Wednesday, November 30, 2011

Notification for Launch of 10-Year National Savings Certificate (IX-Issue), 2011 Issued

In accordance with the decisions taken by the Government on the basis of the recommendations of the Committee for Comprehensive Review of National Small Savings Fund (NSSF), headed by Smt Shyamala Gopinath, the then Deputy Governor, Reserve Bank of India, Notifications on changes made in various small saving schemes except 10-Year National Savings Certificate, have already been issued on 25th November 2011. 

                The Notification for launch of new savings instrument, namely 10-Year National Savings Certificate (IX-Issue), 2011, has been issued today, the 29th November, 2011. 

                The major highlights of this scheme are as follows:

·         Investments in Certificate will earn Interest at the rate of 8.7% p.a. compounded semi-annually.
·         On investment of Rs. 100, the depositor will get Rs. 234.35 on maturity of the Certificate.
·          This Certificate will be available in the denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000 and Rs. 10,000. 
·         There is no upper limit for investment in the Certificate. 
·         This Certificate can be transferred from a post office where it is registered to any other post office and it can be pledged as a security.

                The scheme will come into effect from 1st December 2011. Details of the notification are attached herewith and can also be seen on the website of the Ministry of Finance i.e.
Source : PIB Release, November 29, 2011

Tuesday, November 29, 2011


Chq: Manishinath Bhawan
A2/95 Rajouri Garden
New Delhi. 100 027.

E mail.
Dated: 10t
h November, 2011

Notice is hereby given for a meeting of the National Council of the Confederation of Central Government Employees & Workers, on 16th December, 2011 at KOCHI (Ernakulam – Kerala)  The meeting will commence at 10.00 a.m. and will continue till the agenda items are discussed and concluded.  The following is the agenda for discussion at the meeting.

1.       Review of the 25th November, March to Parliament progfamme and the signature campaign against the PFRDA Bill.
2.       Finalization of future action programme to realize the charter of demands.
3.       Review of progress in the matter of formation of District and State Committees.
4.       Other organizational issues with special reference to payment of subscription and the venue for the next triennial conference.
5.       Participation in the common T.U Programmes chalked out by the joint platform of trade unions
6.       Continuing impasse in the settlement of issues slated for discussion at the National Anomaly Committee.
7.       Any other matter with the permission of the Chair.

Secretary General.
All National Council Members. Please make it convenient to attend the meeting. Another communication will follow from the Kerala state Committee about the arrangements made for the conduct of the meeting, boarding, lodging etc. However, all N.C members are requested  to kindly book the ticket in advance to and fro as there would be terrific rush in connection with the Sabarimala pilgrimage
Near Ernakulam Jn.(South) Railway Station
Chittoor Road
Contact. No.
General Secretary
Confederation- Kerala

District Secretary

Post-office savings get a new stamp

While passive investors can still park funds in post-office schemes, those looking to maximise gains will have to be more nimble on their feet.
Come December 1, post-office savings products are set to offer higher interest rates. While this announcement has been cheered by investors, it may be premature to rejoice based on this proposal alone.
First, if you have read up a bit more, you would know that these new rates are not really ‘fixed' for many years, as was the case so far. The interest rates for a five-year time deposit, for example, will no longer stay put at 7.5 per cent. A new rate will be announced on April 1 each year, and this rate will be linked to the average yield on a five-year government security during the previous calendar year (actual rate will be 25 basis points higher than average yields).
Today, the proposed rate on a 5-year deposit is 8.3 per cent. But it so happens that these changes have come at a time when market interest rates may be at their peak, making the picture look rosy. If market rates plummet later, so will the interest rates on your post-office savings.

Wind out of popular schemes

This is not the only tweaking these products have undergone. Other changes may force investors to reconsider whether they are still attractive at all. Consider the Monthly Income Scheme (MIS). As on March 31, 2011, MIS (outstanding of about Rs 2,18,674 crore) were the top small-savings product, constituting 35 per cent of the total outstanding of all small savings schemes put together. Aside from being popular for providing a steady stream of cash-flows every month from an initial investment, the MIS is considered an alternative to bank fixed deposits. For example, an investment of Rs 4,50,000 (upper limit) in an MIS, at 8 per cent, brings in Rs 3,000 interest every month. If this interest was invested in a post-office recurring deposit (RD) giving 7.5 per cent interest, the gain at the end of a six-year tenure, along with a bonus of 5 per cent, works out to Rs 49,254 per annum, or a return of 10.94 per cent (pre-tax).
Thus, this proved to be a good alternative at all times for people who had surplus cash to invest. More so, when long-term fixed deposit rates were much lower. Now, apart from the fact that the interest rates will change every year, there are two other changes to this scheme. One, the tenure is reduced to five years. Two, the bonus component is out. An immediate check at the current MIS (8 per cent) and RD (7.5 per cent) rates but with a five-year tenure and no bonus shows that the return from a MIS plus RD strategy falls from almost 11 per cent earlier to only about 8 per cent now. Besides, investors will also have to brace for year-to-year volatility, not only in the MIS rates but also RD rates.
Even if you lock into an MIS at an attractive rate, such as the proposed 8.2 per cent, returns on your recurring deposit investments from this cannot be locked in and will vary each year, making your ‘effective return' calculation go haywire.
Similarly, the Kisan Vikas Patra (KVP), forming 25 per cent of the total outstanding as at March 2011, has been another popular scheme.

Kisan Vikas Patra

Attributes such as free transferability, no limits on total investment, absence of TDS (tax deduction at source) on the interest amount, in addition to a promise of doubling investment in eight years and seven months, made KVPs an instant hit. Investors with income below taxable limit didn't have to worry about filing a return to claim refund of the TDS. But a wide usage of the KVP for parking unaccounted money, (given its opaque nature) has prompted the government to discontinue the scheme.
The withdrawal nevertheless narrows the choices for genuine investors, especially seniors, looking for risk-free investment options, which also promises good returns. There could, however, be a small window of opportunity in the next two days. As all the changes will take effect only on December 1, KVP sales would be discontinued only from November 30.

Calls for active money management

To give you the choice to pull out your money, schemes like the MIS, Senior Citizens' Savings Scheme, RD and time deposits already allow premature closure /withdrawal with a penalty. Now, with interest rates set to become volatile, you may be forced to take stock more often if rates turn really unattractive.
For example, if the MIS returns are unattractive and you can take some risk, you can consider investing at least a part of the amount in MIPs (Monthly Income Plans) of mutual funds. Offering a monthly dividend payout, these funds invest in short- and long-term fixed income instruments issued by governments or corporates, debentures and commercial paper. They also have a 15-20 per cent exposure to equities to provide some push to your returns (with additional risk!).
On that note, to enable you more actively manage your money, the government has lowered the burden on withdrawal of 1, 2, 3 and 5-year deposits. Premature withdrawal will now be allowed at a one per cent lower rate (2 per cent lower earlier) than the time deposits of comparable maturity. For premature withdrawals between 6-12 months of investment, Post Office Savings Account interest of 4 per cent (nil, earlier) will be paid.
There is also an interpretation that for schemes that require recurring investments, such as the PPF, every year's investment would earn the same year's rate of interest throughout the tenure of the PPF. If this is valid, it would make sense to invest the maximum possible amount when the PPF interest is high at 8.6 per cent from December 1- March 31, 2012 and then take a call on how much to invest the following year, based on the rates offered. This, again, calls for active management.

Saving for retirement

The new rules, however, seem to discourage liquidity for PPF, having raised the interest rate on loans from PPF from 1 to 2 per cent. This may be because the government wants people to look at it from a ‘saving for retirement' point of view. This is supported by the fact that the annual ceiling for investment in PPF has been raised from Rs 70,000 to Rs 1,00,000.
Two other facts also show that the government is trying create a ‘social security' net. One, the proposed introduction of a 10-year NSC instrument. NSCs, again, are locked in and don't generally provide a premature encashment facility. Two, the higher spread for the interest rate on this new NSC ( 50 basis points over g-sec rates) and the Senior Citizens' Savings Scheme (100 bps spread)
In all, passive investors looking for a reasonable risk-free return, can still park their funds in post-office schemes. But those investors looking to maximise returns or beat inflation will now have to be more nimble on their feet.
Still attractive?
Investors will feel the pinch from fluctuating interest rates more when the tax impact comes into the picture. Interest on the Monthly Income Scheme, Recurring Deposit, Time Deposits and Senior Citizens' Schemes (SCSS) are all taxable, and at times when interest rates are low, the post-tax returns will be even lower.
Unlike the 5-year time deposits and SCSS, the others don't qualify for deduction on initial investment under Sec 80C of the Income Tax Act. That said, even this will change under the Direct Taxes Code (DTC), which is expected to replace the Income-Tax Act from April 1, 2012. The SCSS scheme could then become less popular. Not only will the interest rates offered fluctuate from year to year and the interest be taxed but the deduction under Section 80C will also not be available.
Similarly, for the 5-year time deposits and the NSC, the 80C deduction will not be available under the DTC. Moreover, although interest on NSC is taxable every year, it is considered as a reinvestment and eligible for deduction currently. Once the DTC comes in, interest on NSC will also fall into the tax net.
All this is in addition to the reduction of the tenure of NSC from six years to five years, which could itself curtail the interest outgo. Assuming that the new 10-year NSC scheme will have the same product features as the existing one, its attractiveness remains to be seen as, historically, all these have become popular because of their tax benefits.
Fluctuating interest rates notwithstanding, the Public Provident Fund (PPF) appears to be attractive for those looking for long-term investment avenues.
Along with government PFs, recognised PFs and pension schemes administered by PFRDA, the PPF will continue to fall under the EEE method of taxation (i.e. no tax at the time of investing or on returns or the final proceeds) under the DTC, providing scope for overall returns to be higher.


The government on Wednesday said gross collections under various small savings schemes of the India Post increased by about 9 per cent to Rs 2,74,720 crore in 2010—11 in comparison to the previous year.
“The gross collection under various small savings schemes during 2009—10 and 2010—11 were Rs 2,50,931 crore and Rs 2,74,720 crore (provisional), respectively,” Minister of State for Communications and IT, Mr Sachin Pilot, said in a written reply to the Lok Sabha today.
“The gross collection has registered an increase of 8.78 per cent as compared to the previous year’s collection,” he added.
“Central and state governments take various measures from time—to—time to promote and popularise small savings schemes through the print and electronic media, as well as holding seminars, meetings and providing training to various agencies involved in mobilising deposits under various small savings schemes,” he said.
Responding to another question, Pilot said 24,015 post offices have been computerised and upgraded.
In addition, under the “look and feel” component of the Indian Post’s ‘Project Arrow’, 1,530 post offices have been given a face—lift, he added.
Mr Pilot said Rs 228.50 crore was allocated for the project in 2008—09, Rs 178.01 crore in 2009—10, Rs 244.64 crore in 2010—11 and Rs 88.38 crore during 2011—12.
 13TH & 14TH NOVEMBER 2011.

          The system of engaging casual labour is in existence in the dept since undivided P & T department. Due to many struggles by the then NFPTE organizationally and legally in the year 1987 Honorable Supreme Court intervened and gave a land mark judgment on how wages are to be paid and regularization has to be made. Basing on that department of personal & training issued orders. Even before the judgment DOPT issued orders vide OM no 49014/18/84-esstt (C) dated 7-5-85 for one time relaxation to absorb casual labour against regular group D vacancies even though they were not recruited through employment exchange and also made it clear that future engagement should be through employment exchange only. In spite of this engagement of new casual labours is continued with out adhering to the conditions laid down by the DOPT.

            After the supreme court verdict department of posts issued an order vide no 65-24/88-spb I dated 17-5-89 declaring all mazdoors, casual labours, contingent paid staff daily wager, daily rated mazdoor and outsiders are to be treated as casual labours. It was clarified in the same order that those who work for not less than 8 hours a day are full time casual labours and those who work less than 8 hours are part time casual labours. These casual labours will have priority in absorption as group D after the non test category group D and extra dept agents. The eligibility criterion was fixed as 240 days engagement in a year for full time casual labours and 480 days engagement in 2 years for part time casual labours. In spite of this orders the regularization of full time and part time casual labors was not done in many divisions.

The issue of regularization of full time casual labours as group D was a demand fought by the P&T trade union movement i.e. NFPTE for a long time. The dept of posts again issued an order called as ''grant of temporary status and regularization scheme" in the year 2001.  The scope was further increased vide orders dated 1-11-95 extending the eligibility date from 29-11-85 to 10-9-93. After granting temporary status and working for 3 years in that status they will be treated on par with temporary group D even though group 'D' posts are not in existence.

The Para 1 of the dept of posts orders dated 12-4-91 states that temporary status would be conferred on those who have rendered continuous service of at least one year with 240 days (206 days in administrative offices) is taken as one time measure by the authorities to deny other casual labors who complete this conditions as and when they could get 240 days of engagement in a year subsequent to issue of these orders. This interpretation is arbitrary and unjustified. Because of this interpretation thousands of full time /part time casual labors who have completed this condition in subsequent years are not allowed to be conferred the temporary status and the consequential benefits due to lack of vacancies even though temporary status was conferred they could not be regularized. As per the earlier orders of the dept of posts the part time casual labours who have rendered 480 days in 2 years are to be converted into full time casual labours. This benefit is taken away by the dept in the subsequent orders there by they were denied of temporary status and consequent benefits. But dept of telecommunications extended the scheme and implemented in 1997 but similar extension is not allowed in the dept of posts so far even though both are under the same ministry of communication and IT.

Subsequently Honorable CAT Hyderabad in OA no 389 delivered judgment to grant temporary status to all those FTCLs who completed 240 in a year and PTCLs who completed 480 days in 2 years. But dept approached Honorable Ap High Court and the High Court upheld the decision of the honorable CAT in its judgment on 8th September  2010 by dismissing their writ petition filed by the dept. but till date the same is not been implemented resulting in compulsion on the  casual labors to file contempt of court suite. After filing contempt of court suit hurriedly department approached hon'ble supreme court and filed SLP WHICH WAS DISALLOWED by the apex court. After such hectic continued process only department granted temporary status to those employees who won the case. This clearly shows how department is adamant towards casual labor working in the department and dealing the issue of casual labours.

Wages : As per the directions of the honorable supreme court vide its verdict in 1987 the wages of part time/ full time casual labour  are to be revised from 1-1-2006 i.e. from the date of effect of implementation of 6th pay commission report to regular employees. But orders were issued for revision of wages of casual labours that were conferred with temporary status but even though a long gap is there orders were not issued in respect of full / part time casual labours. in some circles  even payment of DA  to the contingent employees on pre revised wages which was paid regularly was stopped in the name of clarification from directorate. Payment of arrears file is tossing from one section to other on the plea of not receiving the information from circles.

Instead of issuing orders for revision of wages all of a sudden one order were issued to  all cpm'sg to out source these cadres. This is nothing but violation of fundamental rights given by the constitution of India and naked violation of honorable apex court full bench judgment. Against this immediately NFPE responded and gave a programme of call attention day on 10-2-2011 and chelo cpmg office on 03-03-2011.  Directorate issued modification order restricting this to only administrative offices. On the immediate intervention of NFPE only this was stopped.

 Daily rated mazdoors: a new section of casual employment called as daily rated mazdoors came into existence in the department of posts. They are employed in mail business centers i.e. almost in every mail offices and for clearing the arrears of data entry. They are attending to the duties of Pas and SAs i.e. sorting of letters, booking of speed post articles and data entry. No uniform procedure is being followed through out the country in respect of their wages. A uniform rate has to be fixed through out the country.

Keeping in view the above situation the FOLLOWING DEMANDS are to be highlighted for early settlement along with the issue of implementation of revised wages from 1-1-2006



 2]        Revision of wages of all full time / part time casual labours and payment of arrears from 1-1-2006.

 3]         The condition of 1-9-93 in respect of FTCL / PTCL for absorption against the vacancies of MTS has to be removed keeping in view the AP HIGH COURT judgment which stated clearly that all PART TIME CASUAL LABOURS WHO WORKED FOR 480 DAYS IN TWO YEARS SHOULD BE TREATED AS TEMPORARY STATUS CASUAL LABOUR FOR THE PURPOSE OF ABSORPTION WITH OUT ANY CONDITIONS THOSE WORKING UPTO 2010.

 4]        Fixing of uniform rates to daily rated mazdoors who are attending to the duties of PA /SA on the minimum of their pay.

 5]        Ftcl/ptcls are to be given priority against gds vacancies before giving open notification honoring the assurance given by the department at the time of discussions on strike charter.

 6]        All the posts of PT CONTINGENT be converted as GDS and the present employees working in those posts may be absorbed as one time measure to settle the issue permanently.

 7]         No new casual labor be engaged further and no out sourcing in the department.



The number of casual workers is increasing day by day due to the policy of privatization in every sector including central govt organizations. It is the duty of the organized working class to organize these sections and bring them into the working class movement. Confederation of central govt employees and NFPE took a decision to form casual labours union. Still many circles are lagging behind in forming state level organizations. Till now in west Bengal Andhra Pradesh Kerala and UTTARANCHAL circles state level units were formed. In some circles like Tamilnadu efforts are going on. Nfpe federal executive decided to conduct ALL INDIA CONVENTION at TIRUPATHY to form ALL INDIA UNION. Accordingly all India union was formed today in this convention with the name as "ALL INDIA POSTAL CASUAL, PART TIME, CONTINGENT & CONTRACT WORKERS FEDERATION" so that the process of forming state level committees will be speeded up and the most down trodden will be brought under the banner of NFPE. Unless circle unions of nfpe took steps effectively the task will not be completed. Hence all the circle co ordination committees of the circles are requested to take it as a serous task and circle unions may be formed and brought under the banner of THIS FEDERATION to strngthen the working class movement in DEPARTMENT OF POSTS.

Without fulfilling this task we cannot achieve the objective of united strength in postal wing which is the only way for settlement of demands of entire postal workers.

Casual Labor Union Zindabad
Nfpe Zindabad
Workers Unity Zindabad

Monday, November 28, 2011


C/o AIRF, 4, State Entry Road, New Delhi – 110001


Thousands of State and Central government employees, Railway workers, Defence workers, BSNL, University and School teachers today participated in a massive March to Parliament against the PFRDA Bill and to submit a petition to the Prime Minister to which millions of employees have subscribed their signature. The rally was addressed by the leaders of various organizations of employees and several Members of Parliament.

A seven member delegation consisting of Coms. S K Vyas, (Convenor, Steering Committee) Shiv Gopal Mishra, (General Secretary, AIRF), KKN Kutty, (Secy. General, Confederation of Central Government Employees & Workers)   S.N. Pathak, (President, AIDEF) P. Abhimanyu (General Secretary, BSNLEU) Rajendran (General Secretary, STFI) and Sukomal Sen (Sr. Vice President, AISGEF) met the Hon'ble Prime Minister today along with Com Basudeb Acharya, MP and Com.  Tapan Sen, MP and General Secretary of CITU. The delegation appealed to the Prime Minister to reconsider the government's policy of privatisation of pension funds and withdraw the PFRDA bill which seeks to replace the existing defined benefit Pension Scheme of government employees. The concern and anxiety of the government employees over the financial security in the evening of their life was also brought to the notice of the Prime Minister.

The petition to the Prime minister elaborated the various reasons as to why the present bill will be neither in the interest of the employees nor will benefit the Government Exchequer (Copy enclosed).

The Hon'ble Prime Minister assured the delegation of the consideration of the petition and the feasibility of providing a guarantee for a minimum pension which the Standing Committee had recommended but unfortunately not found approval of the Cabinet.  The Prime Minister informed the delegation that his Government would not do anything to harm the interest of the employees.

The rally was concluded at 2.30 PM. On behalf of the Steering Committee, Com. Vyas announced that the employees will organize two hour walk out on the next day the Parliament takes up the PFRDA Bill for consideration.



13.C Feroze Shah Road
New Delhi. 110 001
Dated: 25th November, 2011
Phone: S.K.Vyas . Convenor: 91-98682 44035.
 011-2338 2286. E mail.

The Hon'ble Prime Minister of India,
New Delhi

  Sub: Request for Scrapping of PFRDA Bill
We submit this Petition to bring to your kind notice and through your good office to the attention of the Honorable Parliamentarians of our country certain aspects of the re-introduced PFRDA bill, which will have adverse impact on the exchequer in general and on the prevailing service conditions of the Civil Servants.  We pray that our submissions in this regard may please be caused to be considered earnestly and the implication of the provisions of the bill critically analyzed and examined and take decision to kindly withdraw the Bill from the Parliament.
We submit the following for your critical and objective analysis of the Bill : 
1.      The concept of old age security for civil servant in the form of pension has a very ancient
origin dating back as early as third century BC, the quantum being half of the wages on  completion of forty years blemishless  service to the king.
2.      In the last century, one of the measures taken by the colonial rulers to attract talented personnel to the Royal service was the introduction of pension scheme for civil servants in  1920.  The Royal commission through its various recommendations improved the scheme and the 1935 Government of India Act provided it statutory strength. 

3.      The land mark judgment of the Supreme Court in D .S. Nakara and others Vs. Union of India      (AIR-1983-SC-130)(applicable to the Central and State Government employees, teachers,  and           all stake holders of pension system) conceptualized pension stating that pension is neither a bounty nor a grace bestowed by the sweet will of the employer, but a payment for the past services rendered.  It was construed as a right step towards socio-economic justice and a concrete assurance to the effect that the employee in his old age is not left in the lurch.

4.      The fifth Central Pay Commission which was set up by the GOI in 1993 to go into the wage structure and pension scheme of the Central Government employees referring to the Judgment of the Supreme Court cited, observed (Para 127.6) that

"pension is the statutory, inalienable and legally enforceable right earned by the civil servant by the sweat  of the brow and being so must be fixed, revised, modified and changed in the way not dissimilar to salary granted to serving employees." 

5.      The guiding principle adopted in determining of pay package of civil servants is to spread out    the wage compensation over a long period of time whereby wages paid out during the work  tenure is low in order to effect payment of pension on retirement. As such civil service pension  is rightly termed as deferred wage.  While in the organized private sector the employer is   required to contribute equal share to the Provident Fund of the employees, the Government neither contributes to the Provident Fund of the civil servants nor takes any pension  subscription from  him.

6.      In an unwarranted intervention in the Statutory defined benefit  Pension system, the IMF in    their work paper (WP/01/125,(2001) propounded the creation of a pension fund by eliciting subscription   from the Wage earners at the earliest stage of their employment so as to fetch an annuity decent enough to sustain him at the old age. In fact it was a suggestion for a retrograde change over from the defined benefit pension scheme to a defined contributory system.   While suggesting so, they have categorically stated that India does not suffer demographic pressure experienced by major countries, for India's population beyond the age of 60 was about 7% in 2004 which rose to 8.6% in 2010 and is estimated at 13.7% in 2030 and 20% in 2050.

7.      The New contributory pension scheme enunciated by the Government of India and adopted by most of the State Governments is covered by the PRFDA bill. The bill inter alia, envisages a social security scheme for all who desire to have an annuity at his old age which is voluntary and not mandatory.  However, in the case of Civil Servants, who are recruited to Government service after the prescribed cut -off date ( 1.1.2004 in GOI service) the scheme is mandatory in as much as the employee is bound to subscribe 10% of his emoluments to the Pension Fund and the Govt. being the employer would contributes equal amount.  No employee is entitled to opt out of the scheme.
8.      Despite the inability to bring in a valid enactment, the Central and all  State Governments other than those of West Bengal, Kerala and Tripura through illegal executive orders decided to impose the contributory pension system arbitrarily on the Central and State Government employees .While the Govt.  of India notification excluded the personnel in the armed forces and para-military establishments, the Governments of  the Left ruled States of West Bengal, Kerala and Tripura consciously continued with the existing defined benefit pension system.

9.      The PRFDA Bill stipulates that there will not be any explicit or implicit assurance of the benefit except market based guarantee.  The subscriber is thus exposed to the following risks at the exit.
a)      If there is a major market shock, the subscriber to the New Pension scheme may end with no ability to purchase an annuity.
b)      Since annuity is and cannot be cost indexed, the real worth of the annuity might fall depending upon the inflationary pressure on the economy.
c)      As per the scheme, the subscriber is to make the choice of investment portfolio.  The Civil Servant being mostly uninformed in finance and investment related matters, he might end up in making wrong choices which would eventually rob him of the old age pension.
d)     The subscriber is perforce to contribute to the charges of the investment managers, whose priority often is as to how much profit they could make through investment of the huge corpus of pension fund in the volatile share market .

10.  The pension fund created by the employees' subscription and the employers' contribution which directly flows from the exchequer ( which is nothing but tax revenue of the Govt.) is  made available for the stock market operations which is not only unethical but also blatant diversion of public fund for private  profit, both  Foreign and Indian capitalists.

11.  In the case of Civil Servants recruited after the cut-off  date, the new scheme replaces the existing much better "defined benefit" pension scheme. In the process, the Government has created two classes of civil servants viz. the one with a defined benefit pension scheme and the other with the contributory pension scheme in which the employee is to part with 10% of his emoluments to become entitled for an old age social security subject to  the vagaries of share market permits.  Since in both the cases, the pay, allowances, perks, and other benefits, privileges, duties and responsibilities are the same it amounts to wanton discrimination of one against another which is not sustainable in law, rather violative of the existing constitutional provisions.

12.  The wage structure presently designed for those who are recruited prior to the cut- off date and after is on the same premise and is depressed to enable the Govt. to meet the pension liability in future.  By imposing the new contributory pension scheme on the employees who are recruited after the cut- off date the Govt. not only denies the statutory defined pension  benefit to them but also compel them to contribute for earning an undefined annuity, which must be characterized as highly discriminatory. 

13.  Those who are covered by the contributory pension scheme will become entitled for an annuity, a portion of the accumulated contribution is able to purchase, basing upon the accretion to the fund from the investment.  There is, however, no guaranteed minimum amount of pension for those who are covered by the new scheme, whereas the civil servants covered by the existing scheme do get a defined and guaranteed minimum pension and on his death his family members (wife, widowed and unmarred daughters and unemployed sons below the age of 25) become entitled for family pension.  The discrimination factor is thus compounded.

14.  The  PFRDA Bill when  enacted, it is rightly feared, will empower the Government to alter or even deny the present employees and pensioners the statutory defined pension benefit as has been done in the case of those who are appointed after the cut-off date.

15.   It is stated that the prime objective of the introduction of the contributory pension scheme is to substantially reduce the outflow on account of pension liability.  The major pension liability of Government is accounted for by Armed Defence personnel.  They are however excluded from the purview of the contributory pension scheme.  The personnel in the Para Military forces are also excluded from the ambit of the new Scheme.  While doing so, (no doubt to attract the people to serve in the armed forces for security of the Nation) the Govt. is bound to meet the pension liability from the consolidated fund of India.  The argument advanced by the Govt. to cover the Civil Servants in the ambit of the new Pension scheme has been found to be unsustainable by the study commissioned by the 6th CPC.  Shri S. Chidambaram, Actuary, in his report, (Annexure to "A study of Terminal benefit of Central Government employees by Dt. K. Gayatri, Centre for Economic Studies and policy, Institute for Social and Economic change, Nagarbhavi, Bangalore) has pointed out that the Government liability on account of contributory pension scheme would in effect increase for a period spanning for the next 34 years from the existing Rs. 14,284 Cr. To  Rs. 57,088 Cr. ( 2004-2038) and is likely to taper off only from 2038 onwards.  The exchequer is bound to have an increased outflow for the next 34 years and will be called upon to bear the actual pension liability of defence personnel and personnel of para military forces, besides making the contribution to the Pension fund of the Civil Servants recruited after the cut off date.  The specious plea that the exchequer is bound to gain due to the contributory pension scheme is therefore not borne from facts.

16.   Of the present pension liability of the Govt. of India, which  in 2004-05 was 0.51% of the GDP, 0.26% is accounted for by the Defence( which is 50% of the total pension liability.) The study report of the Centre for Economic Studies has concluded that the pension liability as a percentage to GDP which is just 0.5% presently is likely to decline given the growth rate of Indian economy.

17.   Since most of the State Governments have chosen to switch over to "contributory pension scheme" , in fairness ( from the Study conducted by the Centre for Economic Studies and policy) it can be concluded that the pension liability of all the State Governments are bound to increase to three times of what it is today by 2038. 

18.  The first version of the PFRDA Bill was placed before the Parliament by the NDA Government in 2003.  The 6th CPC set up the Committee to go into the financial implication on account of the increasing number of pensioners and suggest alternative funding methodology in 2006.  The said Committee came to the inescapable conclusion (report submitted in 2007) that "the existing systems of pension are increasingly becoming complicated after the introduction of the New Pension scheme" and warned that "caution has to be exercised in initiating any further reforms"  In the light of the conclusion of the said study report which revealed the fact of serious escalation in the  pension payment outflow,  the rationale of the re-introduction of the PFRDA bill in 2011 covering the civil servants is incomprehensible.  Undoubtedly, the Bill when enacted into law will through the existing pensioners to a financially insecure future and the existing workers to the vagaries of the stock market. We, therefore, earnestly pray to your good-self to bring back all the civil servants including teachers irrespective of the date of entry into Government service as also those irregularly appointed within the ambit of the existing statutory defined pension benefit scheme.  

We may, in fine, quoting the concluding paragraph (Page 76 of the report of the Centre for Economic Studies and Policy – Institute for Social and Economic Change) of the Committee set up by the 6th CPC

"Mainly given the fact that the future liability although may be large in terms of absolute size is not likely to last very long and does not constitute an alarmingly big share of the GDP which is also on the decline. It appears that pursuing the existing 'Pay as you go' to meet the liability will be an ideal solution."

appeal you, for the detailed reasons adduced in the foregoing paragraphs, that the new pension scheme enshrined in the PFRDA Bill  may be withdrawn from the Parliament both in the interest of the Civil Servants and the exchequer.

With regards,