“National Pension System a xerox copy of mutual fund” | NNPSGSEF Mokokchung unit demand for restoration of Old Pension Scheme

Less than two weeks after the installation of Nagaland National Pension System Government Service Employees Forum (NNPSGSEF), Mokokchung Unit on 27 February 2024, the NNPSGSEF Mokokchung Unit has strongly criticized the National Pension System (NPS) and has demanded for the restoration of Old Pension Scheme (OPS). This was decided during the forum’s very first meeting held at CMO office Conference Hall on 9 March under the theme “Scrap NPS, Restore OPS” which was held in affiliation with the Confederation of All Nagaland State Service Employees Association (CANSSEA).

NNPSGEF Mokokchung Unit President, Takotemjen Longkumer called the NPS a “Xerox copy of a mutual fund” while urging the government to roll back NPS and restore OPS. He also encouraged the members present not to get lazy, even though it may take a lot of time for it is for their own future.

“We need the Old Pension System, because it is an assured link to the last payment drawn salary. OPS is a secured guarantee provided by the concerned Government,” Longkumer added.

The NNPSGSEF was established in 24th June 2022 at Guwahati, Assam at a Northeast employee meet and was organized by North East State Government Employees and Teachers United Forum where the agenda was “Scrap NPS, Restore OPS” and regarding Nagaland, the first introductory meet was at Kohima on August 2022.

The NNPSGEF and the district office bearers serve as a channel for the concern of the people who are subscribed to NPS, to roll out from NPS. This forum’s objective is purely for the employee concern and employee welfare and future financial security.

Why are the government employees demanding the Old Pension Scheme?
The call to scrap NPS comes with a list of grievances outlined by the Nagaland National Pension System Government Service Employees Forum (NNPSGEF), enumerating thirteen key reasons compelling their demand.

Under NPS regulations, employees face significant hurdles if they wish to withdraw from the Government Provident Fund (GPF), being limited to accessing only 25% of their contributions following an arduous procedure. This option is restricted to a mere three times throughout their service tenure, with a mandatory gap of five years between each withdrawal. In stark contrast, OPS streamline the withdrawal process, requiring no formalities or documentation and ensuring ease of access to GPF funds.

NNPSGEF emphasizes OPS’s robust security provisions, guaranteeing social security and a reasonable lifetime pension for employees. However, they castigate NPS as being wholly reliant on the volatile stock market, offering no assurances of returns and lacking in social security measures. Furthermore, they criticize NPS for its monthly diminishing fund calculations, alleging that it systematically leads to reduced pension payouts for long-serving retirees.

In a comparative analysis, OPS emerges as the preferred option due to its provision of a minimum pension guarantee, pegged at 50% of the last basic pay plus DA admissible. Conversely, NPS fails to offer such assurances, relying instead on fixed annuities without any allowance for DA.

Employees advocating for OPS also highlight its dynamic nature, where Dearness Allowance (DA) increases biannually and pension benefits are revised in line with Pay Commission recommendations every decade. Such provisions are conspicuously absent within the framework of NPS.

One of the pivotal contentions raised by OPS proponents is the disparity in benefits for survivors in the event of an employee’s demise. Under OPS, the family is entitled to comprehensive family pension schemes and death gratuity benefits. In contrast, NPS offers a less favorable arrangement, with only a fraction of the accumulated amount provided upfront, leaving the bulk to be disbursed as pension to the nominee through an annuity system.

Tax implications further tilt the scales in favor of OPS, with GPF interest remaining tax-exempt, while NPS subjects the last contributed corpus to taxation.

NNPSGEF underscores the inherent disparity between OPS and NPS, characterizing OPS as a government-centric system designed to secure employees’ futures, while branding NPS as a corporate-centric model devoid of employee benefits and future security.

Mokokchung Times