Is Old Pension Scheme Better Than New Pension Scheme

The backpedalling from the new pension scheme to the old pension scheme is being debated. Few state governments have even restored the old pension scheme in the recent past.

- S. K. Khosla & Dr. Rajiv Khosla

History of Pension

The history of the Indian pension system dates back to the colonial era. It was the Royal Commission on Civil Establishments, in 1881, that first awarded pension to government employees. The Government of India Acts of 1919 and 1935 followed it and made further provisions related to pension in it. It is well documented that initially pension was introduced as a reward for loyal service. The system of pensions that prevailed in the pre-independence period continued even after independence. The central as well as state governments continued the pension system with certain terms and conditions in free India.

In 1979, the Government of India introduced a series of measures in the pension policy including the altering of formula for the calculation of pension against inflationary pressures. However, the government restricted the benefits of this measure only to those who retired after April 1, 1979. Against this order a Writ Petition in the Supreme Court was filed in 1980. While hearing the case, Hon'ble Justice Yashavantrao Chandrachud, the then Chief Justice of the Supreme Court held on December 17, 1982 that 'Pension is neither a gift nor a reward or bounty'. Pension is the right of a retired government servant who has served the nation for a long time. It was further elaborated that the government is bound to ensure that its employees lead a peaceful and honourable life after retirement. This judgment conferred pensioners the Right of Pension including Dearness Relief. Henceforth, every year December 17th is observed as Pensioners' Day' throughout the nation.