Call By All India Loco Running Staff Association
By June 30, 2025, an option between NPS or UPS should be given.
Why should we oppose this?
If someone prefers UPS, they can choose it; if not, they can simply refrain from opting for it and continue in NPS. So why oppose? Some might think this is unnecessary fuss from both sides (those opposing and those supporting UPS). However, both sides will agree on the following facts without denial:
Both NPS and UPS are schemes involving employee contributions. But the retirement benefits of these schemes cannot be guaranteed right now.
This is because the final benefits of NPS and UPS can vary due to several factors:
- Growth of pension funds in the stock market
- Employee’s salary increase/change
- Interest rates
- Retirement age
The growth of pension funds, salary increments, and interest rates may change independently of each other. Historically, stock market growth has been 1.5% higher than the average interest rate.
Interest rates and DA (Dearness Allowance) hikes are linked to inflation.
Meanwhile, salary increments depend on yearly increments, promotions, and Pay commission recommendations, making pay growth more likely than pension fund growth or interest rates.
However, all these factors are beyond the control of employees.
Moreover, only the government can change the retirement age.
In such a scenario, how is it fair to force employees to make an irreversible Option at the time of joining or by June 30, 2025?
Voluntary Retirement Impacting Livelihood
According to recent studies, 40% of employees in India suffer from stress.
It’s uncertain whether one’s health can be maintained until retirement age.
Due to medical reasons, nearly 50% of train drivers cannot continue until the age of 60.
Thus, there’s a high chance of opting for voluntary retirement before the normal retirement age. In the UPS system, if one opts for voluntary retirement, they won’t get a pension until reaching the standard retirement age.
This is not only a violation of human rights but also makes opting for NPS more beneficial, as it at least ensures a minimum income.
Even here, how can a decision/Option made at joining or by June 30 be considered feasible?
Conflict Between IREC Rule 1802 and FR56(j)
According to UPS new Rule 13(1)(b), if an employee retires under FR56(j) (premature retirement), they can still receive a pension under UPS.
However, under Rule 13(1)(c), if they opt for voluntary retirement, they must wait until the normal retirement age to receive UPS pension benefits.
How is this fair?
Premature Option Unnecessary – No Issue with Different Contributions
As per Rule 13(2), if an employee is dismissed or resigns, their UPS option becomes invalid, and they are covered under NPS benefits.
Now, despite differing contribution rates between UPS and NPS (UPS: 10%, 10%, & 8.5%; NPS: 10%, 14%),
there is no issue in managing contributions during service under UPS while providing retirement benefits under NPS.
If that’s the case, why insist on an early option?
At the time of retirement one more chance to Opt between UPS and NPS is required.
Difference in Contributions Between NPS and UPS is Against Equality
Under NPS, the employer’s contribution is 14%, whereas under UPS, it is 18.5%.
Pension is classified as deferred wages by multiple Supreme Court and High Court judgments.
Thus, seeking an option and thereby creating disparity in employer contributions between NPS and UPS violates the principle of equality.
This is another reason why forcing an option is wrong.
Retirement Age and the UPS Option
As already mentioned, retirement age is a key factor in determining NPS/UPS retirement benefits.
Only the government has the authority to unilaterally change the retirement age.
The average service tenure for central government employees is about 35 years, and the average life expectancy is about 77 years, meaning roughly 17 years of post-retirement life.
Will the retirement age increase?
If all current pensioners under the old pension scheme have retired,
the government may increase the retirement age without financial burden.
If increased, the contribution period would become 40 years while the benefit consumption would shrink to about 12 years — changing from a 35:17 to a 40:12 ratio.
Thus, PFRDA’s liability would reduce by 35%.
Even this scenario suggests that retirement benefits could decrease after choosing an option early,
proving that Option at the time of retirement would be more reasonable.
Lack of Clarity on the Basic Pay Used for Payout Calculation
Rule 15(1)(i) states that 50% of the average basic pay of the last 23 months before retirement will be considered for the payout.
However, Rule 13 does not clearly define what “pay” includes.
For example, for Railway drivers, pay elements, and for doctors, NPA (Non-Practicing Allowance) are considered during contributions.
But there’s no clarity if these will be included in the payout calculation after retirement.
What Should Trade Unions Do?
The Old Pension Scheme has long been a key demand.
Without abandoning that, mobilizing employees against the current unfair pressure to Opt UPS immediately must be seen as not just a short-term demand but an urgent necessity.
This issue can gather massive support quickly.
Thus, by acting swiftly, trade unions can rebuild trust among workers.
LET US UNITE TO OPPOSE IRREVOCABLE ONE TIME UPS OPTION