NEW DELHI: Finance Minister P. Chidambaram on Tuesday asked the Chief Ministers to go ahead with reforms in the pension schemes as otherwise, the liabilities of the Centre and States would soon be an unbearable burden.

By fiscal 2009-10, the joint liability on this count alone was likely to be over a whopping Rs. 1,00,000 crores.

"The PFRDA (Pension Fund Regulatory and Development Authority) Bill has already been referred to a Parliamentary Standing Committee and nine States, apart from the Centre, have implemented the new defined contribution pension scheme," Mr Chidambaram told newspersons after making his presentation at the National Development Council (NDC) meeting here.

The nine States which have fallen in line with the Centre and adopted the new pension system are Andhra Pradesh, Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Madhya Pradesh, Manipur, Rajasthan and Tamil Nadu.

Also toying with the plan to replace the existing `Pay-as-you-go' system with the funded scheme for fresh government employees are states such as Assam, Orissa, Punjab and Kerala.

In his presentation at the NDC meeting earlier, Mr. Chidambaram informed the Chief Ministers that the existing pension system covered only 12 per cent of the labour force. The larger section of 88 per cent, he said, remained uncovered due to lack of individual choice, portability and multiple pension fund managers and coverage.

Only 9 p.c. covered under EPF

The Employees Provident Fund (EPF), Mr. Chidambaram said, covered only 3.70 crore people or about nine per cent of the work force, while the government scheme (GPF) covered 120 lakh people (2.8 per cent) along with Special Provident Fund covering 21 lakh or 0.5 per cent of the labour force.

To work out new pension schemes, the PFRDA Bill was prepared but that was sent to the Standing Committee. The Bill, among other things, was for setting up a statutory regulator to promote old-age income security by establishing, developing and regulating pension funds. A regulatory umbrella was necessary to protect the interests of workers and a statutory regulatory body with penal powers was a necessity to sustain member confidence.

Besides giving a choice to subscribers, the new pension schemes offer people, other than government employees, an avenue to save so as to receive pension after retirement. The replacement of the old system, Mr. Chidambaram said, was necessary as no country could afford the `Pay-as-you-go' system which extended pension benefits over a 20-year period to all senior citizens.

In fact, many countries faced acute fiscal stress on account of the defined benefit scheme and quite a few had reneged on their promises, he said.

Printer friendly page  
Send this article to Friends by E-Mail

National

News: Front Page | National | Tamil Nadu | Andhra Pradesh | Karnataka | Kerala | New Delhi | Other States | International | Opinion | Business | Sport | Miscellaneous | Engagements |
Advts: Classifieds | Employment | Updates: Breaking News |