CPS not beneficial to govt employees

The State Government deposits the amounts contributed by the employees as fixed deposits (shares) in three companies. Due to fluctuations in stock market in recent months and fall in rupee value, the share values of these companies have fallen and as a result the amount contributed by the employees to PRAN is also reduced

M Manthaiah

Adilabad: The Contributory Pension Scheme (CPS) introduced by the State Government making applicable to the employees who had joined the government service after September 1, 2004, is not beneficial to the employees, they allege. The government employees prefer the old system of GPF and payment of monthly pension after attaining superannuation. In the old system, the employees were eligible to draw 50 per cent in their accumulated General Provident Fund (GPF) amount to meet the medical expenses or other urgent needs.

But in the new system, the employees who have joined after September 2004 are not eligible for any pension. Under CPS system, the employees have to contribute 10 per cent amount in their basic pay per month in the Permanent Retirement Account Number (PRAN). The State Government would contribute another 10 per cent (matching amount) to the PRAN. The employees would get the total accumulated amount after their retirement. They are not eligible to withdraw the amount in the middle of their service. Only at the time of retirement, or voluntary retirement or in case of death, they can withdraw 60 per cent of the accumulated amount.

The State Government deposits these amounts contributed by the employees as fixed deposits (shares) in the SBI Pension Fund Private Limited, UTI Solution Limited and LIC Pension Fund Private Limited. Though there was an option, most of the employees did not know about the option and their contributions go into the accounts of these three companies as their (individual) share amount.

Due to fluctuations in stock market in recent months and fall in rupee value, the share values of these companies have fallen and as a result the total amount contributed by the employees to PRAN is also reduced.

For an instance, an employee in the town started contributing to the Pran (permanent retirement account number) from April 2008 and by August 20, 2013, the actual money deposited by the employee amounted to Rs 1,43,769.90. However, the share values of the above three companies have fallen during the period and as consequence, the amount was reduced by Rs 616.10. Instead of getting additional interest on the accumulated amount, the employee gets reduced money in his contribution.

The government employees urge the government to revoke the old system or provide security (guarantee) to the amounts deposited by them.