A person remains quite healthy and active through the productive age of his life, so can easily earn his livelihood. During this period of his life, he remains completely independent and can shoulder every responsibility not only for his own survival but also of his family. But with the passage of time, as the law of nature brings a change to everything, same holds true with age and health. By the time a person enters old age, he starts becoming physically weak, develops health issues and loses his earning capabilities. Subsequently, he becomes dependent on others for every basic requirement.
Thus in the old age of one’s life, a person needs social and income security. Focusing on these aspects, the government of India in 1999 commissioned a project called OASIS (Old Age Social & Income Security). In 2003 the OASIS came up with its report. Based on the recommendations of OASIS report, Government of India introduced NPS (National Pension System) for central/ state government employees who joined after January 1 2004, except for the armed forces. This pension system replaced the Old Pension Scheme (OPS). As the matter was a state subject, in erstwhile Jammu and Kashmir state, NPS was introduced later with effect from January 1 2010. Pertinent to mention that West Bengal was the only state which didn’t introduce NPS.
In this new pension system, an employee contributes 10% of basic pay plus DA and the government contributes 14% of the same to the Permanent Retirement Account Number (PRAN) of the employee, provided by the government. This accumulated amount is used to buy equities from some insurance companies, which makes this pension a market-linked pension. At the time of retirement an employee is paid 60% of accumulated amount including returns as lump sum and remaining 40% of accumulated amount is used to buy annuity from any life insurance company. The choice of purchase is made by the Pension Fund Regulatory Authority (PFRDA) which pays a monthly pension to a retiree.
At the time of its implementation, the authorities made tall claims that NPS is going to provide good income security to government employees after retirement. However, things turned otherwise.
Those who have worked under NPS and retired recently have sad tales to narrate. If their account is to be believed, the dreams of secure post-retirement life have been shattered while all the tall claims made by the government at the time of introduction of NPS have fallen flat. Most of the retirees have claimed that they took just between one-thousand to two-thousand rupees as monthly pension under the said system of pension, which is very insufficient for meeting the expenses, when the prices of commodities are skyrocketing, and not even sufficient to buy the required medicines in old age.
There are various other reasons which have reduced the attractiveness of NPS, like there are some rigid rules for withdrawals. During the service of a person, there are multiple occasions where he or she might need money. Under existing NPS withdrawal rules, the maximum amount that a subscriber can withdraw during service is up to 25% of his or her own total contribution. At such stages, partial accessibility to one’s own funds disappoints an employee.
Under NPS, the pension of a retiree remains fixed; on the other hand, there is year-on-year inflation in expenses. This will gradually reduce the purchasing power of the fixed pension of a person. On the other hand, time-to-time DA hike is made to monthly pension in the Old Pension Scheme (OPS).
Over and above this, currently the matter of concern for NPS employees is the loss of assets. Over a period of just a few weeks, bearing the brunt of inflation, government employees working under NPS have been disappointed by the negative returns of their contributed money to their PRAN. Most of the government employees have claimed to have lost around fifty-thousand or more rupees and are still continuously seeing a decline in their total NPS account balance due to volatility in the equity market. As all employees are not economists, nothing can be understood from a layman’s point of view. However, it can be said that the market-based pension system is risk-linked.
Keeping in view the drawbacks of NPS in comparison with OPS (old pension scheme), government employees throughout the country have started raising their voices against this pension system and putting forth the demand to restore the OPS.
Recently, a ray of hope emerged when Rajasthan and Chhattishgarh announced the restoration of Old Pension Scheme for all government employees who are working under NPS. We hope that the same decision is taken in union territories of the country. This will give relief to lakhs of government employees and their families.

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Azad Hussain