Finance Minister P Chidambaram on Tuesday asked chief ministers to carry forward pension reform as the liabilities of both the Centre and states was expected to cross a staggering Rs 100,000 crore (Rs 1000 billion) by 2009-10.
"The PFRDA (the Pension Fund Regulatory and Development Authority) Bill has already been referred to a Parliamentary Standing Committee and nine states, apart from the Centre, have implemented the new defined contribution pension scheme," he told reporters.
The nine states are Himachal Pradesh, Tamil Nadu, Rajasthan, Andhra Pradesh, Chhattisgarh, Jharkhand, Manipur, Gujarat and Madhya Pradesh.
Assam, Orissa, Kerala and Punjab are also considering introduction of the new pension system, which would replace the unsustainable Pay-As-You-Go system with a funded scheme for the new government employees at both the Centre and states.
In his presentation, Chidambaram said the existing pension system had limited coverage of only 12 per cent of the labour force, while a large section (88 per cent) remained uncovered due to lack of individual choice, portability and multiple pension fund managers and coverage.
Presently, the finance minister said, the Employees Provident Fund covered only 370 lakh people accounting for 9.0 per cent of the labour force, with government pension with 120 lakh covering 2.8 per cent of the workforce and Special Provident Fund covering 21 lakh or 0.5 per cent of labour force.
In order to roll out new pension schemes, a PFRDA Bill was prepared but it was sent to a Standing Committee.
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