The Hindu Business Line : Help get Pension Bill passed, Centre tells States

THE Centre on Monday appealed to the States to recognise the need to set up the Pension Fund Regulatory and Development Authority (PFRDA) quickly so that it could act as a backbone for all pension-related reforms.

For this the Bill to set up the PFRDA, which was introduced in the Lok Sabha in March this year and is currently with the standing committee on finance, needs to be passed quickly, the State Governments were informed at the 51st meeting of the National Development Council (NDC) here.

According to a presentation to be made by the Finance Minister, Mr P. Chidambaram, at the NDC meeting, the Finance Ministry has briefed the standing committee twice, once in May and a second time in June, and the Bill needs to be passed as early as possible to end the uncertainties in pension reform front.

According to the presentation, the average annual increase in expenditure on pension was as high as 30 per cent between 1996 and 2001, making it the fastest growing expenditure in the Central and State Budgets. Pension liability has also grown faster than normal GDP and in the last 17 years, while nominal GDP grew by a compounded annual rate of 14.5 per cent, the Centre's outgo on pension increased at a compounded annual rate of 17.8 per cent.

For the State Governments, the pension payments in 1987 stood at Rs 1,391 crore which went up to Rs 35,585 crore in 2004-05, the presentation said.

To bring down the Government liability in pension payment, the New Pension Scheme that has come to effect from January 1, 2004, is based on individual contribution and already nine States have joined it for their own employees. The Centre called upon other States to follow suit as that alone can make use ofthe demographic advantage of having a very large population in the working age.

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Help get Pension Bill passed, Centre tells States