The Gujarat High Court has issued notice on NPS

The Gujarat High Court has issued notice to the central and state governments over a PIL challenging the validity of the market-linked New Pension Scheme (NPS), applicable to government employees who joined on or after January 1, 2004.

NEW PENSION SCHEME

The Gujarat High Court has issued notice to the central and state governments over a PIL challenging the validity of the market-linked New Pension Scheme (NPS), applicable to government employees who joined on or after January 1, 2004.

A division bench of Chief Justice R Subhash Reddy and Justice V M Pancholi issued the notice on October 7 and posted the matter for further hearing after a month.

Petitioner Pranav Desai, a retired scientist of ISRO, stated in his petition that the market-linked new pension scheme provides only annuity and gratuity in place of pension, and has no security for family members of an employee if he passes away.

“Old pension scheme, on the other hand, provided for the 50 per cent of last pay, floor pension, family pension if retiree dies, medical benefits and death gratuity,” he said.

Pension is not a gratuitous payment but deferred payment. Compulsory imposition of NPS violates Articles 14 and 21 of the Constitution. Government is exercising economic duress by imposing NPS as it will not help employees in his old age but may in all probability make him starve, the petitioner alleged.

“Mathematical simulation shows that a bulk of employees will get annuity less that subsistence of about Rs 14,000. Also, the NPS provides for no family pension unlike OPS, in the event of the employee passing away,” he said.

“There is uncertainty about pension availability to family if the employee dies. NPS is at the mercy of share market. It is annuity that one gets in place of pension,” he said.

The petitioner further said in NPS, pensioners are not allowed a wide choice of fund manager and asset class.

As per the new pension scheme, a beneficiary cannot withdraw money if he subscribes to an account where government makes an equal matching contribution of 10 per cent of mandatory contribution by employees, he said.

When exiting at the retirement age of 60, one gets 60 per cent of money while 40 per cent has to be invested to LIC-type annuity. And if exiting before retirement age, 80 per cent has to be invested, the new pension scheme mandates, the petitioner said.