GOOD NEWS FOR EMPLOYEES COVERING UNDER 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.