Lok Sabha Question No. 2701 (UNSTARRED), answered on 2016-03-14
Subject: Bhagat Singh Koshiyari Committee
Ministry: LABOUR AND EMPLOYMENT
Asked by: Y. S. AVINASH REDDY, SUKENDER REDDY GUTHA, KOTHA PRABHAKAR REDDY

## GOVERNMENT OF INDIA MINISTRY OF LABOUR AND EMPLOYMENT

LOK SABHA

UNSTARRED QUESTION NO. 2701 TO BE ANSWERED ON 14.03.2016

## BHAGAT SINGH KOSHIYARI COMMITTEE

2701. SHRI Y.S. AVINASH REDDY: SHRI GUTHA SUKENDER REDDY: SHRI PRABHAKAR REDDY KOTHA:

Will the Minister of LABOUR AND EMPLOYMENT be pleased to state:

- (a)whether huge amount of money  is accumulated with the Central Government  has  Employees  Provident  Fund  Organization  on  account  of Employees  Provident  Fund  Contribution  and  those  contributions  are  not getting a sizable pension as per their share of contribution;
- (b)if  so,  whether  other  pensioners  are  getting  more  pension  along  with Dearness Allowance than these pensioners and if so the reasons therefor;
- (c)whether  the  National  Coordination  Committee  of  Employees'  Pension Scheme Schedme 1995 has requested the Government for Implementation of Bhagatsingh Koshiyari Recommendations;
- (d)if so, the details of the recommendations made by Bhagatsingh Koshiyari Committee; and
- (e)the steps being taken by the Government to implement recommendations of the above Committee?

## ANSWER

## MINISTER OF STATE (IC) FOR LABOUR AND EMPLOYMENT (SHRI BANDARU DATTATREYA)

- (a):           No,  Madam.  Employees'  Provident  Funds (EPF)  Scheme, 1952 and Employees' Pension Scheme (EPS), 1995 are two distinct Schemes under the Employees'  Provident  Funds  &  Miscellaneous  Provisions  Act,  1952.  As  per the  Actuarial  Evaluation  of  EPS,  1995  (for  the  year  2013-14),  there  are  no
- surplus in the Pension Fund.
- (b):            Does not arise in view of reply to  part (a) of the Question above.
- (c):           Yes, Madam.
- (d) & (e):  The details of main recommendations and the action taken thereof are at Annex.

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- the

ANNEX  REFERRED  TO  IN  REPLY  TO  PARTS  (d)  AND  (e)  OF  LOK  SABHA UNSTARRED QUESTION NO. 2701 TO BE ANSWERED ON 14.03.2016 BY SHRI Y.S. AVINASH REDDY, SHRI GUTHA SUKENDER REDDY AND SHRI PRABHAKAR  REDDY  KOTHA  REGARDING BHAGAT  SINGH KOSHIYARI COMMITTEE.

## Main Recommendations of Shri Bhagat Singh Koshiyari Committee and Action Taken thereof.

The  recommendations  of  the  147th  Report  of  the  Committee  on Petitions (Rajya Sabha) also known as the Bhagat Singh Koshiyari Committee Report have been considered by the Government. The recommendations of the Committee and the actions taken thereon are briefly enumerated below :

- (i) The Committee had recommended increasing Government's contribution to Employees' Pension Scheme (EPS), 1995 from 1.16 per cent of member's wages to at least 8.33 per cent to support a minimum pension of Rs. 3,000/- per month.

Given  the  constraints  of  financial  feasibility  the  Government  has implemented a minimum pension of Rs. 1,000/- per month under EPS, 1995  with  effect  from  01.09.2014  by  providing  budgetary  support  for the initiative.

- (ii) The recommendation for enhancing the wage ceiling for contributions has been implemented and the wage ceiling has been enhanced from Rs.  6,500/-  per  month  to  Rs.  15,000/-  per  month  with  effect  from 01.09.2014.
- (iii) The  Committee  had  recommended review  of  the  Employees'  DepositLinked Insurance (EDLI) Scheme, 1976 with a view to create incentive for  enhanced  Provident  Fund  (PF)  accumulation.  It  had  also  advised optimizing  use  of  surplus  EDLI  funds  to  provide  relief/indexation  to existing pensioners.

Accordingly, an actuarial valuation of the EDLI funds was conducted by a professional actuary and based on the recommendations of the study a  proposal  for  increase  in  the  benefits  under  EDLI  Scheme  to  a maximum of Rs. 6,00,000/- from  Rs. 3,60,000/- duly linking the benefits to  PF  balance  to  incentive  building  of  PF  accumulation  is  presently under consideration. However, the use of surplus EDLI funds to provide meaningful relief to pensioners was not found feasible.

- (iv) As recommended by the Committee, Employees' Provident Fund Organisation (EPFO) has taken up the task of adopting modern accounting methods  consistent  with  the  standards  prescribed  by  Comptroller  and Audit General (C&AG) in the organisation with the help of expertise from the Institute of Chartered Accounts of India.
- (v) The Committee  had  suggested  appointment  of  Fund  Managers  and investment in equity for better management of the corpus fund.

EPFO  has  already  appointed  fund  managers  since  September,  2008  for better and efficient management of funds and the investments are carried out as per Pattern of Investment prescribed by the Ministry of Finance and notified by Ministry of Labour & Employment and the guidelines laid down by Central Board of Trustees (CBT), Employees' Provident Fund (EPF) from time to time within the parameters of the Investment Pattern.

- (vi) The  Committee  had  suggested  that  the  quantity  and  quality  of  data  in respect of Employees' Pension Scheme (EPS), 1995 members for purposes of valuation of the fund should be improved significantly. The Committee had also recommended that the actuarial valuation of the fund should be conducted  after  every  3  years  instead  of  every  year  presently  and  also that the Government should take responsibility to curb actuarial deficit. It had  also  suggested  replacement  of  the  existing  Employees'  Pension Scheme, 1995  with  a  Provident  Fund-cum-Pension  Annuity  Scheme  with mandatory annuitization.

As suggested by the Committee, special efforts have been made to collect information of members and the  valuation for 2011-12, 2012-13 and 201314 was carried out with data of almost 60 per cent of active contributing members  and  100  per  cent  of  the  pensioners  data  resulting  in  better quality  and  reliability  of  the  valuation  exercise.  Taking  into  account  the recommendations of the actuarial valuation report and the suggestions of the Ministry of Finance while agreeing to the minimum pension proposal, a number of amendments have been carried out in the Employees' Pension Scheme,  1995  to  curtail  the  deficit.  These  measures,  inter-alia,  include calculating pensionable salary on the basis of 60 months' average instead of 12 months' average and determination of eligible service on the basis of contributory service instead of simple length of service. The improvement in  the  quality  of  data  and  the  amendments  have  resulted  in  significant drop  in  the  deficit  of  the  Employees'  Pension  Fund.  As  regards  the suggestion for conducting valuation every 3 years and replacement of the Scheme  with  an  annuity  based  scheme,  it  is  stated  that  these  were considered  by  the  Central  Board  of  Trustees,  EPF  in  its  190 th  and  202 nd meeting where no consensus could emerge on the proposal for an annuity based scheme and it was felt that the annual valuation should continue.

- (vii) The Committee had also recommended  for providing price rise neutralization in the pension amount to offset inflation.

The Employees' Pension Scheme (EPS), 1995 being a funded Scheme with  features  of  defined  benefits  and  defined  contribution,  it  is  not found feasible to provide for increase in pension by neutralizing effect of inflation. However, if the annual valuation reveals surplus in future then appropriate relief  can  be  considered  as  per  the  provision  of  the Scheme.

- (viii)  The Committee had suggested that withdrawal from the Pension Fund should  be  discouraged  and  the  age  of  superannuation  should  be increased from 58 years to 60 years.

In  this  connection,  it  is  stated  that  the  EPFO  has  introduced  the Universal Account Number (UAN) for members and an online transfer claim  portal  providing  ease  to  members  to  transfer  their  accounts instead  of  seeking  withdrawal.  A  proposal  for  deferring  the  age  for vesting pension from 58 years to 60 years  on voluntary  basis is  also under consideration.

- (ix) The  Committee  had  also  suggested  a  separate  grievance  redressal mechanism for pensioners and for grant of interest in case of delay in credit in pension.

In  this  connection,  it  is  stated  that  a  separate  Customer  Service Division (CSD-VI) is in place for pension grievances in EPFO headquarters apart from the fact that an Online Grievances Portal is also in operation. As  regards  the  delay  in credit of pension  is concerned, it is mentioned that EPS pensions are credited electronically  through  core  banking  system  every  month  and  every effort  is  taken  to  ensure  that  the  pension  is  credited  on  the  first working day of each month.

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