Pension fund may cover new PSU jobs

Fresh entrants to the central public sector organisations are likely to be brought under the ambit of the new pension scheme launched by the Centre from the current year.

The Pension Fund Regulatory Development Authority (PFRDA) is at present studying the proposal.

The bringing in of the new entrants to public sector units under the funded pension scheme will make the new pension sector viable as it is, at present, almost totally restricted to new government employees.

The central public sector units are entitled to run their own pension and provident fund schemes, which are exempted, under the Employees Provident Fund Organisation (EPFO) Act of 1952, from the purview of the Act.

The move by the PFRDA is significant, as it is the first step taken by the authority to bring more sections of employees under its wing from the organised sector.

Under the present rules, other than the public sector, all private sector employees have to contribute 10 per cent of their basic pay for their provident fund dues as per the EPFO Act.

Recognising the potential attractiveness of the new pension fund instruments being floated by the government, the EPFO has also decided to invest part of the deposits of private sector employees, who are above 55 years of age, in the Varishta Pension Bima Yojana scheme of the Life Insurance Corporation of India (LIC).

The pension regulator is also examining presentations from potential fund managers and the bodies keen to get the mandate as the Central Record Keeping Agency.

Highly placed sources said domestic and foreign bankers have participated in these presentations.

The 240 central public sector undertakings in the country employed around 2 million people (19.94 lakh), as on March 31, 2002, as per the Public Enterprises Survey.

While recruitment to the public sector units has gone down over the recent years, the sector still takes in around 20,000 staff annually.

For the pension funds, the new rank of people will substantially improve the chances of breaking even at an earlier stage.

This will add to the annual recruitment of about 50,000 employees to different government services.

According to sources, the entry of the new PSU staffs may, however, need an amendment to some of the Acts, before it can be implemented.

The PFRDA has already started the process of advising the government on the types of changes required.

New view

• The proposal will make the new pension sector viable
• The move will bring more sections of employees under the organised sector
• EPFO to invest in the Varishta Pension Bima Yojan
• PSUs employed 2million people as on March 31, 2002
• PSUs employ around 20,000 staff annually