The report, “Pension scheme of RRBs to be on a par with other banks” (Business Line, June 22) brings out the interest evinced by the Finance Minister in solving the pension issue in respect of RRB staff, whose pension amounts were meagre. Mr Pranab Mukherjee deserves appreciation for the fact that he took out time amidst his tight schedule in clearing the pending files dealing with the problems of retirees.
A similar long pending issue is one of DA losses of those who retired from banks before 2002, on account of non-100 per cent DA-neutralisation. The affected retirees fall in the age group of 70+. An average retiree in this category incurs losses to the tune of Rs 2,000-4,500 which is a large sum in testing times of cost hikes of food items and medicines. If the Finance Minister could solve this matter before he lays down office, it would be a boon to these senior citizens.
- C P Velayudhan Nair Thiruvananthapuram (HBL)
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The issue raised here is a long-pending one and deserves to be resolved to the satisfaction of the affected without further delay. Wish, in RBI also, the concerned people do something about it. Beyond all this, diluting the pension system is a wider issue and we should take notice of the consequences. Excerpts from my response to the HBL news item quoted below:
The message given by Pranab Mukherjee about the need to ensure reasonable social security by providing a decent pension scheme for employees of RRBs who handle jobs which are more risky and less attractive as compared to those of their counterparts in commercial banks is a welcome gesture. Let us believe that his successor takes it in right spirit and acts to see that the proposal is taken forward fast for implementation.
The logical extension of the FM’s guidance also calls for a review of the approach of Centre to the Defined Benefit Pension Scheme which is being denied to a section of central government employees who joined after December 31, 2003 in the name of pension reforms which are still awaiting parliament’s approval.
The New Pension Scheme (NPS) has been introduced mainly with a view to save on costs. According to a 2008 estimate, the net present value of the pension liabilities of central government now being met on a Pay As You Go basis was Rs 3,35,628 crore(6th Pay Commission Report,2008). Actually, the Sixth Pay Commission suggested gradual partial funding of these huge liabilities. GOI got over this issue by harping on NPS which is a Defined Contribution Pension Scheme. A closer look will show that the existing pension liability and NPS have no relationship whatsoever.
Ideally, the whole issue should be reviewed taking into account:
• The need to factor in pension costs into the wage structure across government, public sector and private sector organisations
• Making pension contribution adequate to fund a decent pension at the time of retirement mandatory for employees with matching contribution from employers and
• Being transparent on the costs and benefits of NPS
The present approach of a shift from ‘Pay As You Go’ to ‘See As It Comes’ will do more harm to employee morale which does not augur well for the Indian economy at this stage of development.
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