Tamil Nadu

Tamil Nadu incurred ₹797.12 crore expenditure by not joining National Pension Scheme

The TN government had incurred an avoidable additional expenditure of ₹797.12 crore, the CAG said in its State Finance Audit Report

The Tamil Nadu government has incurred an avoidable additional expenditure of ₹797.12 crore by not joining the National Pension Scheme architecture, according to the State Finance Audit Report of the Comptroller and Auditor General (CAG) for the year ended March 2018.

The State government introduced the Defined Contributory Pension Scheme (CPS) for its employees from 1 April, 2003. Under the scheme, employees contributed 10% of their Basic Pay plus Dearness Allowance, and the State government made a matching contribution, the report said.

The employee contribution recovered from their salary and the government contribution debited from the Consolidated Fund were kept as a deposit in Public Accounts, it noted.

The Fund balance was invested in 91 days’ Treasury Bills (T Bills) and continued to be reinvested on maturity, the CAG said.

The Contributory Pension Scheme accounts of individual government employees were maintained by the Government Data Centre (GDC). “Every year, GDC calculates the interest due at the notified rates and credits the interest to the CPS account of individual government employees,” the CAG said.

Repeated requests

On creation of the National Pension System (NPS) architecture, the Pension Fund Regulatory and Development Authority (PFRDA) repeatedly requested the State government to join the scheme in 2008 and 2009, the CAG said.

However, it said the Tamil Nadu government declined to join the architecture, initially citing the non-enactment of the PFRDA Act by Parliament to justify its decision to continue with the existing system of retaining the Pension Fund money in the Public Accounts of the State.

Even after the PFRDA Act, 2013 came into force, the CAG noted that the State government did not take any decision in this regard.

During the three-year period from 2015 to 2018, the employers’ matching contribution towards CPS fell short of the employees’ contribution by ₹204.89 crore, the report said.

As of March 2018, out of the ₹23,392.42 crore accumulated in the Deposit head under the Public Accounts, only ₹22,506.24 crore stood invested in 91-day T Bills, it added.

“During 2015-18, the State government allowed interest at rates ranging from 7.60% to 8.70% on the balance held by individual CPS account holders. Whereas, it earned interest only at 6.03% to 7.85% by investing the balance in 91 days’ T Bills,” the CAG report said.

Thus, it noted that short investment of the fund, together with lesser realisation of interest on T Bill investments, had resulted in the earning of only ₹2,984.36 crore as interest during 2015-18, as against ₹3,781.48 crore allowed as interest to CPS account holders.

As a result, the State government had incurred an avoidable additional expenditure of ₹797.12 crore (₹3,781.48 crore - ₹2,984.36 crore), the CAG said.

Based on growing demand from the government employees’ associations, in February 2016, the State constituted an expert committee to study the feasibility of reverting to the old system of pension. The committee had not submitted its report (October 2018). As such, Tamil Nadu had not notified the extension of NPS to employees of the State government under the PFRDA Act, 2013, it said.

A key demand

Shifting to the old pension scheme was among the key demands of government employees and teachers affiliated to the Joint Action Council of Tamil Nadu Teachers’ Organisations and Government Employees’ Organisations (Jactto-Geo) during a recent strike.

Earlier this year, Personnel and Administrative Reforms Minister D. Jayakumar said the State government had concluded that reverting to the old pension scheme was not possible.

According to PFRDA, Tamil Nadu has notified the National Pension Scheme, but has implemented it only for all-India service employees.

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Printable version | Apr 25, 2022 6:57:38 am | https://www.thehindu.com/news/national/tamil-nadu/state-incurred-79712-crore-expenditure-by-not-joining-nps/article28816529.ece