Cess on public sector coal production set to rise to fund pension corpus

Financial mismanagement of the pension scheme has depleted corpus meant for pensioners of public sector mines

The Coal Ministry has given “in-principle approval” to a proposal to increase the cess levied on coal production from Rs 10 per tonne to Rs 15 per tonne to replenish the pension fund. This may secure the post-retirement benefits of more than 550,000 pensioners of public sector coal mines.

The Board of Trustees of the Coal Mines Provident Fund Organization (CMPFO) made the recommendation in a meeting last week. A senior government official told 'Business Standard' that the ministry, in consultation with Coal India Ltd and other stakeholders, will soon take a decision about replenishing the corpus.

“Along with the proposal to raise the cess levied, discussions were also held on increasing the minimum pension to Rs 1000, once the actuary submits its report. Also, it was decided to cap the pension fund's investment into the Exchange Traded Fund (ETF) at 5 per cent,” said another official.

The Coal Mines Pension Scheme (CMPS)-1998, which covers pensioners of Coal India, Singareni Collieries (SCC) and some coal firms, is administered by the CMPFO which comes under the Coal Ministry.

Financial mismanagement of the pension scheme has depleted the corpus amount, said a report by the Parliamentary Accounts Committee (PAC), which was chaired by Congress leader Adhir Ranjan Chowdhury, in March 2021.

“The committee notes that the Ministry of Coal has been apparently found severely wanting in discharging its nodal administrative role, which resulted in financial mis-management by CMPFO," the report noted.

Rakesh Kumar, a member of CMPF Trustee Board who attended last week’s meeting as a union representative, said pensioners want the cess increased to Rs 20 per tonne as the pension corpus has been depleted over the years. The scheme has not been amended for the last 24 years, despite there being a provision to review and revise the pension payable in the scheme after every three years.

“Despite the positive outcome of the meeting, decisions on other issues like lowering of interest rates on CMPF, waiving off the money invested in DHFL and extending the pension benefits to workers with tenure of less than 10 years could not be taken,” Kumar said.

CMPFO had proposed waiving off around Rs 727 crore invested in Dewan Housing Finance Limited (DHFL) in 2014-15 and lowering the interest rates to 7.8 per cent in the next fiscal from 8.3 per cent in this fiscal, which was opposed by the union representatives.