NEW DELHI: THE current deficit of employees pension fund has grown to an astounding Rs 25,000 crore from less than Rs 22,000 crore in 2004. In fact, between 2000-01, when the deficit first showed up on the EPS radar and was pegged at Rs 43 crore, and 2008, the deficit for the pension fund has gone up by Rs 24, 957 crore. In contrast, the fund had a surplus of Rs 1,689 crore in 1995-96. Significantly, the deficit ballooned with spends like those in 2005-06 when a “substantial amount” of Rs 14.39 crore was spent as commission on just disbursement of pension.
Although no evaluation of the pension scheme has been put on record by the EPFO since 2004, government sources indicated to ET the unofficial evaluations have been done in the period.
The shocking growth in pension deficit, in fact, forced the EPFO to review the entire scheme and its current parameters at the last meeting of the Committee on Comprehensive Review of the Employees’ Pension Scheme, 1995. “In the long run, in view of the uncertainty in rate of interest, it will be difficult to sustain a defined pension benefit scheme like the existing one,” the panel has suggested.
There is a possibility new entrants into the pension system will be brought under a scheme similar to New Pension Scheme. This could be a contributory scheme in which the employer and the government would pay a share and even employees could be asked to set aside 2% of their salaries. The fund so collected would be invested by the EPFO.
The panel, which is to meet again on Monday, will consider several suggestions “for modifications in the EPS to make it selfsustainable and wipe out the actuarial deficit”. One of the key suggestions to be explored is a possible merger of Employees Deposit Linked Insurance Scheme with EPS 95, to increase the corpus of the pension fund. The infusion of Rs 4,000 crore of EDLIS funds into the EPS corpus is expected to make the pension fund sustainable.
The first meeting of the panel was in May this year. The minutes of the panel’s last meeting suggest several of the panel members felt that under the current high deficit circumstances, an enhancement of benefits to 4% as proposed earlier cannot be implemented and that pension relief had to be brought down urgently. Further, any additional benefits should be strictly based only on emergent surplus.
