Pension Bill hits fresh snag

The passage of the Pension Fund Regulatory and Development Authority Bill in Parliament has developed fresh problems as Left parties now insist on the inclusion of a clause that would guarantee pension to the tune of 50 per cent of the employees' monthly salary, calculated by taking an average of his monthly salary in the last three years.

The government is, however, reluctant to give any guarantee arguing that it should depend on the returns on the investment of the pension funds.

The Left parties, however, want a commitment from the UPA regime that even if the returns are not adequate, the government should "make good the deficit" to ensure that the employees continue to get the same amount of pension, according to CPI(M) Politburo member and MP Sitaram Yechury.

The government is not ready to concede to the Left's demand on the plea that it (assured returns to employees) could have been possible when pension was a statutory benefit, but it was converted into a contributory scheme by the previous NDA regime.

The latest snag has come as a fresh dampener for pension reforms whose prospects had looked bright after the recent UPA-Left Coordination Committee meeting in which the government had given in to the Left opposition to the privatisation of pension funds.

Instead, the government had proposed to entrust the funds with public fund managers and to invest them in government bonds for three years.

The Left leaders had made no objection to Finance Minister P Chidambaram's proposal at the coordination committee meeting and promised to get back to the government before the winter session of Parliament.

Their silence at the meeting was taken as an indication of West Bengal Chief Minister Buddhadeb Bhattacharjee's success in convincing his party colleagues of the need for pension reforms.

But, trade unions have apparently managed to stall it again. Leaders of the CPI(M)-backed trade union CITU told Business Standard that they would never accept anything less than assured returns on the pension funds of employees. They also smelt a rat in the FM's proposal to entrust the pension funds with public fund managers.

"Once we agree to it, what they (government) will do is to invest the funds in the stock market through these managers, say, like LIC mutual funds. If the FM is a genius, we are also not duds," said senior CITU leader Dipankar Mukherjee.

The CPI(M), which had insisted on a "political decision" (by keeping out trade unions) on both Pension and Banking Regulation (Amendment) Bills at the coordination committee meeting, today re-iterated its opposition to both.

According to Yechury, removal of 10 per cent cap on voting rights, as proposed in Banking Bill, could be allowed for public sector banks like SBI, but there should be a bar on foreign banks which cannot be allowed to take over Indian banks.

As for Chidambaram's alternative proposal to let corporate houses take over private Indian banks, the senior CPI(M) leader said, "It's for the Congress to decide. At a time when the government is talking about Late Indira Gandhi's 'garibi hatao' slogan, would it want to question and reverse her decision to nationalise banks. For our part, we are opposed to monopoly capital."

He also said that there was no dilution in the Left's stance on FDI in insurance sector, either. The Left remains opposed to the proposed increase in the FDI cap from 26 to 49 per cent.