CAMPAIGN  AGAINST NPS AND EXEMPTION OF PENSION FROM  PAYMENT OF INCOME TAX, MEMORANDUM TO BE SUBMITTED TO PRIME MINISTER.

DRAFT.

To

The Hon'ble Prime Minister of India,

PMO, SOUTH BLOCK, NEW DELHI.

HON'BLE SIR,

SUB-  Ensure defined pension to all employees and allow exemption to all pensions from payment of income tax - request for.

 We may submit the following burning issues of the state and central Government Employees and pensioners  for your kind consideration and disposal.

The system of pension as a social security benefit to the employees in Government sector in India has been existing since the early British days. After independence the pension system was further improved and family pension was also introduced . The Defined pension scheme for the government employees is a well-built scheme as the best of all social security benefits for the employees and they are not required to contribute anything for pension.

Government of India introduced contributory pension to employees those who entered in government service on or after 1.1.2004 .Majority of the state Government s also introduced the same for their employees. The Contributory Pension Scheme is totally depend on the profit and loss in the share market and Government have no control on the fund and it has nothing to do with the welfare of the employees or any individual or even Government finances.

The concept of pension as elaborated by the 4th Central Pay Commission, is 'Pensions to the former members of armed forces and civilian employees of Central Government is not by way of charity on an ex-gratia payment, or a purely social welfare measure was totally changed by . It is in the nature of a “right” which is enforced by the law”. Later the concept was further strengthened by the Land mark Judgement delivered by the Supreme Court in 1982 in a Writ Petition filed by D.S.Nakara Vs the Union of India. Supreme court declared that the Pension is not only compensation for loyal service rendered in the past but has also a broader significance in that it is a measure of socio-economic justice which inheres economic security in the fall of life .The PFRDA Act is against the earlier ruling of the Supreme Court on the employees' Right to Defined Benefit Pension as cited earlier.

There is no assurance, for getting pension ,except market based guarantee in NPS. The stock markets have never remained consistently strong over a long period of time. This volatility of stock market is a cause of serious concern about the sustainability of the National Pension Scheme itself.

The transition from this Defined Benefit Pension System to the Defined Contribution Pension System will make civil services more unattractive. Majority of State Governments are reluctant to remit the employer’s contribution to the pension fund. There is no assurance in getting the pension to the employees and workers.

For all these reasons, particularly the cut in salary and pension of the employees, absence of Government guarantee for retirement benefits in the National Pension Scheme and the distinct possibility of a sustainable Defined Benefit Pension System along with extension of social security system for the unorganised sector, we are not in a position to accept the National Pension Scheme. We strongly urge that a more in depth factual and analytical discussion is essential on National Pension System.

    Further every retired person after rendering 33 to 38 years of service to the Govt. where he worked and for all his services the Deptt pay him salary which is of course treated as income and is liable for Income Tax. But after retirement he is paid pension as a superannuation fund for his livelihood on account of serving for so many years. Here a question arises as to whether why Income Tax is levied on pension. This is not an income for any services or work. This is only a deferred wage by the Deptt to the employee who have served the Deptt for so many years. Then why Income tax?. The Govt must discontinue the levy of Income tax on pension. If  retired MPs & MLAs' pension is not taxable  then why  pension for retired government employees  is Taxed?. Retired persons need more income due to ill health and many more liabilities in old age. Pensions are not sufficient to face all the expenditure incurred by pensioners. Hence it is required to abolish Income Tax on Pension. If such abolition is not possible then at least the exemption limit for payment of income tax and standard deduction  for pensioners/senior citizens may be enhanced to 7 lakh and 3 lakh respectively.