Tuesday, August 2, 2011

Circular 18-2011

Dear Comrades
Please find the Circular 18-2011 posted below
With greetings
M. S. Raja
Secretary General



15/1089-90, VASUNDHARA, VASUNDHARA (P.O.), Dt. GHAZIABAD (U.P), PIN-201012

Ph: 0120-2881727/4101593/ 0 – 98681 45667

E-mail: auditflag@gmail.com

Website: www.auditflag.blogspot.com


Reference: AIA/Circular-/18/2011                                                     Dated:  30th July 2011



Unit Secretaries,

Members & Spl. Invitees – NE &

Members of Women's Committee



Dear Comrades,




The National Convention held at Delhi on 22nd July 2011 jointly by Confederation of Central Govt Employees and Workers, All India State Govt Employees Federation (AISGF), Federation of School Teachers Organisations (FESTO), All India Federation of university and College Teachers Organisations (AIFUCTO), All India Defence Employees Federation (AIDEF), BSNL Employees Union (BSNLEU) and organisations of Railway workers decided to mobilise the employees and launch massive campaign amongst the people at large against the re-introduced PFRDA (pension fund regulatory & development authority) bill.


The convention decided to collect 1 crore signature and submit it to the Prime Minister in a March to Parliament in the Winter Session of Parliament and to organise one day strike thereafter – the date of which would be declared in the Parliament March.


In preparation to the above action programmes, the convention called upon every participant organisations to hold joint conventions at State and District level by 1st week of Sept 2011. The convention formed a steering committee with two members from each participant organisations and authorised the steering committee to decide on the dates of state conventions and the details of signature campaign and also the date for the Parliament March. 




            Right now, the New Pension Scheme (NPS) covers those employees who have entered the service on or after 1st January 2004. The terms and conditions of services of the employees recruited on or after January 2004 have been accordingly framed. But in the case of employees who entered the service prior to 1.1.2004 the terms and conditions of services cannot be altered through an executive order (as in the case of those recruited after 1.1.2004). (The NPS was brought out through an executive fiat dated 23rd Dec. 2003.)


            For effecting any change in the service conditions with respect to pension of employees recruited prior to 1.1.2004 an enabling law is required – and that law is being introduced in the form of PFRDA bill. Once the bill becomes an act after its approval by the Parliament, the government would be empowered to bring any changes to the present scheme of statutory pension altering the terms and conditions of even the employees covered by statutory pension. Nobody would be spared. One has to recall the statement of Shri P Chidambaram, the then Finance Minister in 2005 in Bangalore – that pension payment may have to be restricted upto the age of 75 years!


            This PFRDA bill will give enormous powers to the government to unsettle one of the best social security schemes that we have today. This will definitely put the future of the employees bleak after retirement.


            The government is abdicating its responsibility from assuring that the money deducted from the employees would be returned to him/her on his/her retirement stating that it would depend of the vagaries of market!


            This is most obnoxious piece of legislation that we have to fight tooth and nail. The employees have to be educated on the perils of the PFRDA bill and prepare them for a sustained and determined fight.


            The declaration adopted by the National Convention on 22nd July 2011 on PFRDA Bill is attached along with the format for signature campaign.



            With regards


Yours fraternally





Secretary General
















This National Convention of Govt. employees, Railway workers, Civilian Defence employees, BSNL employees, teachers and pensioners held on 22nd July 2011 take serious note of re-introduction of PFRDA Bill in the Parliament in its last session. This is a most dangerous conspiracy dictated by the IMF and World Bank which would demolish the social security to the employees and workers in their old age and would work only to fatten the private profit at the cost of savings of employees and contributions from the national exchequer.

The Convention notes that the neo liberal globalization has been aimed to advance the interest of global capital at the cost of world's majority population who are faced with falling incomes, greater social and economic insecurity and greater restriction on the democratic rights.  The advanced and developed countries with the aid of the Bretton-Wood institutions imposed neo-liberal policies on developing, underdeveloped and undeveloped economies to pry open their market for the unbridled entry of the surplus goods and finance capital.  India adopted the neo-liberal economic policies in 1991.  It is now with us for more than two decades.  Our economy underwent a thorough restructuring to advance free trade, unrestricted foreign investments, deregulated market, unhindered foray of finance capital, privatization of public enterprises, changing work structure, free say for entrepreneurs in the matter of employment, gradual reduction of all welfare measure, annulling of labour welfare measures, withdrawal from all social security measures, privatization of pension funds etc.  Resentment over these policies, especially from the working people grew over the years and manifested itself in various forms of struggles, against privatization, outsourcing, casualisation/contractorisation, and withdrawal of various welfare measures which were in vogue for years since independence.  During the last 20 years, the Indian Working class assiduously built up a united resistance platform to wage battles against these policies and we were proud participants in all those struggles.  Almost near unity of the working class was brought about on 7th September, 2010, when the Indian working class organized the one day general strike and later on 23rd Feb. 2011 when half a million people rallied before Indian Parliament demanding inter alia the withdrawal of the anti-people economic policies of the Indian Govt.  Insensitive to the growing pauperization of the working people and perhaps emboldened by the electoral victory, the UPA II Govt. continued unabated the pursuance of the pernicious policies and introduced various bills in the last session of the Parliament including the resurrection of the PFRDA bill to marshal the pension fund for maximizing private profit.

The very concept of defined and adequate pension (being a deferred wage) capable of providing socio-economic justice to the employees after their retirement as proclaimed by the Supreme Court of the country an enforceable right, stands dismantled as under the new dispensation pension would be fluctuating as opposed to defined or may even be a vanishing phenomena depending upon the vagaries of stock market. The terms of reference for the study group set up by Sixth CPC to go into the pension structure amply indicates a future migration even of the existing employees to the new contributory pension regime.

The wage structure of the govt employees has been designed on the premise that it is to be depressed in order to enable the government to meet the pension liability in future. The corollary drawing from this is this that the pension liability as a deferred wage is inherent in the existing wage structure. Therefore, the imposition of the new contributory pension scheme on the employees who entered service on or after cut-off date is illegal as because the deferred wage as pension which was to be earned by them on account of depressed wage structure has been denied and they have been compelled to contribute in order to earn an undefined and uncertain annuity.

The pension fund created by the employees' subscription and the employers' contribution which directly flows from the exchequer ( which is nothing but tax revenue of the Govt.) is  made available for the stock market operations which is not only unethical but also blatant diversion of public fund for private  profit, both  foreign and Indian capitalists.

The PFRDA Bill when enacted, it is rightly feared, will empower the Government to alter or even deny the present employees and pensioners the statutory defined pension benefit as has been done in the case of those who are appointed after the cut-off date.

 It is stated that the prime objective of the introduction of the contributory pension scheme is to substantially reduce the outflow on account of pension liability.  The major pension liability of Government is accounted for by Armed Defence personnel.  They and the paramilitary forces are however excluded from the purview of the contributory pension scheme and rightly so. While doing so, the Govt. is bound to meet their pension liability from the consolidated fund of India.

The argument advanced by the Govt. to cover the Civil Servants in the ambit of the new Pension scheme has been found to be unsustainable by the study commissioned by the 6th CPC.  Shri S. Chidambaram, Actuary, in his report, (in Annexure to "A study of Terminal benefit of Central Government employees by Dt. K. Gayatri, Centre for Economic Studies and policy, Institute for Social and Economic change, Nagarbhavi, Bangalore") has pointed out that the Government liability on account of contributory pension scheme would in effect increase for a period spanning for the next 34 years from the existing Rs. 14,284 Cr. to  Rs. 57,088 Cr. ( 2004-2038) and is likely to taper off only from 2038 onwards.  The exchequer is bound to have an increased outflow for the next 34 years and will be called upon to bear the actual pension liability of defence personnel and personnel of para military forces, besides making the contribution to the Pension fund of the Civil Servants recruited after the cut-off date.  The specious plea that the exchequer is bound to gain due to the contributory pension scheme is therefore not borne from facts.

Since most of the State Governments have chosen to switch over to "contributory pension scheme" , in fairness it can be concluded that the pension liability of all the State Governments are bound to increase to three times of what it is today by 2038. 

The first version of the PFRDA Bill was placed before the Parliament by the NDA Government in 2003.  The 6th CPC set up the Committee to go into the financial implication on account of the increasing number of pensioners and suggest alternative funding methodology in 2006.  The said Committee came to the inescapable conclusion (report submitted in 2007) that "the existing systems of pension are increasingly becoming complicated after the introduction of the New Pension scheme" and warned that "caution has to be exercised in initiating any further reforms"  In the light of the conclusion of the said study report which revealed the fact of serious escalation in the  pension payment outflow,  the rationale of the re-introduction of the PFRDA bill in 2011 covering the civil servants is incomprehensible. Undoubtedly, the Bill when enacted into law will throw the existing pensioners in to a financially insecure future and the existing workers to the vagaries of the stock market.  

It would be pertinent to mention the inescapable conclusion of the study undertaken by the committee set up by Sixth CPC (centre for economic studies & Policy – Institute for Social & economic change) at page 76 of their report:

"Mainly given the facts that the future liability although may be large in terms of absolute size is not likely to last very long and does not constitute an alarmingly big share of GDP which is also on the decline. It appears that pursuing the existing 'pay as you go' to meet the liability will be an ideal solution".

In the light of the above we must oppose the imposition of the new pension scheme and the PFRDA Bill and demand that the defined benefit pension must be extended to all the Government employees irrespective of the fact whether they are regularly or not regularly appointed.

In the wake of the renewed attempt of the UPA II Government to dismantle the existing defined benefit pension scheme for no ostensible reasons, which has been in vogue for a century, it must be our endeavour to wage a determined battle, solicit and obtain the solidarity and support of the working class in the country, arouse the public opinion against the Bill so that those in the Treasury Benches and the dominant opposition party in the Parliament who have joined together to push the enactment will be forced to rescind their decision.

 This National Convention urges upon all organizations of central and state govt employees and teachers to unite and organize the employees to launch a signature campaign on a petition to be submitted to the Prime Minister. The convention also decides that the petition to the Prime Minister will be submitted by organizing a mammoth march to the Parliament/Raj Bhawan in State Capitals at a convenient date when the Parliament will be in Session. In case the PFRDA Bill is not withdrawn and /govt employees are not brought under the statutory pension scheme, it would become imperative for the govt employees and teachers to organise industrial action including strike. This convention sets up a Steering Committee consisting of leaders from all participating federations/unions/associations to finalize the date of strike.  

We appeal for active support to this struggle from all sections of employees and workers and also from those who have been or are being brought under the PFRDA Bill.


All India State Government Employees Federation

Confederation of Central Govt. Employees and Workers

All India Defence Employees Federation

BSNL Employees Union

School Teachers Federation of India

All India Federation of University and College Teachers Organisations

Organisations of Railway Workers










Dr Manmohan Singh

Hon'ble Prime Minister

New Delhi


We submit this petition to bring to your kind notice certain aspects of the re-introduced PFRDA Bill which will have an extremely adverse impact on the pension and retirement benefits of the Government employees. We may also state in this connection that the contributory pension scheme will be a drain on the exchequer.

The guiding principle adopted in determining the pay package of civil servants is to spread out the wage compensation over a long period of time because of which the wages during the work tenure is low to enable pension payment on retirement. This makes the pension a "deferred wage", which the Supreme Court has upheld as such in their landmark judgment in the case of D.S. Nakara Vs. Union of India. As the bill does not provide implicit or explicit assurance of a minimum pension except marked based guarantee, the civil servant even after contributing huge sums to pension fund may end up with no annuity if the invested company become bankrupt or the equity market crashes. Moreover the annuity which would be the pension under the new scheme being not cost indexed will make it difficult for the pensions to make the both ends meet.

The Committee set up by the 6th CPC has concluded that the new contributory pension scheme will increase the outflow from the exchequer from Rs. 14,284 Crores to Rs. 57088 Crores by 2038. The Committee has also observed that the pension liability of the Government which was 0.5% of the GDP in 2004-05 under the defined benefit scheme is likely to decline if the same is not replaced by the contributory pension scheme as envisaged in the PFRDA bill. The Committee has ultimately recommended that the existing "Pay as you go" pension which is presently in vogue will be ideal and may be continued.

Since the new scheme is neither in the interest of the country as it increases the outflow on account of pension liability nor to the Civil Servants for it does not guarantee a minimum pension, we appeal to you kindly cause withdrawal of the PFRDA Bill from the Parliament immediately.

            Thanking you,

Yours faithfully