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To reduce the ‘burden’ on the Centre to contribute to EPFO pension funds and “eventually do away with it”, the Public Accounts Committee (PAC), headed by KV Thomas, has reiterated its call for more efficient management of retirement funds.
The Centre contributes 1.16 per cent of the basic wage to the Employees Pension Scheme (EPS) 1995.
The Employees Provident Fund Organisation (EPFO) “has such huge funds (₹7.42 lakh crore) and can earn handsome returns…, the burden on the Central government to contribute towards pension funds may be reduced in the first instance and eventually done away with,” said the PAC’s 72nd action taken report on its recommendations by the Ministry of Labour and Employment, tabled in Parliament.
At present, 69 per cent of the retirement savings of EPFO are with the government, which are being utilised for development activities. However, the Labour Ministry’s Pension Division’s told the PAC that the actuary had projected an impact of ₹32,365.66 crore if the Centre’s share of 1.16 per cent in EPS 1995 is done away with.
For 2016-17 alone, the impact assessed was more than ₹4,300 crore, the Minstry added.
“This impact will increase every year in future due to increase in number of EPS members and the corresponding increase in contribution due to increase in pensionable salary each year,” the Ministry told the PAC.
However, the PAC was of the firm view that the EPFO should strive for efficient management of funds to ensure maximum returns on investments with a view to reducing the burden on the Centre.
As of now, roughly ₹1.15 lakh crore (15.5 per cent of the total) is invested in scheduled commercial banks, about ₹55,000 crore (7.5 per cent) is invested in the power sector, ₹17,000 crore (2.4 per cent) in sectors, such as housing, agro and railway finance, said the report.
The Committee, therefore, desired that the Labour Ministry deliberate on the issue and come out with options for investing in developmental projects and apprise the PAC on its decisions within two months.
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