The Pension Fund Regulatory & Development Authority (PFRDA) Bill, 2011 has been passed by the Parliament in its Monsoon session this month with Congress and main opposition party BJP and some regional parties like SP etc. coming together to support it thus reflecting the complete consensus among ruling elite on pushing through the policies of LPG. The passage of this Bill marks the response of the UPA government of more vigorous implementation of these policies particularly opening up the key sectors to tide over the present deep economic crisis which itself is the result of the same policies being implemented for last 30 years. This Bill was pending for last 9 years mainly due to opposition from trade union movement and left forces. The passage of Bill is clearly an act of succumbing to the US pressure and a bailout measure to the financial giants which are still crumbling under financial crisis.
This Bill while grants statutory authority to the PFRDA, the regulator for this sector, it allows at least 26 per cent FDI in Pension sector, or such percentage as may be approved for the insurance, whichever is higher (the government through Insurance Law (Amendment) Bill, 2008, seeks to increase FDI in Insurance sector from present 26 per cent to 49 per cent sector). The PFRDA regulates and develops the pension funds of government employees under the New Pension Scheme (NPS). Now the PFRDA has got the power to penalize those who don’t fall in line. This scheme has been made mandatory for the central government employees joining the service since 1 January 2004. Later on it was extended to the unorganized workers too. This scheme is contributory in nature with no assured returns thus replacing the earlier pension system of defined benefit. The onus of investing in the pension fund shifts to the employee. This means that although employees will make a fixed contribution out of their salaries, they will not get a fixed return. The bill clearly says that there is no guarantee of return. Under the NPS, the pension fund will be managed by fund managers to invest wherever they want and the funds will be available for global investment amounting virtually to ‘reverse FDI’ where corporates and multinationals would merrily play with thousands of crores of rupees of hard-earned money of the Indian working people to reap huge profits through share market speculations. It is very dangerous for workers whose life saving goes into the pension funds.
Clearly, the Bill has given a legal sanction to privatization of pension system, exposure of thousands of crores of hard earned money of working people of country lying in pension funds to the vagaries of market and cleared the way of government to get rid itself of burdening the responsibility of this old age social security system popularly known as “Budhape ki lathi” (crutch for the aged).
It is important to note here that the Finance Ministry had recently moved a proposal to close down EPS (Employees Pension Scheme) under EPFO – the only defined benefit scheme at present- by suggesting that all new employees covered under the EPF Act may be brought under the NPS on mandatory basis. This move has been rejected by the central trade unions. Even the Labour Ministry as of now has rejected this move of Finance Ministry.
From this move it is clear that the government intends the entire pension system and thousands of crore of rupees of pension fund to be brought under the NPS and thus made available for corporates and multinationals.
The working class movement must continue to strongly oppose this anti-worker Act and demand a minimum assured monthly pension linked with VDA for all workers. Even in the last ILC a consensus was built to fix Rs. 1000/- as minimum monthly pension for all workers. AICCTU and also many pensioner organizations have been demanding Rs. 6500/- linked with VDA as minimum monthly pension.
