NEW PENSION SCHEME
The Gujarat High Court has issued
notice to the central and state governments over a PIL challenging the
validity of the market-linked New Pension Scheme (NPS), applicable to
government employees who joined on or after January 1, 2004.
A division bench of Chief Justice R
Subhash Reddy and Justice V M Pancholi issued the notice on October 7
and posted the matter for further hearing after a month.
Petitioner Pranav Desai, a retired
scientist of ISRO, stated in his petition that the market-linked new
pension scheme provides only annuity and gratuity in place of pension,
and has no security for family members of an employee if he passes away.
“Old pension scheme, on the other
hand, provided for the 50 per cent of last pay, floor pension, family
pension if retiree dies, medical benefits and death gratuity,” he said.
Pension is not a gratuitous payment
but deferred payment. Compulsory imposition of NPS violates Articles 14
and 21 of the Constitution. Government is exercising economic duress by
imposing NPS as it will not help employees in his old age but may in all
probability make him starve, the petitioner alleged.
“Mathematical simulation shows that a
bulk of employees will get annuity less that subsistence of about Rs
14,000. Also, the NPS provides for no family pension unlike OPS, in the
event of the employee passing away,” he said.
“There is uncertainty about pension
availability to family if the employee dies. NPS is at the mercy of
share market. It is annuity that one gets in place of pension,” he said.
The petitioner further said in NPS, pensioners are not allowed a wide choice of fund manager and asset class.
As per the new pension scheme, a
beneficiary cannot withdraw money if he subscribes to an account where
government makes an equal matching contribution of 10 per cent of
mandatory contribution by employees, he said.
When exiting at the retirement age of
60, one gets 60 per cent of money while 40 per cent has to be invested
to LIC-type annuity. And if exiting before retirement age, 80 per cent
has to be invested, the new pension scheme mandates, the petitioner
said.
