Maharashtra opposes pension for new govt employees

The proposal is currently with the finance department and is expected to be placed before the Cabinet in the coming days. 

The Maharashtra finance department, in its projection of pensions to be accorded over the next 15 years, has recommended that no fresh institutions or cadres be covered under the pension scheme, to overcome a massive debt burden that the state faces.

As per a white paper report by the finance department, the proposal for a reform in the pension scheme at the state level has been pending since 1995.

The last time the proposal was put before the state Cabinet was October 17, 1995, but it did not receive the go-ahead.

The report states that as on February 18, 2015, there are 6,83,812 pensioners who have received pension from the state government through the Regular Pension Scheme or Defined Benefit Pension (DBP) Scheme.

The pensioners include state government employees, other state pensioners, railway employees, All India Service, teachers of Old Education Board (prior to 1962), central government and military and family pensioners.

"The total annual burden on the state exchequer on this account is Rs 8,871 crore (Rs 88.71 billion). Assuming there will be slight increase in number of pensioners based on the dates of retirement of employees who are now serving and would retire in the next 15 years, the financial burden on the state will be Rs 3.33 lakh crore," the report states.

It further states that if there is a decrease in the number of pensioners by 2.2 per cent due to deaths, burden over the state exchequer would amount to Rs 2,20,913 crore (Rs 2.2 trillion).

Principal secretary of the finance department (reforms), Bijay Kumar said, "Employees of aided institutions and Zilla Parishad school teaching and non-teaching staff too have been allowed pension from the Regular Pension Scheme. That has further increased financial burden on the state exchequer."

"However, we have adopted National New Pension Scheme or Defined Contribution Pension (DCP) Scheme from November 1, 2005, and have joined the National Pension Scheme from August 27, 2014.

In the DCP scheme, the state government deducts a certain amount from the employee's salary and contributes an equal amount from its own coffers.

"We deposit the amount collected through the new pension scheme in the Pension Fund Regulatory and Development Authority (PFRDA), which can invest 15 per cent in equity," Kumar said.

He further said that this investment helps the government receive additional money from the equity market and thereby

reduces the burden on the state exchequer. In its report, the finance department also recommended that pension should not be extended to newly-recruited employees or cadres and called for the appointment of actuarial firms to estimate the actual annual pensionary burden and set up a special fund on a permanent basis to meet future liabilities.

"If we remove the pension facility, nobody will want to work with the government. Also, we have no right to set up a special fund out of the budget, otherwise the importance of Legislature will be over," Kumar said.

The proposal is currently lying with the finance department and is expected to be placed before the Cabinet in the coming days.