NPS funds: Legal opinion suggests arbitral proceedings, govt undecided

Jaipur: Even as legal opinion suggests that in the event of any dispute, the state must initiate arbitral proceedings with Pension Fund Regulatory and Development Authority (PFRDA) for securing around Rs 40,157.18 crore accrued in favour of its employees under the National Pension System (NPS), the state government hasn’t taken any such decision as of now.
“We have no such information or directions (about initiating arbitral proceedings) from the higher authorities yet. However, the state government has pursued the issue with the Centre by writing to the Union ministry of finance and even meeting senior officials,” said a senior official. The Rajasthan government restored the old pension scheme (OPS) with effect from April 1, 2022.
The agreement signed between the state government and PFRDA in December 2010 states that “in the unlikely event of any dispute or difference, the same shall be referred to PFRDA, which in turn shall appoint a sole arbitrator for determination of the dispute/difference” and “the arbitral hearings shall take place in Delhi”. It also stated “the decision of the sole arbitrator shall be final and binding”.
An opinion by Supreme Court advocate Chandrashekhar A. Chakalabbi says, “It appears that no consent has been taken of the employees by the government of Rajasthan before the government decided to join the NPS. 2. It appears that the government of Rajasthan had decided to join the NPS on extraneous considerations. There was no consideration as to in what manner the NPS is more advantageous as compared to the OPS.”
“The employees or their respective associations do not have a choice of withdrawing from the NPS scheme independently. It is further informed that the government has now reverted to OPS. Therefore, the government of Rajasthan should make all efforts to coordinate with PFRDA so that the amounts accrued in favour of the employees is safely and securely taken care of and regulated as per the OPS. In the event of any dispute, the government of Rajasthan must quickly act upon and initiate arbitral proceedings with PFRDA for securing the amounts accrued in favour of its employees,” the opinion further stated.
The legal opinion was sought by New Pension Scheme Employees’ Federation of Rajasthan (NPSEFR). “OPS is no longer a financial issue, it has become a political issue now. Arbitral proceedings are time consuming and will not help the state government. Therefore, we don’t want the government to go for arbitration now. There is also a possibility of bias in arbitration. In the present situation, those who support OPS will be favoured in the assembly and Lok Sabha elections,” said Vinod Chaudhary, coordinator, NPSEFR.