Govt to discuss pension Bill with states

The Centre is likely to call a meeting of chief ministers and state finance ministers in a fortnight todiscuss the pending pension Bill and to build consensus on investing funds under the new pension system.

The Cabinet had sent the Pension Fund and Regulatory and Development Authority (PFRDA) Bill to a group of ministers (GoM) on December 22 last year to resolve a deadlock over the Left parties' demand for guaranteed returns.

The GoM is likely to submit its report before the coming Budget session. The Bill, introduced in Parliament 21 months ago, is yet to get political consensus as Left parties are opposed to it in its current form and are supporting guaranteed returns as demanded by civil servants.

They also oppose FDI in pension funds and investment of subscribers money in the stock market. The states which have implemented the scheme are awaiting the central government's guidelines .

With the pension liability growing, the central and state governments want to give returns depending on the income made from investments of pension funds on equities and debt instruments.

The new system has been operational for employees of central government from January 1, 2004 and 16 states have joined it since then, which is a defined contributory system.

As PFRDA Bill is yet to be cleared, the returns from the funds collected so far are around 8 per cent per annum as there is no clear guideline about investing these funds in higher return giving assets.

The interim PFRDA has suggested four investment options that varies from partial investment in equities to 100 per cent in government securities as per the choice of subscribers.

It has also added a fifth one 'default option', under which regulator PFRDA will make investments on behalf of subscriber depending on the age of the person and risk taking ability.