The Centre on Thursday urged states to adhere to timely payment of pension contribution under the National Pension System (NPS) to ensure they do not lose out on interest on their pension corpus.
“Pensions and pension payout have become very big challenge. They have been growing steadily and the liability for the pension payments is going to cast a very heavy burden on the exchequer and especially on the current revenues of the governments,” special secretary, expenditure of the Ministry of Finance, Ajay Narayan Jha, said at a conference of NPS for state governments.
A third of the total staff enrolled in both the Central and state governments are registered in NPS and the pension liabilities of all the state governments was around 3 per cent of total revenue expenditure excluding salary and interest payment in 2004-05 which increased to 12.30 per cent in 2012-13, Jha said. Speaking at the same conference, Pension Fund Regulatory and Development Authority chairman Hemant Contractor expressed concern over two states — West Bengal and Tripura — not joining the NPS so far.
“Two states have not joined, one state which has joined, which has actually notified but not yet joined…we have been following up with the states very regularly,” Contractor said.
Also, even though Tamil Nadu had notified the pension scheme for state employees in 2003, it has so far not joined NPS, he added.
On plans to raise equity exposure of pension corpus of government employees to up to 50 per cent, Contractor said, “We have requested for allowing same pattern of investment for the government sector. We have not yet heard from the government on this.”
At present, government employees can invest up to 15 per cent of the corpus in equity-related instruments, up to 50 per cent in government securities and up to 45 per cent in corporate bonds.
The pension sector regulator is also in discussion over the proposal to allow private sector pension fund managers to manage the corpus of government sector employees.
“We have placed before the government to allow private sector fund to manage government corpus so that matter is also receiving the government’s attention. We have had some discussions with them. They have to take a call” he said.
Contractor also stressed on the need to increase the coverage of state autonomous bodies and inclusion of unorganised workers like Anganwadi workers, Asha workers and self-help groups within the ambit of NPS.
Currently, the total assets under NPS is over Rs 1.05 lakh crore, he said, adding the subscriber coverage of the state governments has crossed 28 lakh.