Several employees’ unions on Sunday rejected the Centre’s newly announced Unified Pension Scheme (UPS), a contributory scheme like the current National Pension Scheme (NPS), and vowed to keep fighting for a return to the Old Pension Scheme (OPS), scrapped two decades ago.

The National Movement for Old Pension Scheme, an organisation of state and central employees, said the Centre was misleadingly portraying the UPS — offered as an optional alternative to the NPS — as similar to the OPS.

The OPS entitled retired employees to a pension equal to half their last drawn basic salary and dearness allowance (DA), without having to contribute anything themselves while in service.

Under the NPS, introduced in 2004, employees contribute 10 per cent of basic salary and DA to the pension fund while the government contributes 14 per cent. And yet, the pension amount under the NPS — which depends on the volume of the contributions made — is less than that under the OPS.

Under the UPS, announced on Saturday, an employee will go on contributing 10 per cent while the government’s share will rise to 18.5 per cent. The pension will be equal to half the average of the last 12 months’ salary and DA.

"Under the OPS, employees became eligible for full pension after 20 years of service. Why is it 25 years in the UPS? We’ll continue fighting for the OPS," movement president Vijay Kumar Bandhu said.

Tapan Sen, general secretary of CPM labour arm Citu, said: "The UPS may be better than the NPS but remains a contributory scheme. We demand only the OPS."

Contributions under the UPS are invested in assets whose risk profiles are unknown, said the Democratic Teachers Front (DTF) of Delhi University.

If in any year the total pension liability under the UPS outstrips the interest generated on the existing corpus, then one of four things can happen, it said.

One, the in-service employees who have chosen the UPS must contribute more; two, the UPS corpus will be run down "i.e. tomorrow's pension will be sacrificed to pay today's pension"; three, the UPS corpus may be redeployed towards more risky financial assets which may lead to capital losses i.e. a decline in the UPS corpus; four, inordinate delays in paying pension and dearness relief to existing pensioners, the DTF said.

The Academics for Action and Development Teachers Association said the UPS was "meaningless" for employees "appointed after 40 years of age as they won't be able to complete 25 years of service".

"The entry age in academics is generally higher. In case of SC, ST, OBC teachers and employees, mostly their tenures are shorter," it said.

It said there’s no clarity that the UPS would be linked to the Pay Commission, which used to review pensions under the OPS.