Employees of the Arunachal Pradesh government took to the streets today demanding that the Old Pension Scheme be restored and the National Pension Scheme be scrapped. The agitators under the banner of National Movement for Old Pension Scheme Arunachal Pradesh, took part in a rally from Akashdeep to the Tennis court in Itanagar ‘to show its anguish to the government and highlight the flaws of the new National Pension Scheme (NPS).
Speaking to the media, general secretary of NMOPSAP Dejum Yinyo said,”The main motto of this rally is that the employees who are in service since 2008 must be include under the Old Pension Scheme, which must be implemented immediately. To express our anguish, we have taken out this rally. This is a nationwide demand and it is a pan-India movement, we are a part of this.”
Meanwhile, the employees warned that their agitation will intensify if the demands are not meth. In this regard, Dejum Yinyo said,”In the coming days too, our agitation will continue and it won’t stop until the government restores the Old Pension Scheme, for the benefit of our employees. We will go ahead (protest) adhering to democratic principles.”
It may be mentioned, mny of the 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.
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.
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.
The review meeting was attended by Chief Ministers of Arunachal Pradesh, Manipur and Tripura.
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