The CAG really useful that the State authorities take into account appointing a fund supervisor to make sure higher returns.
By not joining the National Pension Scheme and designating a fund supervisor in accordance with the Pension Fund Regulatory and Development Authority Act, the State authorities has incurred an avoidable further expenditure of ₹1,296.61 crore since 2020-21, in line with the State Finances Audit Report of the Comptroller and Auditor General (CAG) for the 12 months ending March 2022, which was tabled in the Assembly on Friday.
This avoidable extra burden had been mounting 12 months after 12 months, thus impacting the State’s income expenditure and financial prudence, it stated.
The report identified that the Tamil Nadu authorities launched the Defined Contributory Pension Scheme (DCPS) for its workers on April 1, 2003.
The scheme was relevant to all new entrants joining State authorities service on or after 2003. Under this technique, workers contribute 10% fundamental pay and dearness allowance, which is matched by the State authorities, and each the employer’s and the worker’s contribution are initially transferred to the general public account beneath the top Defined Contributory Pension Scheme (DCPS).
DCPS accounts of particular person authorities workers are maintained by the Government Data Centre (GDC). Every 12 months, GDC calculates the curiosity due on the notified charges and credit the curiosity into the DCPS accounts of the staff, the report stated.
For the 12 months ending March 2022, the CAG stated the expenditure on pension and different retirement advantages, in respect of State authorities workers recruited on or earlier than March 31, 2003, was ₹26,249.95 crore, which was 10.33% of the whole income expenditure of ₹2,54,030.42 crore.
On creation of the National Pension System (NPS) structure, the Pension Fund Regulatory and Development Authority (PFRDA), in 2008 and 2009, requested the State authorities to hitch NPS.
In 2010, the State authorities declined to hitch the NPS structure, and initially cited the non-enactment of the PFRDA Act by Parliament to justify its resolution to proceed with the prevailing system of retaining pension fund cash in the general public account of the State.
Even after 19 years had lapsed because the inception of DCPS, the State authorities did not be a part of NPS and designate the fund supervisor, the CAG famous.
The State authorities invested a portion of the quantity from the DCPS Fund in the “New Group Superannuation Scheme with Cash Accumulation Plan” with the Life Insurance Corporation of India, and likewise in Treasury Bills.
The common fee of return on funding with the designated fund managers was between 9.50% and 9.91% for each State and Central authorities workers. However, the State authorities earned curiosity on the fee of 5.47% from LIC and 4.29% from Treasury Bills in 2021-22, the CAG stated.
In order to pay 7.10% curiosity to subscribers, on a par with General Provident Fund subscribers, the extra common curiosity burden of 2.22% was being borne by the State authorities from its personal assets, which was an avoidable extra expenditure, the CAG stated. It really useful that the State authorities take into account appointing a fund supervisor to make sure higher returns.
The Additional Chief Secretary has pointed said that an Expert Committee constituted by the state authorities to look at the the feasibility of implementing the demand of persevering with the outdated pension scheme and to make advice on the doable choice to Government for applicable selections has submitted its report on November 27, 2018, which was beneath examination, CAG stated.
He has additionally identified that the state authorities has not but taken a coverage resolution on investing the funds via fund supervisor beneath PFRDA.
