Panel to study pension plan: Finance minister Dr T M Thomas Isaac

Thiruvananthapuram: The state government will appoint a ‘committee’ to study the social, economic and legal implications of the contributory pension scheme (CPS). The committee will study the consequences of two aspects of the scheme: the transfer of state’s money to private fund managers and the simultaneous existence of two pension schemes in the state, the contributory and the statutory schemes.

This was announced by finance minister Dr T M Thomas Isaac in response to a Calling Attention motion moved by CPI MLA Mullakkara Ratnakaran in the Assembly on Monday. Mr Ratnakaran had called for the constitution of a ‘commission’, a body that carries more legal heft than a ‘committee’, for the purpose. However, Dr Isaac accepted Mr Ratnakaran’s demand that a time-frame be fixed for the committee to submit its report. The composition of the ‘committee’ and its schedule will be announced later.

Under the CPS, a government employee has to contribute a fixed percentage of the basic pay and the dearness allowance combined, and an equal share will be contributed by the government.  This will be entrusted with a pension fund manager who will invest the amount in mutual funds and the share market. Mr Ratnakaran, while moving the Calling Attention, said that a portion of the employee salary that would have normally ploughed back into the state’s economy would not be taken out by pension fund managers and invested in the speculative market. “The earlier decision to route the money that goes into pension funds through the Treasury has not been implemented till now,” he said.