Employee associations across the country for long have been demanding the abolishing of Contributory Pension Scheme (CPS) and harking back to the Old Pension Scheme (OPS). The CPS was adopted in the State of Andhra Pradesh on September 1st, 2004. Ever since, thousands of employees who have been protesting the CPS have been observing the day as a black day.
The fundamental difference between the OPS and CPS is that in the former pension for employees was a right while in the latter it wasn’t anymore. In the OPS, employees were entitled to a fixed pension (assured pension) which was half of the basic pay. In the CPS, pension is not assured or fixed. It depends directly on the vagaries of the stock market. Second, in the OPS there was a family component to the pension, or what was called Family Pension. Under this scheme if a retired employee who has been availing a fixed pension dies his immediate family is entitled to the same fixed pension. But in the new CPS, this component did not exist. Only after severe protests and pressures did they include a component, albeit watered-down, where if the employee dies while still in service the immediate family would be entitled to a pension as per the new scheme. Third, in the OPS the employees did not have to contribute towards their pension. This was upheld by the Supreme Court in many judgements where it pronounced that pension is not charity but a right of the employee; or in the Court’s own words, pension is nothing but ‘deferred salary’. In the new CPS, the employees have to contribute 10% of their basic pay towards their pensions and this is also taxed.
In November 2018, the then TDP Government, after demands from employees across the State, constituted a committee under the chairmanship of former Chief Secretary S.P. Tucker to review the demand. However, as the issue snowballed in a major election issue Y.S. Jagan Mohan Reddy has promised to abolish the CPS within one month of coming to power as part of his poll promises. After coming to power Jagan in-principle reiterated his promise to abolish the CPS and later constituted a working committee with secretaries of five departments headed by the Chief Secretary Neelam Sawhney at the end of the year. The committee will look into the report submitted by the Tucker commission and is bound to submit its final report by June 30, 2020.
Committees are usually constituted when governments wish to postpone any matter. In fact, such committees were constituted to review the CPS in both Kerala and Tamil Nadu and they are yet to come to a final conclusion. Y.S. Jagan Mohan Reddy who promised to abolish CPS within one month of coming to power has failed to do so and has now constituted a committee. Hopefully this issue significance is not postponed indefinitely.