Railway Minister seeks exemption from NPS for railways workers

Union Railways Minister Suresh Prabhu has urged Finance Minister Arun Jaitley to consider a long-pending demand of Railways employees to exempt them from the National Pension Scheme just like the defence forces.

Exemption from NPS for railways workers

Unions are drawing a parallel with the nature of duties performed by the armed forces.

“May I request you to kindly have a re-look into the case sympathetically and consider favourably the demand of the Railway Federations to exempt Railway employees from the purview of NPS,” the minister wrote in a letter last month, adding there was strong merit in the case.

Mr. Prabhu said railway unions had been drawing a parallel with the nature of duties performed by the armed forces, which are exempt from the NPS at present.

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Mr. Prabhu informed the All India Railwaymen’s Federation (AIRF) about his submission to the Finance Minister at a meeting on Wednesday.

The Minister recently also said that he was in discussion with the Finance Ministry seeking additional help to meet the ‘unbearable burden’ of the Seventh Pay Commission’s recommendations.

Mallikarjun Kharge, the Railways Minister in the previous government, had also raised the issue with the then Finance Minister in March 2014.

However, the Ministry of Finance, through a letter written in May this year, didn’t agree to the proposal to exempt railway workers from the purview of NPS.

Every central government employee appointed on or after January 1, 2004, has to face a deduction from his or her salary (10 per cent equal contribution from the employee and the employer) toward the NPS, which is a defined contribution scheme, instead of the defined benefit scheme that prevailed earlier.

Prior to 2004, government employees, including 1.4 million employees in the Railways, were entitled to a fixed pension linked to their final salary at the time of their retirement.