(a) whether the working group on pension liability has recommended that the existing
Government employees should also be gradually shifted towards a limited pension
system from existing wage linked pension plan;
(b) if so, the reaction of the Government thereto alongwith the reasons therefor;
(c) the details of the other recommendations relating to the pensions to Government
employees; and
(d) the reaction of the Government on these recommendations?
MINISTER OF STATE OF THE MINISTRY OF SOCIAL JUSTICE AND EMPOWERMENT (SMT. MANEKA GANDHI)
(a) The Working Group on Pension Liability set up by the Department of Expenditure in its
Report submitted in June 2001 has recommended a transition from the existing pension
system to a funded system of pension payment for new employees as well as provision of
appropriate incentives for existing employees to move to a (partial) Defined Contribution
System.
(b), (c) & (d) The Working Group on Pension Liability has suggested introduction of a Defined
Contribution System which may be partial or totally funded. It has also mentioned that
there should not be corresponding increases in employees` salary levels to compensate
them for this contribution. Besides this, the Working Group has suggested that since
pensions in the Government are a deferred wage component, the gravity of the burden of
compensation to labour can be better judged by considering the wage and pension
burdens together as a whole. They have also recommended strengthening of the data base
relating to existing employees and pensions in terms of age profile and distribution so as
to facilitate better fiscal planning.
The idea of introducing a pension scheme based on defined contributions had been
reflected in the Budged Speech of the Finance Minister. The Hon`ble Finance Minister in
the Union Budget 2001-02 has announced that in view of the Central Government
Pension Liability having reached unsustainable proportions, it is envisaged that those
who enter Central Government Services after 1st oct. 2001 would receive pension through
a new pension programme based on defined contributions. He had also proposed to
constitute a High Level Expert Group to review the existing pension system and provide
a roadmap for the next steps to be taken by the Government. Accordingly the
Government has set up a High Level Expert Group which is looking into the existing
pension scheme and also the scheme to be introduced based on Defined Contributions
including related issues like manner of funding, rate of contribution etc.