NEW DELHI: The hole in the employees' pension scheme rose from Rs 54,200 crore in 2008 to nearly Rs 62,000 crore in 2009, according to a significantly delayed valuation report of the scheme that was launched for provident fund account holders in 1995, when Manmohan Singh was the finance minister.
The report, which was presented to the government last year but only shared with PF trustees last week, has recommended that a part of the pension scheme's corpus be invested in "real assetslike equities" instead of keeping it "wholly invested in fixed interest instruments." The actuary has also suggested that the superannuation or retirement age under the scheme be raised from 58 years to 60 years.
The pension scheme is expected to have a kitty ofRs 2.2 lakh crore with around 8 crore members, by the end of 2013-14. The UPA government has been dithering on a long-stalled proposal to offer a minimum monthly payout of Rs 1,000 to all retired members under the pension scheme because of the finance ministry's concerns about its sustainability.
A proposal to raise the statutory salary ceiling for employees' PF from the present Rs 6,500 per month to Rs 15,000 per month has also been hanging fire for over four years, due to fears that the pension scheme's liabilities could rise significantly. When the salary cap on PF savings was raised from Rs 5,000 to Rs 6,500 per month in 2001, the pension scheme's liabilities had risen by Rs 10,000 crore.
Twenty four per cent of an employee's salary uptoRs 6,500 is deducted towards PF, a little over third of which is redirected into the pension scheme. The central government chips in with a 1.16 per cent subsidy on the pension scheme, which takes its contribution rate to 9.49 per cent of salary. The total liability in respect of active members and pensioners under the scheme was Rs 1.71 lakh crore as on March 31, 2009, but it only had assets ofRs 1.1 lakh crore at the time.
"This has resulted in a deficit of Rs 61,608 crore compared to Rs 54,203 crore in the year before," concluded the actuary PA Balasubramanian in the valuation report reviewed by ET. One way suggested to curb the scheme's Rs 61,608 crore deficit is to achieve an annual return of 9 per cent over the future and raise the contribution rate for members to at least 12.49 per cent of salary.
Alternatively, the actuary has said the contribution rate would need to be raised to at least 14.5 per cent of salary, if the government doesn't want to make a onetime lumpsum contribution to cover the current deficit. Pointing out that the scheme's benefits are linked to a retiree's salary, the actuary has backed investments in 'real assets like equities as these assets over a long term provide higher returns through dividend income and capital appreciation over fixed interest securities and match the real time cost' of the scheme's liabilities.
PF trustees could lay down a prudent investment policy for equity investments and also consider allowing limited trading in fixed income government securities as it would boost returns, the report said. The valuation reports for the three years between 2009-10 and 2011-12 are still pending, though officials expect them to reflect a sharply lower deficit in the pension scheme.
Source : http://economictimes.indiatimes.com/
No comments:
Post a Comment