Fresh differences on pension bill

Fresh differences have arisen between the government and the Left parties over pension reforms that may indefinitely stall the Pension Funds Regulatory and Development Authority (PFRDA) Bill.

According to government sources, Prime Minister Manmohan Singh is opposed to offering assured returns if pension funds are deployed in equity markets.

The Left, however, wants equity-market investments only with assured returns.

The UPA government has called a meeting of chief ministers on January 22 to garner support on deployment of pension funds in equity markets.

The Left leadership had instructed the chief ministers of the Left-ruled states of West Bengal, Kerala and Tripura to stick to the party line on the PFRDA Bill, CPI(M) general secretary Prakash Karat said today.

The government has been banking on the chief ministers of the three Left-ruled states, especially West Bengal's Buddhadeb Bhattacharjee, to voice their support for the reforms.

Two weeks ago, a formula to provide assured returns on pensions and their deployment in equity market through public sector fund managers was to have been implemented through an executive order.

This proposal also envisaged the appointment of a regulator that would review the issue of assured returns after five years.

Although an executive order does not technically require Cabinet clearance, the proposal was brought to Cabinet. It was, however, withdrawn when Foreign Minister Pranab Mukherjee advised the prime minister to hold it in abeyance because Parliament was in session

The government has argued that assured returns to employees are not possible because pensions will no longer be a statutory benefit but a contributory one.

The government had proposed that it could consider assured returns if the Left agreed to an increase in the premium employees paid. "We will not accept any increase," Prakash Karat reiterated today.