New pension scheme

THE Centre has unveiled broader benefits for its employees in the new guaranteed pension scheme. The Unified Pension Scheme (UPS) is surely a political response to the growing nationwide demand to revert to the pre-2004 Old Pension Scheme (OPS). The Centre claims the UPS, to be implemented from April next year, will benefit 23 lakh employees. Those covered under the current National Pension System will have a chance to shift to the UPS. The move is aimed at resolving the debate on the OPS, a cause championed by many Opposition-ruled states, including Himachal Pradesh and Punjab, on the ground that its benefits are more favourable to employees. With an eye on the upcoming Assembly elections, the BJP-ruled states are expected to adopt the UPS. The tweaking of the pension scheme presents a chance to the stakeholders in all states to have an informed discussion, keeping an open mind. A summary dismissal without an in-depth study of the provisions or offering insightful suggestions will be an opportunity lost.

The Reserve Bank of India had last year flagged concerns about the strain on government finances and accumulation of liabilities for the states opting for OPS. The Centre’s contention is that the UPS is fiscally more prudent as it is a funded, contributory scheme, unlike the OPS. The likely additional strain on the Centre and the states now has official sanction. Striking a balance between employee welfare as well as their aspirations and fiscal prudence must be the guiding principle. Both are equally important.

The mixed response by the employees’ unions is on the expected lines. Sticking to a hard stance is an unreasonable approach. As for employees in the private sector, their hopes for any enhanced pension and retirement benefits do not seem a priority for the government.