Calcutta, Aug. 16: Mamata Banerjee rode to power on a wave of change but certain things remain where they were under Left dispensation.
Bengal is now the only state in the country, other than Left-ruled Tripura, to continue to shun the pension scheme launched by the Centre to transfer the government’s growing liabilities on this count onto a fund administered independently.
The Pension Fund Regulatory and Development Authority, which watches over the National Pension System (NPS), has said that these two were the only exceptions after Kerala, another holdout state that — like Bengal — was ruled by the Left till recently, agreed to join the scheme.
Yogesh Agarwal, the chairman of the regulatory authority, today said: “I have spoken to finance minister Amit Mitra after Trinamul came to power. He said the chief minister would take the decisionů. It depends on the chief minister what kind of pension system she wants.”
The NPS was introduced in 2004, primarily for central employees for whom it became mandatory but was also opened to state staff on the same terms.
It was started under an executive order with the relevant bill still pending passage in Parliament. But from Agarwal’s statement, its widespread acceptance is apparent as states ruled by the BJP as well as other non-Congress parties have signed up.
At the time of the launch, Bengal, Kerala and Tripura — all with the Left in power — had opposed it on the ground that the NPS did not offer defined retirement benefits, as was the case with the traditional pension scheme. The Left also objected to pension funds being put in shares. Kerala broke rank after the Congress snatched power there.
While it is possible that Mamata shares the Left’s opinion, as she does with her opponents on many other economic issues, another difficulty in opting for the scheme is the huge accumulated liability.
“If the government accepts the NPS, it will have to cough up the contributions of government employees who had joined after April 1, 2004. Given the position of the state exchequer, it is not possible to take that liability now,” said an officer.
Under the NPS, which is similar to the employees’ provident fund (EPF) scheme in some ways, an individual contributes 10 per cent of their income with the government offering an equal portion.
Under the traditional scheme, which Bengal operates, the pension benefit on retirement is worked out at 50 per cent of basic pay on superannuation plus dearness allowance. Besides, there is the privilege of 30 per cent of the pension being paid to the family on the pensioner’s death.
While this ties the government down to a commitment to pay a fixed amount for years, the NPS offers an opportunity to get out of this. Its responsibility ends with providing the matching 10 per cent contribution.
Bengal’s annual pension liability is now over Rs 4,000 crore a year and increasing all the time.
The Manmohan Singh government’s claim that the NPS would ease the financial strain on the exchequer was contested at the time by the then finance minister, Asim Dasgupta. He had worked out that there would not be any savings for the government.
Pension fund managers argue that as the government’s contribution of 10 per cent is part of the employee’s salary, it is not an additional burden.
Agarwal said the returns generated by NPS fund managers in 2012-13 were 12-15 per cent, much higher than that offered under the EPF.
The uncertainty, however, is that the pensioner will be vulnerable to the vagaries of fluctuating returns. In the wake of the 2008 financial crisis, many pensioners in the West saw their lifeline being washed away.