New Pension Scheme To Be Delayed Further

The introduction of the pension reforms programme for new government employees is likely to be delayed beyond the revised October 1 deadline.

More than a year after former finance minister Yashwant Sinha had announced the date for all new recruits to a funded pension plan, the government is still to finalise the schedule, because the finance ministry has questioned the practicality of the dependence of the proposed investment pattern on government securities.

The finance ministry is too busy with the revival of the Unit Trust of India to work on the proposal. According to officials, since the switch-over is momentous, they have to study its implications, including its budgetary impact.

 

This has delayed the liberalisation of the pension market. While the government has constituted a new group of ministers to study the Insurance Regulatory and Development Authority report, the group is yet to meet.

In the 2001-02 Budget, the government had announced with effect from October 1, any entrant to government service would have a new pension plan, instead of the current pay-as-you-go system. Under the latter scheme, the entire pension liability devolves on the government as a budgetary liability since the employees contribute nothing for their pension. In fiscal 2002-03, the Centre