No pension for new bureaucrats

To manage projected financial burden of Rs 13,681 crore and more than Rs 2 lakh crore over the next 15 years on account of the National Pension Scheme and Regular Pension Scheme respectively, the finance department has recommended that new institutions or fresh cadres should not be covered under these schemes. If this recommendation is accepted, the state government would be able to save Rs 2 lakh crore in the next 15 years.

A proposal for reforms in the pension scheme at the state level has been pending since 1995. Though it was last put before the state Cabinet on October 17, 1995 for its final nod, the file has not been opened again till date, documents available with this newspaper reveal.

According to a senior official from the finance department, as on 18 February 2015, there were 6,83,812 pensioners who received pension from the state government through the Regular Pension Scheme or Defined Benefit Pension (DBP) Scheme. The pensioners include state government employees, Railways employees, All India Services’ employees, teachers of the Old Education Board (prior to 1962), Central government and military pensioners and family pensioners.

“The total annual burden on the state exchequer on this account is Rs 8,871 crore. Assuming that there will be a slight increase in the number of pensioners in the next 15 years, the financial burden on the state will be Rs 3.33 lakh crore,” the official said.

He added that if a decrease in the number of pensioners by 2.2 per cent was assumed, the burden would be Rs 2.20 lakh crore.

The state’s principal secretary of the finance department (reforms) Bijay Kumar said, “Later, employees of aided institutions and zilla parishad schools’ teaching and non-teaching staff too were allowed pension under the Regular Pension Scheme. This increased the burden on the state exchequer.”

He said, “However, we adopted the National New Pension Scheme or Defined Contribution Pension (DCP) Scheme from November 1 2005, and joined the Pension Fund Regulatory and Development Authority (PFRDA) on August 27 2014.

In the DCP scheme, the state deducts a certain amount from the employee’s salary and contributes an equal amount from the state exchequer.

“We deposit the amount collected through the new pension scheme in the PFRDA, which has the authority to invest 15 per cent in equity,” said Mr Kumar.

He added, “It helps by receiving additional interest through the market and reduces the burden of the state exchequer.”

Meanwhile, the finance department recommended that pension not be allowed to newly recruited employees or cadres. It also recommended the appointment of actuarial firms to estimate the actual annual pensionary burden and set up a special fund on a permanent basis to provide future liabilities.

Mr Kumar said, “If we remove the pension facility, nobody would join government jobs. And we have no right to set up a special fund from the budget.”

The proposal is still with the finance department and it is expected to be put before the Cabinet in the coming days. Finance minister Sudhir Mungantiwar was not available for comment on the matter.