The Employees' Provident Fund Organisation (EPFO) has said it disagrees with finance ministry's proposal to encourage its subscribers to shift to New Pension System (NPS), saying the scheme does
not provide better returns than its Employees Pension Scheme-1995.
The finance ministry had written to the labour ministry saying: "The subscribers (of EPS) may be given an option to either remain with EPS or join NPS with the same contribution."
The ministry argued that NPS, which is self sustaining pension system, could be a good substitute for EPS and would be beneficial for subscribers as they would get decent returns and
adequate pension wealth.
Moreover, the Finance Ministry said, "The government would be free from any open ended and financially unsustainable liability of EPS."
Disagreeing with the contention, EPFO said
EPS provides social security for lower income group people in their old age. In addition, it also provides pension to widow, children and dependents in case of death of the subscriber.
The retirement fund body said: "If we take return of EPS as indicative return on the fund managed under EPS, then the annualised return for the period May 2009 to May 2013 will be 10.47 per cent, which on the face of it, is higher than the return declared by NPS in its scheme for central government."
EPS's corpus size stood at Rs 1.83 lakh crore as on March 31, 2013. EPFO has a subscriber base of over 5 crore and manages PF corpus of Rs 3.7 lakh crore, excluding the pension fund of Rs 1.83 lakh crore.
Under NPS, total corpus was at Rs 29,852 crore as on March 31, 2013, with a
subscribers' base of 47,70,507 members.
Under the EPS scheme, many interim benefits are provided.
Subscribers can withdraw their contribution towards pension while withdrawing his or her EPF money. There is a lock in period of 15 years in NPS.
Moreover EPS subscribers get bonus of two years on completion of 20 years of service and there is provision of commutation or part withdrawal also. That is not available in NPS.
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