquor) to drown her sorrows. Some of the elderly people I interviewed mourned, as did Aalo, the loss of family or a meaningful role within the community. Others were preoccupied by practical problems. Budhwa Munda narrated his story: “Gaddhe mein gir gaya tha aur pair tut gaya, ilaaj ke liye 80,000 mang rahe the. Kaha se la ye itne paise?” (I fell in a pit and broke my leg, they said the treatment will cost Rs 80,000. Where will I find so much money?)

The stories went on – some sad and others uplifting. The common thread is that the pensions that these old people and widows receive under the Indira Gandhi National Old Age Pension Scheme (IGNOAPS) and the Indira Gandhi National Widow Pension Scheme (IGNWPS) play a critical role in their lives. By the end of our conversation, Aalo Devi asserted, “agar pension nahi milega, toh mar jayenge hum” (If I stop receiving the pension, I will die).

I heard these stories during the course of a recent study of social security pensions delivered under the National Social Assistance Programme (IGNOAPS and IGNWPS) in the rural areas of Jharkhand’s Ranchi district. This involved a field survey in ten randomly-selected villages spread over five blocks of the district in February 2017. In each sample village, ten respondents were selected at random from the official list of pensioners.

Issues with pensions

The share of the elderly (above age 60) in India’s population has increased steadily over time (from 5.6% in 1961 to 8.6% in 2011), and is still rising. There are a 104 million elderly people in India, with women (53 million) slightly outnumbering men (51 million) and 71% of the elderly population residing in rural areas. In Jharkhand, elderly persons who are below the poverty line, or have an annual income below Rs 7,995 in rural areas, are eligible for a monthly pension of Rs 600 under IGNOAPS (the central government pays Rs 200 and state government adds Rs 400). This amount rises to Rs 700 for those above the age of 80. Widows between the ages of 40 and 79 years receive Rs 600 under IGNWPS. From the age of 80, they get an enhanced pension of Rs 700 per month under the old-age pension scheme.

As I travelled from village to village, pensioners were eager to share their experiences. Whenever I sat down to talk to one of them about her pension, other elderly women and men came out of their homes in large numbers to join the discussion. They answered my questions patiently and explained the problems they faced. Four key problems emerged – irregular pension payments, high collection costs, discontinuation of pensions due to Aadhaar-related issues and inadequate pension amounts.

A large majority of the respondents (84 out of 100) said that although they were receiving their pension money, it was not disbursed monthly and they did not when it would come. They were also not told the months for which they received their pensions. Their passbooks were difficult to read because the payments were irregular, lump-sum payments for several months were common and sometimes the entries looked incomplete. Further, 38% reported that they did not receive money for periods ranging between one month and eight months during the preceding 12 months. It was hard to tell whether the missing payments had somehow been siphoned off, or whether they reflected delayed payments, inaccurate recall or other issues. The irregularity of pension payments was a source of major confusion and added to their distress.

Since money is not credited to their bank accounts on a regular basis, pensioners visit the bank once every few months and often have to make several trips to collect their pension. The nearest bank is often far away and difficult to reach for the elderly. In Singarsarai village (Namkum Block), which is 30 kilometres from the nearest bank branch, pensioners have to travel the first 5-6 kilometres by foot before taking an auto rickshaw. They stand in the queue for an average of six hours and spend an average of Rs 60 per person on each trip. The cost is compounded if someone has to accompany them to withdraw the pension. Out of the ten villages I visited, only two had a bank branch within a three-kilometre radius.

All the respondents had an Aadhaar card. This is not surprising, since Aadhaar is now mandatory for social security pensions in Jharkhand. Concerned officials in Ranchi mentioned that around 1,200 pensioners in the district were recently removed from the system. On further investigation, I found that that all the 16 pensioners in the survey who were not receiving pensions despite having Aadhaar cards had issues related to “Aadhaar seeding”. Either their Aadhaar number was not linked to their bank account, or it had been linked to some other account, or there was a mismatch of names between the bank account and Aadhaar. While the purported intention of linking Aadhaar with pensions is to reduce leakages and ensure efficiency, the survey suggests that a number of pensioners stopped receiving a pension midway due to technical issues related to Aadhaar.

Pensioners value their pension money. It gives them power at home and an opportunity to spend on small comforts in life. Many said that they spend their pension on food and healthcare, and even share it with other members of the household. However, everyone echoed the same sentiment: “itne se paise me aur kya hoga?” (What more can I buy with this little money?).

The pension amounts of Rs 600 or Rs 700 per month are grossly inadequate by any standard. The central government has not increased its contribution of Rs 200 per month to old-age pensions for the last 11 years, despite prices going up year after year.

Many remain uncovered

I did not find any fake names on the pension lists. Also, none of the respondents seemed to be ineligible. However, anecdotal evidence showed that many eligible persons (both elderly and widows) are yet to be covered under the pension scheme. They were not in my sample, since the respondents were selected from the list of pensioners, but I often met such people as I went along. Many said that they had filled the application form a number of times but had not heard back from the concerned authorities even after repeated enquiries. I showed one of the block officers a completed form and asked him if he would accept it. He pointed out that the person had not filled in her BPL number and that the application would therefore be rejected. There is no specific procedure to inform an applicant about the rejection; applicants will have to enquiry at the block headquarters to know the status.

Sambhavna Biswas is a student of public policy at the National Research University Higher School of Economics, Moscow.

The author would like to thank Jean Drèze and Inayat Sabhiki.