The
Employees’ Provident Fund Organisation (EPFO) says it disagrees with
finance ministry’s proposal to encourage its subscribers to shift to New
Pension System saying it does not provide better returns than its
Employees Pension Scheme-1995.
The retirement fund body has said this in response to a letter written by Financial Services Secretary to Labour Secretary.
“If we take return of EPS as indicative return on the fund managed
under EPS then the annualised return for the period May 2009 to May 2013
will be 10.47 per cent, which on the face of it, is higher than the
return declared by NPS in its scheme for central government”, EPFO said.
Finance Ministry has written to the Labour Ministry saying: “The
subscribers (of EPS) may be given an option to either remain with EPS or
join NPS with the same contribution.”
The ministry argued that NPS, which is a self sustaining pension
system, could be a good substitute for EPS and would be beneficial for
subscribers as they would get decent returns and adequate pension
wealth.
Moreover, the Finance Ministry said, “The government would be free
from any open ended and financially unsustainable liability of EPS.”
Disagreeing with the contention of the Finance Ministry, EPFO said
that EPS scheme provides social security for lower income group people
in their old age. In addition, it also provides pension to widow,
children and dependents in case of death of the subscriber.
Under the EPS scheme, many interim benefits are provided.
Subscribers can withdraw their contribution towards pension while
withdrawing his or her EPF money. There is a lock in period of 15 years
in NPS.
Moreover EPS subscribers get bonus of two years on completion of 20
years of service and there is provision of commutation or part
withdrawal also. That is not available in NPS.
EPS’s corpus size stood at Rs 1.83 lakh crore as on March 31, 2013.
Under the NPS, total corpus was at Rs 29,852 crore as on March 31, 2013
with a subscribers’ base of 47,70,507 members.
EPFO has a subscriber base of over 5 crore and manages PF corpus of
Rs 3.7 lakh crore excluding the pension fund of Rs 1.83 lakh crore.
Keywords: EPFO, new pension system, employees pension scheme, retirement fund body, finance ministry, EPS scheme
Source : The hindu
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