New Pension System worse than EPS
Union Finance Secretary wrote to the Union Labour Secretary suggesting to encourage subscribers of Employees Pension Scheme (EPS) to shift to the New Pension Scheme (NPS) claiming NPS as a better substitute to EPS, NPS being ‘self-sustaining’ with ‘decent returns’ and ‘adequate pension wealth’ and “The government would be free from any open ended and financially unsustainable liability of EPS.
The Employees’ Provident Fund Organisation (EPFO) disagreed with the Finance Ministry’s proposal stating that return under EPS for May 2009 – May 2013 period would be 10.47% which is higher than the return under NPS; and EPS providing social security for lower income group in old age; pension to widows, children and dependents in case of death of the subscriber; many interim benefits; with provision of withdrawing self contribution in EPF. There is 15 years lock-in period in NPS. EPS subscribers get bonus of two years on completion of 20 years of service and there is provision of commutation or part withdrawal which are not available in NPS. EPS’ corpus stood at Rs 1.83 lakh crore wih 5 crore subscribers as against NPS corpus of Rs 29,852 crore with little over 47.70 lakh subscribers as on March 31, 2013. EPFO manages PF corpus of Rs 3.7 lakh crores plus Rs 1.83 lakh crore pension fund. (From: the Hindu, 6 August 2013/ Working Class)