Explained: Why govt employees are agitating over pension in poll bound Gujarat

The demand for restoration of the old pension scheme (OPS) has emerged as a major poll plank in Gujarat with lakhs of government employees being up in arms against the Bharatiya Janata Party (BJP) government over the new pension scheme.

Elections for the 182 member Gujarat Assembly will be held in two phases on December 1 and 5.

There are nearly seven lakh government employees who are pressing for the demand for the OPS, including around 70,000 primary school teachers who joined before 2005 on a fixed salary.

The agitation was revived ahead of the upcoming Assembly elections when thousands of state government employees, including school teachers, joined the mass casual leave protest across the state in September this year.

The Congress has promised to implement the OPS in its election manifesto for Gujarat.

What is the old pension scheme?

In the OPS, upon retirement, employees receive 50 per cent of their last drawn basic pay plus dearness allowance or their average earnings in the last ten months of service. A ten-year service requirement should be met by the employee.

Under OPS, employees are not required to contribute to their pensions. Retirement corpus building was not pressured.

How is the new pension scheme different?

In this NPS, those employed by the government contribute 10 per cent of their basic salary to NPS, while their employers contribute up to 14 per cent.

Under NPS, individual savings are pooled in to a pension fund which are invested by PFRDA regulated professional fund managers as per the approved investment guidelines in to the diversified portfolios comprising of government bonds, bills, corporate shares and debentures.

These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.

​But on retirement, a contributor cannot withdraw the entire corpus of the NPS. One is compulsorily required to invest at least 40 per cent of the corpus to receive a regular pension from a PFRDA-registered insurance firm.

***

The Gujarat government had introduced the new contributory pension scheme for employees joining the service on or after April 1, 2005. As per its notification, it will make a matching contribution of 10 per cent of the basic pay plus dearness allowance (DA) contributed by the employees in the NPS fund.

After protests by employees in Gujarat, the state government had said the new pension will not be applicable to those employees who had joined duty before April 2005. It also promised to increase its contribution in the fund to 14 per cent from the 10 per cent earlier.

The employees have staged massive agitations against the government in Gujarat while demanding restoration of the OPS because they believe the New Pension Scheme is not in the interest of the retiring employees.

With the BJP government not acceding to the demands of the employees, the Congress has assured to bring back the OPS.

Non-BJP ruled states like Rajasthan, Chhattisgarh, Jharkhand, Punjab and West Bengal have reverted to the OPS for their employees.

Rajasthan Chief Minister Ashok Gehlot had said those claiming that the OPS it will put a burden on the exchequer were not right as it was all about financial management.