By Manish Anand
New Delhi, March 27: Quite reluctantly, Finance Minister Nirmala Sitharaman agreed to constitute a committee to revisit the New Pension Scheme (NPS) headed by the Finance Secretary to buy peace with the agitating employees across the country. Demand for reverting back to the Old Pension Scheme, which guaranteed 50 per cent of the last drawn salary as pension, is emerging as a poll mainstay in the state elections.
The NPS was unveiled in 2004 and there are too few retirees counting their monthly pension under the NPS. There’s nothing guaranteed in the NPS. Market forces will decide the quantum of the corpus that an employee may achieve upon superannuation.
But the fund managers who are tasked to deal with the retirement schemes of the government and the public sector companies have cheaqured history. The Comptroller and Auditor General in a report tabled in Parliament on Monday revealed that the fund managers just slept to cause erosion of the capital for ‘Coal Mines Provident Fund Organisation’.
“Coal Mines Provident Fund Organisation made an investment of Rs 1390.25 crore (during the period May 2015 to February 2018) in Non-Convertible Debentures of Dewan Housing Finance Corporation Limited. The investment included Non-Convertible Debentures amounting to Rs 864 crore having an early redemption clause which provided right to dispose of the investments before maturity at par along with accrued interest in case credit ratings of Non-Convertible Debentures falls to AA- or below. Balance Non-Convertible Debentures amounting to Rs 526.25 crore did not carry such clause of early redemption,” noted the CAG in its report.
But the top auditor found that “despite downgrading/falling of ratings of the Non-Convertible Debentures since March 2019 and recommendations of Portfolio Managers for exercising early redemption option, Coal Mines Provident Fund Organisation failed to utilise the option and remained indecisive, which resulted in avoidable loss of Rs 315.35 crore”.
Those who have bought the Mutual Fund through systematic investment mode whine that their portfolio hardly ever meets the rosy picture shown by the agents selling such funds to them. The equity market is not yet free of manipulation, as alleged by several stakeholders, and wild fluctuations sometimes wipeout the gains made over the long term.
“I am very happy that I am part of the OPS. There are some genuine concerns about the NPS. We cannot trust the market for our post-retirement life,” said a senior official of the Railway Board. The committee constituted by the Finance Ministry may take a look at the proposal of the Andhra Pradesh government, which envisaged a guaranteed 33 per cent of the last drawn salary along with additional incentives.