Trade unions have decided to oppose finance ministry's proposal to offer the New Pension System (NPS) to the retirement fund body EPFO's subscribers who are covered under Employees' Pension Scheme-1995 (EPS-95).
The Finance Ministry has said the NPS scheme provides better returns than EPS-95 run by the Employee's Provident Fund Organisation (EPFO) at present.
"Whenever this proposal will be taken up in the trustees' meet, we will oppose it," Hind Mazdoor Sabah Secretary and member of the EPFO's apex decision making body, Central Board of Trustees, A D Nagpal told PTI.
Another Trustee and President of Indian National Trade Union Congress G S Reddy said, "We want to continue with the EPS-95 scheme. We don't want to give any such option to subscribers."
Another trustee and All India Secretary of Bhartiya Mazdoor Sangh ,Virjesh Upadhyay, also opposed it and said, "This has not come to us for discussion. But we will certainly oppose this."
Earlier, disagreeing with the proposal, EPFO has already written a letter to the Labour Secretary explaining its position.
Financial Services Secretary has put up the proposal for NPS before the Labour Secretary.
"If we take the return of EPS as indicative return on the fund managed under EPS, then the annualised return for the period May 2009 to May 2013 will be 10.47%, which on the face of it is higher than the return declared by NPS in its scheme for central government", EPFO has said
Finance Ministry has written to the Labour Ministry saying: "The subscribers (of EPS) may be given an option to either remain with EPS or join NPS with the same contribution."
The finance ministry has argued that NPS, which is self sustaining pension system, could be a good substitute for EPS and 0would be beneficial for subscribers as they would get decent returns and adequate pension wealth.
Moreover, the Finance Ministry said, "The government would be free from any open ended and financially unsustainable liability of EPS..."
Disagreeing with the contention, EPFO has said that EPS-95 provides social security for lower income group people in their old age. In addition, it also provides pension to widow, children and dependents in case of death of the subscriber.
Under the EPS scheme, many interim benefits are provided. Subscribers can withdraw their contribution towards pension while withdrawing his or her EPF money. There is a lock in period of 15 years in NPS.
EPS's corpus size stood at Rs 1.83 lakh crore as on March 31, 2013. Under the NPS, total corpus was at Rs 29,852 crore as on March 31, 2013 with a subscribers' base of 47,70,507 members.
Currently central government employees are covered under the NPS while it is also available for individuals opting for it.