2^nd AIC of AIPRPA at Vijayavada on 17/9/2017

Comrade President, General Secretary, Leaders on the dais and my dear Pensioners, on behalf of TUI (P&R) and AIBSNLPWA, I express my sincere thanks for extending an invitation to your 2^nd AIC and I wish your conference every success.  Though your organization is 3 years old child, your leaders have more than 40 years of trade union experience.  Your organization has got established branches in 22 states within this 3 year period which is a marvelous achievement.  Your CHQ is also bringing out a monthly journal regularly and it is a best journal both in content and outlook.  The main slogan of your organization is “Protect the pension and social security”.  It is in conformity with the resolution of TUI (P&R).

Attack on senior citizens’ Rights

As a result of 2008 financial crisis, pensions across Europe are affected.  In 2009, Poland reduced the number of people eligible for early retirement from 1.53 million to 8,60,000 and pension was reduced from 51% to 26%.  Older people in southern Europe were hit hard, particularly Greece and Portugal.  Spain froze its pension, while Italy legislated to encourage private pensions.  Other negative impacts included widespread cuts to health and home care, subsidized transport.  In 2012 Portugal reduced the subsidy to senior citizens for public transport; within six months 41,000 older people in one area called greater Lisbon had stopped buying the monthly travel passes.  To face these onslaughts a global organization for pensioners became necessary and hence TUI (P&R) was formed.

Recently Brazil introduced pension cut according to which to become eligible, one has to serve for 49 years; family pension was reduced by 50%, thereafter another 10% decrease for ach dependent.  Against this attack there was a powerful strike on 28/4/2017 in Brazil. 

Indian situation

According to socio economic caste census data released in July 2015, out of 243.95 million households nearly 75% live in rural India.  56.25% of rural households do not have any agriculture land.  9.68% rural households have a member who is getting regular monthly salary and only 1.61% have their own small business.  51.14% depend on manual casual labour income.  Only 3% rural households has a member who is a graduate.  74.5% rural households have less than Rs.5000/- income per month and only 8.3% has an income of more than Rs.10000/- per month. 

In India 116.6 million are senior citizens and only 28.9% of senior citizens receive pension.  Out of this, 2/3rd are getting a very small amount as old-age social pension who are below poverty line.

According to a study conducted in 2007-08, in India, 60% of men and 19% of women above the age of 60 are working.  In rural India the percentage is 66 and 23 respectively.  10.9% of senior citizens were depending on others in 1961 which rose to 13.1% in 2001.  Only 12% of working population are getting pension in India.  There are one crore pensioners in Central Government/para military/Central PSUs and nearly one crore in State Governments/Teachers.  It constitutes 1.67% of population and 2.45% of Electorate.   Art. 41 of Indian Constitution talks about “well-being of senior citizens”.  National Policy on older persons (NPOP) was evolved in 1999.  Maintenance and Welfare of Parents & senior citizens Act, 2007 was enacted in December 2007. It is not enough to have proper policy but its proper implementation should be ensured.   Indian Govt. spends only 0.032% of GDP for senior citizens.

Universal Social Pension Possible

A question may arise whether it is affordable for low and middle income countries to pay guaranteed basic income for older people?  Research in 50 countries found that the cost of a universal pension for all over 65 at 20% of average income would range from 0.4% to 1.8% of GDP.  Social pensions help to tackle inequality and support growth.  Bolivia, despite being one of the poorest countries, has had a progressive policy environment for older people with a National Plan on Ageing, free healthcare for older people and a non-contributory universal pension.  In Bolivia, the universal Dignity Pension for everyone from the age of 60 has led to dramatic increases in school enrolment and falls in child labour in households.  Sweden, as a developing economy, 100 years ago, introduced universal pension scheme.  Norway introduced it in 1937 before achieving the current status of high-income country.  Even Maurtius introduced a universal pension in 1958.

Brazil ranks highest among BRICS countries in terms of income security.  This is due to near universal pension system which has relatively high levels of adequacy by international standards.  The system includes two forms of non-contributory pension for rural and urban areas, as well as minimum pensions within the contributory system, all of which are tied to the minimum wage.  This has made a major contribution to reductions in inequality over the last two decades.  The poverty rate among older persons in Brazil would be 48% in the absence of its public pension system, compared with the present rate of 4%.

Status of old people in various countries

With the available datas, Global Agewatch Index provides ranks every year from the year 2013 for 96 countries (where nearly 90% of senior citizens live) out of 194 countries.  The ranks are awarded taking into account four domains viz. Income Security, Health Status, Capability & Environment. According to Global Agewatch Index 2015, Switzerland, Norway, Sweden, Germany, Canada, Netherlands, Iceland, Japan, USA & UK are in the top ten.

On the basis of these ranks, among the BRICS group, China is at 52^nd place, Brazil – 56^th, Russia – 65^th, India – 71^st and South Africa 78^th (among 96 ranks).  In 2014, India was in 69^th place among 96 but it declined to 71^st place in 2015. 

Healthcare

Healthcare is most important for senior citizens. Out of total Government’s spending on health it is 18.7% in Germany, 17.4% in Norway, 12.9% in China, Nepal 7.9% and India 3.6% (Source – WHO).  The survey of Health, Ageing and Retirement in Europe found that

the poorest spent the highest share of their income on health care and that out-of-pocket expenses were heaviest for the oldest, the less healthy, and women.

An indicator to measure the affordability of health-care services is out-of-pocket expenditure as a percentage of total health expenditure.  When out-of-pocket expenditures exceed a certain threshold, they limit people’s access to healthcare.  While out of pocket expenditure in China is 34%, Srilanka 48%, Nepal 49%, it is 57% in India (source: WHO National Health Account Database).

The main demand of TUI (P & R) is “full social security with a decent retirement income for the senior citizens above the age of 60, public healthcare, proper and decent housing, culture, leisure, access to public high quality transport system at subsidized cost, healthy environment and special care for disabled”.  To achieve these objectives, unity of senior citizens is the need of the hour. 

Pakistan: From 1/7/2010, no medical reimbursement is allowed for out-door treatment for pensioners.  Instead 25% of net-pension is given as medical allowance for non-gazetted and 20% for gazetted.  From 1/7/15, this medical allowance was increased by 25% (Source: GoP finance division OM. dtd.7/7/15).  

Bangladesh: A pensioner upto the age of 65 is getting 1500 taka and above the age of 65 is getting 2500 taka as medical allowance. 

Active Ageing

Globally 901 million senior citizens are there in 2015 which constitutes 12.3% of total population.  It is projected that the %age may go to 21.5 in 2050.  Senior citizens make an important contribution to the fabric of society.  The first significant attempt at the international front was in the form of the World Assembly of Ageing in 1982 at Vienna by

UN.  The Assembly said “the need is to make the old age meaningful, contended and happy”.  WHO in 1999 stated that countries would become old if governments, international organizations and civil society don’t adopt ‘Active’ Ageing’ policies and programmes that enhance the health, participation and security of older citizens.  The word ‘Active’ refers to continuing participation in social, economic, cultural, spiritual and civic affairs.

Specific Policies Required

Providing basic social protection to older people is about recognizing the right to a dignified old age as well as the need for financial independence.  Economic growth alone will not

improve old people’s wellbeing and specific policies need to be put in place to address the implications of ageing.  Mexico introduced tax-financed social pensions to ensure everyone can look forward to a minimum standard of income security in old age.  Because of the rapid expansion of social pension schemes in the past decade by Mexico 90% of people above the age of 65 are now covered.  Japan, a hyper-ageing country, with 33% of population over 60 years of age adopted a comprehensive welfare policy in 1961, introduced universal healthcare, a universal social pension, and a plan for income redistribution.  This investment has paid-off with a healthier labour force and increased longevity.  As a result, Japan is not just the oldest, but also one of the healthiest and wealthiest countries in the world.

China has the largest population of older people in the world with 209 million people (15% population is more than 60).  It introduced “Rural Social Pension Scheme” in 2009.  Because of that scheme, 89 million senior citizens received pension payment for the first time.  In 2013 China amended a national law to protect the rights of older people, mandating local governments to provide social security, medical and long-term care to their senior citizens.  Pension coverage has gone up to 75% and health insurance coverage to nearly 90%.  In spite of having economic and political weight, relatively high Gross National Income (GNI) per capita, Russia & India rank lower in the Index.  Russia has wide pension coverage but no national plan on ageing.  Now it is being developed.  South Africa has social pensions and it is about 23% of the average salary. 

Nepal’s income security is boosted by 56% pension coverage.  In Nepal, the senior citizens Act of 2006 was amended in 2013 and it has adopted treatment guidelines for delivering healthcare to older people.  Another neighboring country Srilanka’s long-term investments in education and health have had a lifetime benefits for many of today’s older population.  Even in Bangladesh the status of senior citizens are better than India. 

Comparison with comparable countries

We do not want to compare here about the socio, economic status of pensioners in developed countries or OECD countries because the background & systems are different from India.  We would like to compare the status of pensioners with comparable countries more or less with the same background.

The World Bank is categorizing the countries as ‘Developed’, ‘Developing’ ‘under-developed’ on the basis of Gross National Income per capita per year using ‘purchasing power parity’ every year on 1^st July.  If the GNI per capita per year is less than 11,905$ it is called a ‘Developing Country’.  As on 1/7/2015, India had 5630$, Afganisthan 2000$, Bangladesh 3330$, Srilanka 10300$, Nepal 2410$, Pakistan 5090$ & China 13170$ (source –

World Bank).    This reveals that the GNI in Afganistan, Bangladesh, Nepal, & Pakistan is less than India.

Life expectancy at 60 for both sex in India, 76.7, Afganistan 75.7, Bangladesh 77.9, Srilanka 80.2, Nepal 77.2, Pakistan 77.5 & China 80. 

The retirement age in India, Pakistan & Myanmar is 60, Afganisthan 65, Bangladesh raised from 57 to 59, Srilanka 55 for men & 50 for women, Nepal 58, Bhutan 56 which will be increased gradually to 60 in 20 years & China 60 for Men & 55 for women.

According to 2006 World Bank Report, separate Civil Service Pension Scheme is available in 7 countries of South Asia.  Let us understand the pension formula in our neighboring countries. 

In Pakistan, Pay scale is revised at frequent intervals and not once in 10 years like India.  For example, it was revised in 2008, 2011 & 2015. There were 21.5 lakh pensioners in 2013.  One is eligible for pension after 10 years of service.  For 10 years qualifying service it is 70/300, for 11 years 77/300 and so on.  For 30 years of service pension is granted at 70% of last 12 months average.  Additional 2% is given for each year of service beyond 30 and maximum is 10% (source: GoP Fin.Min order dtd.1/7/86).  Minimum pension from 1/7/2013 is Rs.5000/- & Family pension is Rs.3750/-. There is no Dearness Relief but adhoc relief is granted every year on 1^st July.  For example 20% was granted from 1/7/12, 10% from 1/7/13, 10% from 1/7/14 & from 1/7/15, 7.5% of basic pension (source: GoP Finance Division OM dtd. 7/7/15).  Subsidised medical care (free in Govt. hospitals), subsidized housing & subsidized education for children is given to pensioners.  Discount prices are given in Employee shops.  100% property tax exemption from Rent Income.  Commutation table at the next birthday of 60 and not at 61 as in India and its restoration is after 15 years. 

This was suddenly withdrawn on 29/2/2008.  Pensioners’ Associations not only fought on the streets but legally also.  Ultimately Hon. Supreme Court of Pakistan delivered a favaourable judgement on 31/3/2014 and it was restored on 7/7/2015.  It is noteworthy to mention here that Hon. Supreme Court of Pakistan quoted the judgement delivered on 17/12/1982 by Hon. Supreme Court of India in D.S.Nakra Vs UOI. 

In Bangladesh total population in 2015 is 16,15,40,000 and 6.94% is above the age of 60.  There were 5.2 lakh pensioners.  Here also pay scale is revised frequently.  In 45 years 8 pay commissions were appointed.  7^th Pay Commission recommendations were implemented from 1/7/2009 and 8^th Pay Commission recommendations (presented to Government on 21/12/14) were implemented from 1/7/2015 (pay revision from 1/7/15 & Allowance revision from 1/7/16).  According to 8^th Pay Commission Minimum Pay is 8250 taka (earlier 4100) & Maximum Pay which was 40,000 rose to 78000 taka (1:9.45 ratio between minimum & maximum).  As per 8^th PC recommendation pension is 90% of last pay drawn (earlier it was 80%).  Minimum pension is 2000 taka. Upto the age of 65, pension increase is 40% and above 65 the increase is 50% (source: gazette notification dated 15/12/15).  20% of basic pension is given as ‘Festival Allowance’ thrice in an year.  Two times it is given to Muslims for their festivals, and for Hindus for their festivals, Christians for their festivals etc.  But one is given to all on the eve of Bangla New Year (during April).  Bangladesh Bureau of statistics conducted a survey in June 2010 with the help of Bangladesh Retired Govt. Employees Welfare Association whose president is Mr.Abu Solaiman Chowdhry, former Cabinet Secretary.  The survey covered 700 officers, 900 class III & 700 class IV employees.  It revealed that 88.48% of pensioners get less than 5000 Taka (Bangladesh currency) per month (equivalent to Rs.4286 as per exchange rate on 21/5/16).  85% are living alone.  28.25% pensioners are involving in some activities like Religious (9.39%), Social (8.71%), Professional (2.43%), Cultural (1.91%), Political (1.87%), NGO (1%), Sports (0.91%) & others 1.83%.  Remaining 71.75% are not involving in any such activities.  Average monthly expenditure for a pensioner & his/her family is 18,028 taka (food 44.37%, Medical 11.84% etc).  64% of pensioners said that pension is not sufficient to meet both ends.

In Srilanka, Public Servants Pension Scheme (PSPS) was introduced in 1901.  Total pensioners in March 2016 are 5,65,712.  37.9% of pensioners are getting less than Rs.20,000/- per month, 44.2% are getting between 20,000 & 30,000 and 17.9% are getting above Rs.30,000/-.  The average monthly pension is Rs.16,675 (all Srilankan currency).  However it is not indexed to wages or prices.  The increase is on discretionary basis and it is below the rate of inflation on average.  Thus, the pension loses value in real terms.  Mandatory pension scheme is financed by the Govt. budget which is a Defined Benefit Scheme.  It covers permanent public sector employees, civil servants, armed forces,

provincial & local government employees, government teachers & judicial officers.  One is eligible for pension on completion of 10 years of service.  On completion of 30 years of service pension is 85% to 95% of last salary ( Lower scale of pay persons get more percentage and higher scale of pay persons get less percentage).  Pension is not taxable.  In addition, 24 months salary of last drawn is given as ‘commutation’ and for this 10% is recovered from pension and it is restored after 10 years.  In the event of death, dependents are entitled to an unreduced pension.  In addition, the widows, widowers and orphans pension is a separate contributory scheme that provides benefits to dependents of public sector workers who die in service. 

In Nepal, Civil Service Pension Scheme is applicable for civil servants, Employees of Government-owned enterprises, Armed services, Teachers of Government schools, Universities & Police.  For pension eligibility, minimum service required is 20 years but for army it is 16 years.  The pension formula is Number of years of service X last pay drawn divided by 50.  It works out to 60% for a person with 30 years of service and Rs.10000/- as LPD.  Family pension is 50% of pension.   Contributory pension scheme, just like our National Pension Scheme, was introduced on 15/7/2005.  According to that, 10% shall be contributed by the employee and similar contribution by Govt.  Due to intense pressure from Unions and Peoples’ movement it was rolled back in 2009. 

In Afganisthan, pension is available to Civil servants, Teachers, State-owned enterprises, Afgan National Army, Home Affairs, National Directorate of Security.   Under old pension scheme, employees have to contribute 3% salary.  Under New Pension Scheme which was introduced from 17/9/2009 the contribution was raised to 8% and Govt. contributes same percentage.  Minimum service required for full pension is 40 years of service.  Pension is the last 36 months pay divided by 36.  After the age of 65, for each year 3% additional pension is added and the maximum is 80%.  After the death of the pensioner, the family shall get 36 months of pension as lump sum instead of monthly family pension. 

In Bhutan, National Pension & Provident Fund Plan (NPPFP) is in vogue.  It is contributory pension and each side contribute 8%.  Minimum qualifying service is 10 years.  Pension formula is somewhat cumbersome.  Total pension points (PP) X 60% of Average Annual Civil Service Salary Index (ACSSI) divided by full working period.  PP = Annual salary divided by ACSSI of the same financial year.  ACSSI = Total civil service salary divided by total service.  Minimum is 30% of ACSSI and maximum is 200% of ACSSI.  Family pension is 50% of pension.  It is granted from the following month of death or the spouse reaches the age of 50 whichever is later. 

In Myanmar, minimum qualifying service required is 10 years.  Pension formula is LPD X qualifying service X 1.5%.  It means, if one has more service he/she may get more pension, if less service then less pension.  For 30 years service it is 45% of LPD, for 35 years it is 52.5% of LPD & for 40 years it is 60%.  Family pension is equivalent to pension. 

Some may argue that all the above countries are small compared to India.  Let us consider China which is larger than India.  In China, pension is 65% of LPD for those who have less than 10 years service, 70% for those who served between 10 & 20 years, 80% for those who served between 20 & 30 years, 85% for those who served between 30 & 35 years and above 35 years it is 90%.  For military service <10 years = 65%, 10 to 15 years = 70%, 15 to

20 years = 75%, 20 to 30 years = 80% & above 30 years = 85%.  For severely injured it is 95% of LPD (source: Stirling Finance Research). 

Pension Expenditure

In India, there was a population of 54,81,59,652 in 1971 and the employees in formal sector (Central/State/Localbody/Quasi-govt. agencies & Govt. companies) was 1,07,30,400 (1.96% of total population) and in 2011 the population was 121,08,54,977 and the employees in formal sector was 1,17,34,000 (0.97% of total population).  In 2012, the expenditure for retirement benefits of Central Government employees is 4.42% of total expenditure (Retirement expenditure includes not only recurring pension expenditure & terminal benefits but also pension contribution for serving employees).  During the same period, All State Governments spent 10.19 of total expenditure for the retirement benefits of State Govt. employees.  In 2012-13 Kerala spent 20.09% of total revenue for retirement benefits (highest among states).  Punjab comes second with 18.05%, Himachal in 3^rd place with 17.61% & West Bengal in 4^th place with 16.16%.   

Organize under one umbrella

There are 45 countries in Asia.  But affiliates for TUI (P&R) are only from India, Nepal & Pakistan.  There is a long way to go and I expect that AIPRPA shall play its role in strengthening TUI (P&R) in South Asia first.  Pensioners of India cannot be complacent that their pension is safe because of statutory guarantee.  Many countries including Pakistan have such statues but still pension is under attack in various forms.  According to PTI news, the present government at the centre in India made an attempt recently to repeal Pension Act 1871.  Pensioners have to be vigilant and organized under an organization, if possible under one umbrella.  Once again I wish your conference all success and congratulate the new office-bearers who would be elected in this conference.

(Speech by D.Gopalakrishnan,

Secretary,

Asia, TUI (P&R) at Chennai.

Mobile:9444010621)