In a significant decision, the government has decided to give a one-time option to select Central government employees to migrate to the Old Pension Scheme (OPS), who applied for jobs advertised before December 22, 2003, the day the National Pension System (NPS) was notified but joined the service in 2004, when the NPS came into effect.
The option is available to the Central government employees enrolled under the NPS as they joined the service on or after January 1, 2004, the day the NPS came into effect, even though such posts were advertised before December 22, 2003, the day it was notified. The employees have time till August 31 to opt for the OPS. The order will be applicable to Central Armed Police Force (CAPF) personnel and other Central government employees who joined the services in 2004 as the recruitment process was delayed due to administrative reasons.
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The employees’ contribution to the NPS will be credited to the General Provident Fund (GPF) of the individual.
The Bharatiya Janata Party-led government has maintained that restoration to the old system would cause an unnecessary financial burden on the government while several Opposition-ruled States such as Chhattisgarh, Rajasthan, Jharkhand and Himachal Pradesh have announced that they would restore the OPS.
Till January 31, there were 23,65,693 Central government employees and 60,32,768 State government employees enrolled under the NPS. Except West Bengal, all States had implemented the NPS.
Many litigations
A senior government official told The Hindu that the decision was taken to address a vast gamut of litigations that the government faced on the issue. “There were hundreds of litigations in courts across the country, the government did not win a single case. Through court orders individual officials were getting benefit, we decided to issue general instructions for the benefit of all eligible officials,” said the official.
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The Department of Pension and Pensioners’ Welfare (DPPW) held extensive consultations with the Ministries of Finance and Law and Departments of Expenditure and Personnel and reached a consensus to allow the employees the option to switch to the OPS. In 2020, the DPPW gave one-time option to those Central government employees to opt for the OPS who were declared successful for recruitment in the results declared before December 31, 2003.
However, representation was received from government employees referring to court judgment and orders by the Central Administrative Tribunals that allowed them to migrate to the OPS. Following this, the DPPW moved a proposal to issue a general circular to extend the benefit of the judgments to similar placed employees. Union Minister of State for Personnel Jitendra Singh approved the proposal on Friday.
The exact number of employees who will be covered under the new order is not known and it will be known after eligible employees have exercised the option, said the official.
“The government was spending time and resources in fighting such cases in court. There were several orders by High Courts and even the Supreme Court to give OPS benefits to those recruits who applied for jobs before the NPS was notified. There was a huge demand from public representatives and questions were raised in Parliament too,” said the official.
Participatory scheme
The OPS or the Defined Pension Benefit Scheme assures life-long income post-retirement which is usually equivalent to 50% of the last drawn salary. The government bears the expenditure incurred on the pension. The Atal Bihari Vajpayee government in 2003 decided to discontinue the OPS and introduced the NPS. The scheme applicable to all new recruits joining the Central government service (except the armed forces) from January 1, 2004 is a participatory scheme, where employees contribute to pension corpus from their salaries, with matching contribution from the government and is market linked.
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A DPPW order issued on Friday (March 3) said, “Instructions have been issued by the DPPW, vide OM No. 57/05/2021-P&PW(B) dated 03.03.2023 that, in all cases where a Central government civil employee has been appointed against a post or vacancy which was advertised/notified for recruitment/appointment, prior to the date of notification for the NPS i.e. 22.12.2003 and has been covered under the NPS on joining service on or after 01.01.2004, may be given a one-time option to be covered under the CCS (Pension) Rules, 1972 (now 2021). This option may be exercised by the concerned government servants latest by 31.08.2023.”
The All India Defence Employees Federation, one of the government employee unions, welcomed the move. “We were fighting for implementation of the judgment to all similarly placed employees, the order is issued now. Our struggle to completely withdraw the NPS and restore the OPS will be intensified in the coming days,” said C. Srikumar, General Secretary, AIDEF.
