Why we oppose NPS? – Concluding Part


The first part of this article was carried in the Bank Workers’ Unity issue dated 20th August 2022.

Under the CCS (Pension) Rules, minimum guaranteed pension is Rs.9000 and maximum pension is 50% of last drawn pay.  And this scheme is available for spouse, crippled son, unmarried, divorced, widowed daughters etc..  Moreover, Dearness Relief is also granted on pension so as to compensate erosion in money value at every six monthly intervals. At the time of implementation of recommendations of Pay Commissions, Pension & Family Pension are also upwardly increased.  But under NPS, the annuity does not allow DA/DR and Pay Commissions will not have any say on it and consequently no chance of upward increase.   But there is always a danger of losing the entire money in the market crisis.

Live Example

Smt. Prema, a primary Railway School Teacher in Villupuam retired on 13.04.2018 after 14 years of continuous service under NPS with Basic Pay Rs.46,000/-. She was entitled for Rs,23.000/- ie. 50% of Basic pay as pension, had she retired under old pension scheme. In the old pension scheme, 10 years of qualifying service is enough to get full pension i.e. @ 50% of last pay. She could commute 40% of Rs 23000 ie 9200 and get commutation value of  Rs 9,04,617. Apart from this she would also receive her Provident Fund. She would get Rs 13 800 as residual pension for 15 years.  She would also get Dearness allowance for full pension of Rs 23000. After 15 years, her full pension of Rs 23000 would be restored. After the death of the spouse, anyone in the family like crippled son, unmarried /widowed/divorced daughter would get the family pension at 30% of her last basic pay subject to a minimum of Rs 9000 plus Dearness Allowance.

But under the NPS, she had a pension wealth of Rs. 12 Lakh.  She withdrew 60% of it i.e. Rs.7 lakhs.  She was mandated to invest 40% i.e. Rs.5 lakhs in an annuity scheme. She is given a monthly annuity pension of Rs.2706/- at the rate of Rs 523 per lakh against her entitlement of Rs.23, 000/- under the old pension scheme. Under NPS, after her demise, her surviving husband will get the same amount of Rs.2706/- per month. After that the annuity ceases. The purchase price of Rs 5 lakh is returned to the nominee. She is not entitled for any commutation, DA and there is no upward revision during pay commissions. No GPF would be received. Even this meager pension of Rs.2706/- which is static is with attendant risk as the Rs.5 lakh, the purchase price is invested in share market with the risk including loss of principal.

Under NPS, she is not guaranteed a minimum pension either by the annuity service provider company or the Government.  As per the annuity scheme if one is to get a minimum pension of Rs.9000/- one should have Rs.31,25,000/- in her pension wealth and should invest 40% of it  ie. 12,50,000/- in annuity scheme to get Rs.9181/-. If she has to get Rs.23,000/- as pension she should have Rs. 1.12 Crore in her pension wealth and should invest Rs.50 Lakhs(40%) in annuity, which  is totally impossible.

An unscientific /unconstitutional/ scheme:

The case of this above referred individual explains how people covered under NPS stand to lose heavily. A meager pension amount Rs.2706/- will in no way be equal to the minimum pension of Rs.9000/-plus Dearness Relief guaranteed under the old scheme. Annuity pension can never be treated as decent and meaningful pension. Further annuity pension is not only not guaranteed but also not adequate and not compensated for price increase.

This is in violation of Article 114 of the constitution. According to this article, the amount should not be varied or its destination altered.  Besides, the contribution of employees is their property and it cannot be handed over to somebody detrimental to their interest.  The Hon’ble Supreme Court has ruled that the pension is the right and not a bounty. The pensioner should not be left in lurch.

Scrap this New Pension Scheme:

After fully analyzing the adverse impact of this scheme, the sector wise organizations and central organizations have called for scrapping of this New Pension Scheme and restoration of Old defined benefit Pension Scheme.  They are relentlessly fighting for this through varied agitation programmes including all India strikes.

We shall win

The working class has the strength and vigour in pressurizing the ruling class to achieve the old pension scheme for all through  sustained campaign and  struggles.

With mounting pressures, recently Rajasthan government has implemented old pension scheme and stopped recovery towards NPS. Chatisgarh government has also implemented the old pension to its employees w.e.f 1-4-2022. Both the State Governments are led by Congress Party which brought the NPS. Now the fire has been ignited and it will have its positive impact in all States. Several other State Governments had promised to scrap the NPS in their election manifesto and workers in these States are vigorously pursuing with their Governments for implementation of their promises.


  1. Yes there is risk as the contributions are invested in Equities. The NPS is basically a copy cat of global pension schemes. Many pension funds invest in stocks and that flow into the stock market will be a huge boost to the economy at large. India is also looking to do that. On the long term basis the returns for the pensioners will be certainly more than the 8.33% since it’s being invested into the stock market. There is enough proof that any stock market in the world has only increased on the long term basis. Atleast 12% annual compounding can be achieved in the NPS. We should first come out of the nutshell on a conservative approach. NPS even though taxable the return will be certainly better than the old scheme and it would only benefit the pensioners. Further Govt must be also on the helm of the investments. LIC OVER THE YEARS IS also INVESTING ITS FUNDS (public premium money) in the stock market and LIC has the experience as well. Don’t think this has big risk looking it’s long term perspective.

  2. The article elaborately explains the ills of the New Pension Scheme. With the Rajasthan and Chattisgarh State Governments showing the way of restoring the Old Pension Scheme Trade Unions in other States should take up the issue. More importantly the employees under the NPS should be made to realise the ills of the scheme thereby making them participate in all programs in restoring the Old Scheme.

  3. The article clearly explains the old and new Pension Schemes. When our own contribution is at risk, the NPS should never be allowed to continue. Hats off to our organisations fighting for it

  4. Only way to get Old Pension scheme is employers unity and Union’s movement.. And together we to be achieved…

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