Top 100 firms' employee benefit liabilities rise to Rs 3.6 lakh cr

This can be attributed to PSU banks' liabilities, which are fully reflecting impact of wage revisions and second pension option

The amount of money to be spent by top the 100 listed Indian companies towards employee benefits, including pension, climbed to a whopping Rs 3.6 lakh crore, says a report. The findings are part of professional services firm Towers Watson’s ‘Employee Benefits Accounting and Risk’ study of the financial statements of BSE 100 companies.      

“... The combined estimated liabilities for employee benefits covering 99 of the BSE 100 companies registered an increase of 24 per cent to approximately Rs 3,600 billion (during 2011-12 period) as compared to approximately Rs 2,900 billion in previous year (2010-11 period). “This can largely be attributed to the public sector banks’ liabilities, which are fully reflecting the impact of wage revisions and the second pension option,” the report said.      

The estimate of Rs  3.6 lakh crore is based on analysis of financial statements of BSE 100 companies for the financial year ended March 2012.     

Meanwhile, the study revealed unfunded employee benefit liabilities of companies declined to 14 per cent in 2011-12 fiscal. In the comparable financial year, it was around 20 per cent. The study said  pension continued to be the biggest contributor to total defined benefit liabilities at 52 per cent in the year ended March 2012, followed by gratuity at 23 per cent.     

The report said if public sector banks were excluded ‘other’ defined plans and gratuity were the biggest contributors at 42 per cent and 33 per cent, respectively.

"Increase in 'other' defined benefits liabilities over the past year can be attributed to greater disclosures by companies and particularly Provident Funds trusts," it added.      

The report also noted that public sector banks continue to face higher business costs and liabilities risks as compared to other sectors largely due to the defined benefit pension liability.     

Towers Watson India Director (Client Account Management) Kulin Patel said that Indian companies are increasingly becoming cautious and conscious about financial facets of employee benefits against the backdrop of uncertain and dynamic macro-economic environment.      

Unfunded Defined Benefits liabilities have seen a decline in recent years, Patel added.