Financial Daily from THE HINDU group of publications
Tuesday, Jun 18, 2002
Industry & Economy - Small Savings
No changes in EPFO structure proposed -- Pension panel meet on June 24
Sarbajeet K. Sen
NEW DELHI, June 17
EAGER to get pension reforms moving, the Ministry of Finance has decided not to propose any changes in the structure and powers of the Employees' Provident Fund Organisation (EPFO) and the existing pension-related schemes during the initial years of transition to a new system.
The decision to leave the EPFO structure untouched comes at a time when the Ministry is gearing up for the second meeting of the Group of Ministers (GoM) on pension reforms. The meeting of the GoM headed by the Deputy Chairman, Planning Commission, Mr K.C. Pant, is scheduled to be held on June 24.
The attempts of the Ministry of Finance, which is piloting the papers for consideration of the GoM, is to keep the more contentious issues aside for the time being. It is understood that there were severe disagreements within the GoM on several issues during the first meeting held on April 16.
"We do not want to tinker with the EPFO and the schemes administered by it at this stage. We would like the GoM to decide on the other basic issues that would help in kicking off the reforms at the earliest,'' officials of the Ministry of Finance told Business Line.
The move to keep EPFO reforms in abeyance would run contrary to the suggestions in the pension reforms reports of both the Insurance Regulatory and Development Authority (IRDA) and the S.A. Dave Committee's report on Old Age Social and Income Security (OASIS).
Both the committees had suggested major changes in the EPFO structure. While the OASIS report had made several suggestions to improve the efficiency and returns provided by the organisation to the participants in the various scheme such as the Employees' Provident Fund (EPF) and the Employees' Pension Scheme (EPS), IRDA had suggested that the regulatory functions of the EPFO be transferred to the designated new pension regulator. In fact, the first task of the GoM would be to decide on the body to be designated as the new pension regulator. It is understood that severe disagreements had cropped up at the earlier meeting of the GoM over the issue. While the Finance Ministry had backed the claim of IRDA as the regulator, there had been opposition from both the Ministries of Labour and the Social Justice and Empowerment.
The Ministry of Social Justice and Empowerment had suggested that a new pension regulator be created, since IRDA should not be burdened with the added responsibility in view of its already demanding task of regulating the insurance sector.
The Labour Ministry had, however, proposed itself as a candidate. It had said that the being the nodal ministry on pension for labour and the unorganised sector the task of regulation should be handed over to it.
The GoM is also expected to give the designated regulator directions on the time-frame within which the framework for the reforms has to be put in place.
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