REPORT NO. 147 PARLIAMENT OF INDIA RAJYA SABHA COMMITTEE ON PETITIONS ONE HUNDRED AND FORTY SEVENTH REPORT Petition Praying for Amendment in the Employees Pension Scheme, 1995 (Presented on 3rd September, 2013) Rajya Sabha Secretariat, New Delhi September, 2013/Bhadra, 1935 (Saka) Website : http://rajyasabha.nic.in E-Mail : [email protected] Hindi version of this publication is also available PARLIAMENT OF INDIA RAJYA SABHA COMMITTEE ON PETITIONS ONE HUNDRED AND FORTY SEVENTH REPORT Petition Praying for Amendment in the Employees Pension Scheme, 1995 (Presented on 3rd September, 2013) Rajya Sabha Secretariat, New Delhi September, 2013/Bhadra, 1935 (Saka) CONTENTS PAGES 1. COMPOSITION OF THE COMMITTEE............................................ (i)-(ii) 2. INTRODUCTION..................................................................... (iii)-(iv) 3. ACRONYMS.......................................................................... (v) 4. REPORT.............................................................................. 1-7 5. APPENDICES......................................................................... (i) Petition submitted by Shri Prakash Javadekar, Member, Rajya Sabha praying for amendment in the Employees Pension Scheme, 1995. ................................................ 18-20 (ii) Comments on petition received from Ministry of Labour and Employment .......................................................... 21-23 (iii) List of Representatives of associations and individuals appeared before the Corther. ......................................... 24 6. MINUTES............................................................................ 25-40 COMPOSITION OF THE COMMITTEE (2011-12) 1. Shri Bhagat Singh Koshyari ------ Chairman 2. Shri Nandi Yellaiah 3. Shri Avinash Pande 4. Shri Rajaram 5. Shri Paul Manoj Pandian 6. Shri P. Rajeeve 7. Shri Ram Vilas Paswan 8. Shri Murli Deora 9. Shri V.P. Singh Badnore 10. Shri Darshan Singh Yadav (i) COMPOSITION OF THE COMMITTEE (Re-constituted w.e.f. 8th May, 2013) 1. Shri Bhagat Singh Koshyari ------ Chairman 2. Shri V.P. Singh Badnore 3. Shri Husain Dalwai 4. Dr. Akhilesh Das Gupta 5. Shri Paul Manoj Pandian 6. Shri P. Rajeeve 7. Shri Palvai Govardhan Reddy ∗8. Shri Avinash Pande 9. Shri Arvind Kumar Singh 10. Shri A.V. Swamy SECRETARIAT 1. Shri Alok Chatterjee, Joint Secretary 2. Shri Rakesh Naithani, Joint Director 3. Shri Rajendra Tiwari, Deputy Director 4. Shri Goutam Kumar, Assistant Director *Nominated w.e.f. 22nd July, 2013 (ii) INTRODUCTION I, the Chairman of the Committee on Petitions, having been authorized by the Committee to submit the Report on its behalf, do hereby present this One Hundred and Forty Seventh Report of the Committee on the petition signed by Shri Prakash Javadekar, MP, Rajya Sabha praying for amendment in the Employees Pension Scheme, 1995. 2. The petition was admitted by Hon’ble Chairman, Rajya Sabha on 7th November, 2012 under the provisions of Chapter-X of the Rules of Procedure and Conduct of Business in Council of States (Rajya Sabha). In accordance with Rule 142 of the said Rules, the petition was presented to the Council on 23rd November, 2012 by Shri Prakash Javadekar, after which it stood referred to the Committee on Petitions for examination and report in terms of Rule 150 ibid. 3. The Committee issued a Press Communiqué inviting suggestions from individuals/organisations on the subject matter of the petition. In response thereto, more than one thousand memoranda were received by the Secretariat. The Secretariat scrutinized those memoranda and a gist of the same has been suitably incorporated in the Report. 4. The Committee heard the petitioner on the petition in its sitting held on 3rd January, 2013. The Committee heard the Secretary, Ministry of Labour & Employment on 5th February, 2013. The Committee also heard the representatives of selected NGOs/individuals, who had submitted their memoranda on the issues raised in the petition in its sitting held on 29th July, 2013. It considered the draft Report in its sitting held on 29th August, 2013 and adopted the same. 5. The Committee while formulating its observations/ recommendations, has relied on the written comments of the concerned Ministry, oral evidence (iii) (vi) of witnesses, observations of the Members of the Committee and interaction with others. 6. For facility of reference and convenience, the observations and recommendations of the Committee have been printed in bold letters in the Report in separate paragraphs. NEW DELHI ; BHAGAT SINGH KOSHYARI August, 29, 2013 Chairman, Bhadra 7, 1935 (Saka) Committee on Petitions ACRONYMS EPS : Employees Pension Scheme PIC : Pension Implementation Committee CBT : Central Board of Trustees EPFO : Employees Provident Fund Organization CoS : Committee of Secretaries EFPS : Employees Family Pension Scheme RPFC : Regional Provident Fund Cell EPF : Employees Provident Fund EDLI : Employees Deposit Linked Insurance ILO : International Labour Organization PROST : Pension Reform Options Software Toolkit CPI : Consumer Price Index (v) REPORT A petition signed by Shri Prakash Javadekar, MP, Rajya Sabha praying for amendment in the Employees Pension Scheme, 1995 was submitted to the Council of States on 14th May, 2012 (Appendix-I). The petition essentially aims towards providing a better pension to the employees who are members of the Employees Pension Scheme, 1995. The petitioner’s contention is that the Employees Pension Scheme, 1995 which was framed under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 seeks to provide social security benefits to the employees. Soon after the launch of Family Pension Scheme 1971, demands were made that the old age security benefit should also be provided to its members upon retirement/superannuation and in case of contingences like disability etc. The Government acceded to these demands by notifying a new Scheme w.e.f. 16.11.1995, called the Employees’ Pension Scheme, 1995 replacing the erstwhile Family Pension Scheme, 1971 and the net assets of the Family Pension Scheme 1971 were transferred to Employees’ Pension Fund. 1.1 Initially, the Employees’ Pension Scheme, 1995 was a family pension scheme but, later, it was converted into a regular pension scheme for employees who drew salary less than Rs.6500 per month. The scheme is mandatory on all establishments having 20+ employees and which do not have separate pension scheme of their own. Presently, around 5.5 cr employees are enrolled under the scheme and their contribution is @8.33%. The employer also contributes @8.33%, however, the Government is contributing only @1.16%. As on date, approximately 36 lakhs retired employees are getting pension under this scheme. Out of them, more than 30 lakhs get less than Rs. 1000 per month and more than 25 lakhs out of the said 30 lakhs pensioners get less than Rs.500 per month. This is too meager an amount particularly when some States are giving pension at higher rates than this to the elderly under their old age pension 2 schemes. The petitioner is of the view that the amount of pension is awfully inadequate and insufficient for survival of a family anywhere in the country. Accordingly, the petitioner has made following prayers:- i) Government should contribute @8.33% in the EPS-95 making equal contribution from the employee, the employer and the Government. ii) Ensure minimum pension of Rs.3000 or more. iii) The necessary budgetary support should be given. iv) Workers should be allowed to choose from various pension plans. v) Restore all the facilities withdrawn through various Government orders like commutation, withdrawal, etc. vi) EPS-95 pension should be indexed with inflation. 2. The Ministry of Labour and Employment, which the nodal Ministry on the subject matter of the petition in their response has submitted that an Expert Committee constituted for reviewing the Employees’ Pension Scheme, 1995 had submitted their report to the Government and its recommendations are under consideration of Pension Implementation Committee (PIC), a sub - Committee of the Central Board of Trustees (CBT), Employees Provident Fund Organisation (EPFO). This matter was discussed in the 198th and 199th meeting of CBT (EPFO) but the discussion remained inconclusive. The Ministry has also submitted the following points for consideration the Committee:---- (i) The matter of ensuring minimum pension of Rs.1000/- by raising existing Government contribution from 1.16% to 1.79% has been taken up with the Ministry of Finance. This would result in increase in Government’s contribution from the existing Rs.990 cr. to Rs.1533 cr. The option to authorize the employer to divert 1.16% extra from employer’s contribution so that the total contribution 3 remains 9.49% in case of voluntary contribution over the wage ceiling. (ii) For budgetary support to the scheme, the matter has been taken up with Ministry of Finance. (iii) Government had resorted to withdrawal of some facilities under the Scheme in order to wipe out the actuarial deficit in the pension fund. From the year 2001 onwards, the valuation had shown a continuous deficit in pension fund due to unusually high incidence of early withdrawal payments, generous benefits, high life expectancy, falling interest rates from 12% per annum in 1996 to less than 8% per annum in 2006 which had an adverse impact on the earnings and consequently on the monthly pension amounts. This has also resulted in high actuarial deficits basically because of the wide spread of benefits. Apart