The Hindu Business Line : 9 States to join Centre's pension plan; Bengal says no

WHILE several State Governments are gradually homing in to take refuge in the pension nest being created by the Central Government, one State - the Left Front-ruled West Bengal - has decided to alter its flight path and stay away from the pack.

With mounting pension burden severely denting their finances, already nine State Governments have indicated their willingness to participate in the Centre's new defined contribution pension structure. Announcing the new pension scheme last year, the Centre had said that participation would be open to all the State Governments that desire to avail themselves of the option.

While Tamil Nadu, Himachal Pradesh and Rajasthan have issued formal notifications to enable the State Government employees to avail themselves of the Centre's pension scheme, the Andhra Pradesh cabinet had already cleared the proposal and a notification is expected shortly. Among those who have informed the Centre about their intent to join are Goa, Kerala, Punjab, Haryana and Madhya Pradesh.

Finance Ministry officials said that though the West Bengal Government had originally shown interest in the Centre's scheme it had formally conveyed its decision to back out. Thus, West Bengal would continue to offer the existing defined benefit to its Government employees.

However, officials did not disclose the reason that prompted the State Government to stay away.

"You have to ask that (the reason for not joining) from the West Bengal Government," a senior official said.

The growing response to the Centre's pension scheme, which had come into operation for the new Government employees from January 1, 2004, is likely to provide a major fillip to ongoing pension reforms. Officials are hopeful that more States would gradually express willingness to join the Centre's scheme.

The new pension structure, which would be available to all, has initially been made applicable to all fresh employees of the Central Government joining after the January 1 cut-off date, except those serving the armed forces.

Under the scheme, while each employee makes a defined contribution of 10 per cent of salary, a matching contribution is to be made by the respective Governments. However, there would be no contribution from the Government for those who are not in its service.

Contributions from both the Government and non-Government employees would be placed with pension fund managers. The PFMs, who are to be licenced by the pension regulator, would be responsible for investing the corpus as per norms laid down.

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