30th June retirees case - Supreme Court passed comments- noncompliance costs as well as interest may be imposed.

  The National Pension Scheme (NPS) was introduced in 2004, replacing the defined benefit pension system for most government employees except West Bengal. This shift has been met with significant opposition due to several concerns:

• Lack of Guaranteed Pension: The NPS is a defined contribution scheme, meaning pension payouts depend on market performance, leaving retirees vulnerable to market fluctuations.

• Lower Benefits: Critics argue that NPS provides lower benefits compared to the previous defined benefit system.

• Forced Savings: NPS restricts early withdrawals, limiting access to funds before retirement.

• Tax Implications: The NPS corpus is taxable upon maturity, unlike some other retirement savings options.

• Market Risk: The performance of NPS investments is tied to market volatility, exposing retirees to potential losses.

• Complexity: The complexities of NPS investment options can be challenging for many employees to understand.

• Violation of Constitutional Rights: Critics argue that the NPS discriminates between employees with different pension schemes, potentially violating Article 14 of the Indian Constitution.

Historical Context:

• The origins of the Pension Fund Regulatory and Development Authority (PFRDA), the body responsible for overseeing the National Pension System (NPS), can be traced back to the Project OASIS report of 1999. This report, commissioned by the first NDA government, advocated for a shift towards a defined contribution pension system.

• However, this recommendation faced strong opposition from various stakeholders, including the Tripartite Central Board of Trustees of the Employees' Provident Fund. The CBT argued that the OASIS report prioritized investment returns over social security concerns and could jeopardize the savings and future of workers.

• Even the Bhattacharya Committee, also appointed by the NDA government, did not fully endorse a purely defined contribution model. It recommended a hybrid approach, combining elements of both defined benefit and defined contribution systems.

• Furthermore, the impetus for pension reforms in India appears to have been influenced by the World Bank report titled "Averting the Old Age Crisis." While the title suggests a focus on addressing the needs of the elderly, critics argue that the report primarily aimed to alleviate the pension payout burden on governments worldwide.

• The NPS was introduced based on recommendations from the World Bank, primarily aimed at reducing the government's pension burden.
• Previous committees and the Tripartite Central Board of Trustees had expressed concerns about the potential negative impacts of a defined contribution system.

Why we are opposing the New Pension Scheme
i. There is no minimum guarantee of pension under the NPS. The demand of the Central Government employees seeking minimum of 50% of last pay as the minimum pension has not been considered by the Govt so far. 

ii. The Govt has appointed a committee only to revamp the NPS and not to scrap the same and restore the social oriented defined pension scheme. The committee report not implemented.

iii. The NPS scheme has its own set of advantages or disadvantages, when we compare it to the other investment/pension options available.

iv. Lesser Benefits (For the Government Employees) than the Earlier Pensions Schemes

v. The NPS scheme was created by the Government of India, in order to stop all the defined pension related benefits that it gave to its employees.

vi. NPS restricts all kinds of withdrawals, before the subscriber reaches the age of 60 years. The subscriber can make the first withdrawal from NPS, after 10 years of opening the account, and a total of 3 withdrawals, till he or she reaches the age of 60 years.

vii. The withdrawal cannot be more than the total sum of all the contributions made by the subscriber. The contributions that are made by the employer towards the employees NPS fund, are not termed as the investment of the subscriber.

viii. The NPS corpus, which the subscriber can use for buying annuity or for drawing pensions, is taxable, when the schemes mature. 

ix. 60% of the investment in the NPS is taxed upon by the Government of India, while 40% escapes taxation.

x. Other products, including the Public Provident Fund, and the EPF, among others, are not taxed at maturity. One can also invest in the mutual funds (equity), whose returns are not taxed at the time of maturity, and offer much greater returns.

xi. A person can maintain a single NPS account, in his or her lifetime. While the PRAN can be easily ported across the geography and jobs, 1 single individual will get a single PRAN.

xii. The subscriber cannot invest more than 50% of his or her total investment in the NPS account, towards the equities.

xiii. While NPS is a government scheme, the corpus is created according to the returns, which are generated under the corporate bonds, government securities, and the equity. Hence, the market fluctuations can affect the returns/gains adversely.

xiv. Many people are not aware of the financial terms relating to equities, debt, securities and others. Hence they fail to choose the right fund manager for their NPS investments.

The NPS remains a contentious issue, with significant opposition from government employees. The government needs to carefully consider the concerns raised by employees and explore potential solutions that ensure adequate retirement security for all.