FM seeks Left support on Pension Bill

Finance Minister P Chidambaram on Tuesday asked Left parties to reconsider their opposition to the pension bill so that government can provide a "legal basis" to the new pension system started last year.

"I requested the Left parties to reconsider their opposition to the PFRDA bill," he told reporters as the bill was slated to be taken up for debate in Lok Sabha.

"I have pointed out that the new pension system has already come into force from January 2004. It is now without a legal basis. It is therefore important to provide a legal basis," he said.

The new pension system was started by earlier National Democratic Alliance government for new recruits in central government from January 2004. After that nine states -- Andhra Pradesh, Tamil Nadu, Rajasthan, Chhattisgarh, Jharkhand, Orissa, Andhra Pradesh, Manipur, Himachal Pradesh and Gujarat have also decided to implement it.

Chidambaram said he has already spoken to the Left leaders on the Pension Fund Regulatory and Development Authority Bill, which will enable government to set up a regulator and allow private players to manage long-term savings.

At present, the pension contribution of the new government employees are being accumulated in the consolidated accounts of the government.

Once, the PFRDA bill is passed and the pension regulator gives licence to pension fund managers, the pension contribution would be managed by them.

"I am sure they will consider my request. Let us see what happens in the floor of the House," Chidambaram said.

Left leaders have opposed the opening up of the pension system to private players and the switch over to a new defined contribution pension regime from the earlier defined benefit pension system.

However, the Centre and some states have decided to opt for the new pension system considering the burgeoning pension bill.

Pension burden rose seven-fold to Rs 15,367 crore (RS 153.67 billion) since 1990-91, even though the country's 89 per cent of workforce was out of any financial security scheme.

The burden of pension bill rose more steeply for states, already reeling under financial crisis, compared to the Centre. The average increase in pension outgo increased by 27 per cent for states since 1990 as against 21 per cent for the Union Government.