Govt pays more under new pension scheme

New Delhi, Nov 20 | Updated: Nov 21 2005, 06:37am hrs
The government has accumulated a corpus of Rs 1,000- Rs 1,100 crore under the new pension scheme, for which it is paying a interest of 8%, costing Rs 80-90 crore. Had it borrowed the funds from the market, it would have paid a lower interest of about 6.5% only.

The funds are not lying idle. The government is using it for its own development but it is paying a much higher interest, official sources said, adding, though the sum of Rs 90 crore is not significantly high, it is definitely uncalled for especially when deficits still loom large.

At present there are over two lakh employees both from the central and state governments under the new scheme and 15 states have already adopted the new pension scheme.

Once the new scheme, marking a shift from the defined benefit to the defined contribution system, is put in place, the subscribers would be allowed to put their funds in various investment options and categories.

The government may also incorporate a scheme by which the subscribers would get an assured return on their pension funds. In addition, there would be four schemes safe, balanced, growth and a 100% government securities scheme, which would be a low risk low return one.

The Pension Fund Regulatory and Development Authority Bill, will be tabled in Parliament during the winter session.