Describing the several State Government’s decision to introduce the old defined benefit pension system as a “disturbing development”, former PFRDA Chairman Supratim Bandyopadhyay on Sunday said this does not augur well for the country.
“There may be political compulsions to do this. But this does not augur well for the country. This (rolling out of defined benefit pension) is like accepting a post-dated cheque from a failing bank,” Bandyopadhyay said at the 22nd Global Conference of Actuaries, organised by the Institute of Actuaries of India.
Bandyopadhyay referred to the Reserve Bank of India’s report on State finances to highlight that most of the States finances were not healthy to take up such “unfunded” liabilities that defined benefit pension systems bring about when introduced.
“It is scary” when one notices that for several States the committed expenses (salary, pension, etc) are touching 75 per cent of their revenues, he added.
It may be recalled that already five States of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have informed the central government/Pension Fund Regulatory and Development Authority (PFRDA) about their decision to restart Old Pension Scheme (OPS) for their State government employees.
On the recent Supreme Court judgment on Employees Pension Scheme (EPS) 1995, Bandyopadhyay said this is “very good’ for the employees if the Employees Provident Fund Organisation (EPFO) really implements it in the spirit of the apex court judgment.