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A committee of secretaries of various ministries on Thursday agreed on the need for a minimum monthly pension of Rs 1,000 under the scheme run by the Employees Provident Fund Organisation but failed to arrive at a decision on how to ensure this. The panel discussed options proposed by the labour ministry in a cabinet note on raising of funds for the purpose.
These included a one-time grant of Rs 14,000 crore by the government to the pension fund or an increase in the former's annual contribution. Sources said the matter would be taken to a higher level. As reported earlier this week, a recent official valuation of the pension fund revealed a shortage (of liabilities over assets) of Rs 53,000 crore in the fund.
The pension scheme as presently operated includes a contribution from the employer. The government does not guarantee a minimum pension. About 27 per cent of those getting a pension get less than Rs 500 a month; about 55 per cent get between Rs 500 and Rs 1,000. While there are 40 million members in the pension scheme, there were 27,276 pensioners in 2009.
Under the pension scheme linked to the PF scheme, employers contribute 8.33 per cent of a worker's pay to their pension fund. The government contribution comes to Rs 1,000 crore annually.
The government could increase its annual contribution, as proposed, from 1.16 per cent to 1.79 per cent of a worker's wages; however, the requirement would keep increasing. It is already happening for even the present low level; for 2009-10, there was an estimated requirement of Rs 539 crore, for 2010-11 it was Rs 706 crore and for 2011-12, Rs 733 crore.
