December 17, 1982: The landmark judgement of Supreme court that guarantees our elderly a decent, dignified and no dependent life on any other being in the society. It established the equality before law as fundamental and the fact that ‘a Pension is not a gratuity’. With the judgement, we celebrate National Pensioners day every year. Let us have a look back in time knowing about the Pension system of India and how it has evolved over the years.

The Pension system of India: A History

Pension during the British Raj – The system of providing pension has been prevalent since the colonial era. The acts and schemes were meant for the employees in the public service. The first pension benefits were awarded by the Royal commission on civil establishments in 1881. Provisions were made in the Government of India act, 1919 and 1935.

After Independence – The Central Civil Services (Pension) Rules, 1972 a fully fledged pension law was passed for the first time in Independent India. Several protests by the employees at the central level led to the passage of the act. Detailed discussions were held on Article 148(5) and Article 305 of the constitution. It said – An employee at the Center with 33 years of service will be given 50% of the average salary of last 36 months upon retirement. The act was amended later following recommendations of the Pay commission and the demands raised by various organizations.

D.S Nakara and others vs the Union of India, 1982: The Magna Carta of Pensioners

A petition was filed by D.S Nakara, a retired defense official of the Government of India. He was joined by retired civil servants and an organization advocating the rights of elderly. It raised the issue of –

Discriminatory nature of the Liberalized Pension program that categorized the pensioners according to an arbitrary date (retirement before or after a specific date). It will lead to a class division among those retiring.

The unequal treatment of pensioners violated Article 14 (equality before law and the equal treatment under law) of the Constitution.

The judgement resulted in the favor of the petitioners, declaring the program unconstitutional and was thus, overturned. The phrase specifying the date was removed and the pension rates from April 1, 1979 were applicable to all the employees (benefits availed to those confined under the Pension Act, 1972) and the Liberalized Pension scheme will be accessible regardless of their date of retirement.

The challenges:

Even after the Supreme court judgement, ruling parties didn’t ensure a well- established pension scheme. During the tenure of Atal Bihari Vajpayee, the participatory pension scheme was implemented. The people employed before Jan 1, 2004 and in Armed forces were excluded temporarily from the New Pension Scheme. Then, the Pension Fund Regulatory Development Authority (PFRDA) couldn’t be passed in Parliament. It could be implemented only in 2013. Not much was done by the Governments that followed for the senior citizens. The dearness allowance during the COVID 19 pandemic was also frozen (Jan 2020 – June 2021). But in August 2024, the Narendra Modi government has approved the Unified Pension Scheme (UPS).

The Unified Pension Scheme (2024):

The new pension scheme, i.e. the Unified Pension Scheme (UPS) will be in practice from the coming financial year. It will cover approximately 23 lakh employees of the Central Government who are at present under the National Pension Scheme (NPS). Under the UPS, an employee is promised 50% pension after 25 years of service, a pension of minimum Rs 10000 for a service of 10 years and the pension will not be affected of Inflation. The employees will have to contribute 10% of their regular pay and Dearness allowance without any returns.

The UPS has several concerns. The employee unions are reaching out to the Government highlighting the inequalities and failing objectives of it affecting their stability and financial security. The IRTSA (Indian Railways Technical Supervisors Association) wrote to the Government urging not to replace the old pension scheme. They say the UPS demands a longer service requirement, employee contribution and does not provides any additional benefits.

No matter what scheme is implemented, the ultimate motive is that the elderly shall be satisfied. That they are able to live a life of dignity for the remaining years of their lives, without a dependency over others…being able to take care of their health and every day expenses. The government should look into the concerns raised and implement the schemes which align with the Constitutional principles; those that do not perish in the long term.