The high-level committee on pension reforms for government employees will be submitting its report in time for the finance ministry to incorporate the recommendations in the next budget.
This will be especially about the tax treatment of the contribution by new government employees to their pension fund.
Committee chairman BK Bhattacharya told reporters today that they expected to complete their roadmap for moving from an unfunded pension system for new government employees to a funded pension system in the next two months.
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Making a presentation on the contours of the issue the former chief secretary of Karnataka said the committee would have to decide on a pension scheme that allowed a fixed rate of contribution for the employees but which would earn them a reasonable return when they retired. In the budget this year finance minister Yashwant Sinha had said that the central government pension burden had reached unsustainable levels. Currently, the government pays an inflation linked pension for which the employees make no contribution.
The current pension liability for central government for its 3.4 million employees work out to Rs 22,597 crore in 2000-01. Bhattacharya said the burden works out to 2.3 per cent of the GDP if the pension liability for state government employees are also taken into consideration.
The chairman said the committee has held five meetings so far. He said the committee will take note of the fact that there is not even a minimum taxpayer funded pension scheme in the country. Listing out the important issues he said any pension scheme will have to take account of the difference in pay between the government and private sector.