New govt pension corpus idles

The contributions made by over 500,000 government employees who had joined the New Pension Scheme (NPS) since January 2004 have remained uninvested, with the Pension Bill awaiting Parliament's nod.

As the funds are not generating any returns, the government has no option but to pay an interest of 8 per cent to employees on their contributions.

What is more, the government is yet to gauge the total damage this has caused to its resources. The Centre has data on just about 81,000 employees in the absence of a central record-keeping agency.

Besides, the corpus for these employees has piled up to Rs 233 crore. The corpus will be many times more if employees of the railways, all the autonomous bodies and state governments were to be included.

Employees who thought they would be able to reap the benefits of a buoyant stock market using investment options available under the NPS have lost out and have to be content with the 8 per cent return. They could have earned a return of 14 to 16 per cent had they invested using the option B or C of the NPS, respectively.

Investment options available under scheme B are: 40 per cent in G-Secs, 35 per cent in corporate bonds, 20 per cent in equity and 5 per cent in international equity. Under scheme C, the options are: 20 per cent in G-Secs, 30 per cent in corporate bonds, 40 per cent in equity and 10 per cent in international equity.

The money is just being used to bridge the government's deficit. Most to suffer will be those in group C and group D as they constitute about 92 per cent of government employees. Group C has an estimated 63 per cent employees and group D, 29 per cent. Officials at the Central Pension Accounting Office (CPAO) told Business Standard that the railways had not submitted the details of many of its employees.

The CPAO, in the interim, maintains records of employees in civil ministries.

Government officials estimated that the actual number of central employees could be up to two lakh. For example, there are about 1,000 Kendriya Vidyalayas under the aegis of the human resources development ministry and the details of how many teachers have joined them in the last two years are not available.

"The number of state government employees coming in the ambit of the NPS could be between 2-3 lakh," an official at the Accountant-General's office told Business Standard.

The number can easily exceed 3 lakh as 16 States have joined the NPS. Further, there is no estimate of the number of autonomous bodies in states which are covered by the NPS.