KOLKATA | May 09, 2017: The government may merge Coal India’s pension fund with the Employees’ Provident Fund in an attempt to overcome a shortfall and ensure that payments to pensioners are not disrupted.
The state-owned miner’s fund currently manages about Rs 13,000 crore and provides pensions to some 3 lakh retired Coal India employees. Contributions from employees, interest income and earnings from investments haven’t generated enough money to meet a pension bill that’s been mounting as salaries increase.
An actuarial estimate about four years ago suggested that the fund faces a gap of about Rs 26,000 crore and needs to be replenished to ensure there’s enough money to pay pensions in the near future. The ministry’s decision to merge it with the EPF is an effort to save the fund.
The coal ministry recently formed a six-member committee headed by additional secretary Suresh Kumar to look into the possibility of merging the Coal Mines Provident Organisation (CMPFO) with the Employees’ Provident Fund Organisation (EPFO). A copy of the notification forming the committee was available with ET.
The other members of the committee are coal ministry joint secretaries RP Gupta and RS Puri and deputy secretary M Pratap, as well as economic advisor Animesh Bharti and CMPFO commissioner BK Panda. The committee, which has met once, has been asked to submit its report by May 20.
According to the actuarial report submitted in 2013, the total accrued liability of the fund was about Rs 41,000 crore while its assets were estimated at Rs 14,800 crore, resulting in a deficit of Rs 26,200 crore. Employees will need to contribute about 19% of their salary – compared with about 5% currently – to make good the deficit.
“Despite inbuilt provision for review of the Coal Miners’ Pension Scheme every three years, there has been no review for the last 20 years mainly due to lack of coordination between Coal India and the coal ministry,” said SQ Zama, secretary general of the Indian National Trade Union Congress, one of the employee unions at Coal India.
He said the fund cannot be made sustainable unless urgent measures are taken to inflate its corpus. The unions had suggested imposition of Rs 20 per tonne of coal while employees had agreed to increase their contribution to the fund from 4.91% of their salary contribution to 7% and wanted the Coal India management to contribute an equal 7% to the fund.
(Source: http://economictimes.indiatimes.com/)