Kerala to switch over to contributory pension scheme for government staff

The Kerala government has planned to bring in Contributory Pension Scheme for employees joining the state service from 2013. The state government has decided to take the step as the liability of the exchequer by way of pension payment was set to mount hugely in coming years if the Statutory Pensions Scheme was continued. Countering the opposition LDF's charge that such a decision would mean denial of long-enjoyed benefits to employees, Finance Minister K M Mani told the Assembly today that the switch-over was not only essential to arrest fiscal collapse but also to safeguard the security of employees in the future.

Reeling out statistics, Mani said currently the state had a total of 5.50 lakh pensioners against 5.37 lakh serving employees and the gap was set to widen every year. In 2001-02, the state required only Rs 1838 crore to meet the annual pension commitment, which now stood at Rs 8700 crore. This would steeply go up to Rs 41,180 crore in 10 years and to Rs 2 lakh crore in 20 years. Rejecting the opposition charge that the government was running away from its responsibility by bringing in CPS, Mani said, in fact, the government would have to make an additional allocation of about Rs 72 crore a year as its contribution to the pension fund.

The employees would be required to contribute 10 per cent of their pay and dearness allowance to the pension fund. The government would also make a contribution to the fund. Pensions would be available to employees who contribute to the fund for a specified number of years. Payment of full pension by government would be discontinued. Opposition Leader V. S. Achuthanandan, CPI State Secretary Pannian Raveendran and the Joint Council of State Service Organisations have decried the decision to introduce contributory pension scheme.

The Opposition Leader said that the order to undermine statutory pension and impose ban on appointments was a challenge to the people and demanded its withdrawal. He recalled that the Chief Minister Oommen Chandy had promised in the Assembly that the contribution pension scheme would be implemented only after consultations with all concerned. The government was showing disrespect to the Assembly and democratic systems by dismantling the long-standing provision for statutory pensions through a government order. Mr. Pannian Raveeendran said that order betrayed youth seeking employment in government service. The government was undermining statutory pensions following the economic policies of the Central government.

The Pay Commission defines the salary of the government employees by also including the pension amount. If the contributory pension scheme is introduced it would have an adverse effect on it. An employee will only get half of the pension on the contributory pension scheme compared with the normal pension, also pointed out that by implementing the contributory pension scheme, the State Government would be at the mercy of the speculative market . ‘’The equal pension amount from the employee and the government is deposited in banks and uncertainty hare market. Depending on the market trend, the interest will fluctuate and there is . If the banks or share market witness a collapse than the pension scheme will be doomed affecting thousands of government employees,’