The labour ministry will have its way, it seems, as far as Employee's Pension Scheme (EPS) is concerned. A recent viability report, based on the World Bank's 'PROST' model, has concluded that the scheme can be fully funded until 2075, reports the Economic Times. This goes against the finance ministry's earlier claims that the scheme could not be expanded any further as the scheme had mounted huge deficits.
The estimates were the deficit had gone up to Rs 54,000 crore for the scheme worth Rs 142,000 crore and therefore could not be rolled out for a wider reach to stop further losses.
The report put together by KA Pandit Consultants & Actuaries, has been accessed by ET. It says pension scheme will have positive cash flows even if the wage ceiling for EPF coverage is raised to Rs 7,000 per month in 2012 and henceforth raised by Rs 500 every five years.
The finance ministry itself had asked for an evaluation based on this Prost model before it could take the fund to cover more people. Right now almost 8.33 percent of a person's salary goes into this scheme from the provident fund allocation that is mandatory. The government also contributes another 1.16 percent of the salary for this. However, the benefits for provident fund is ceiled at Rs 6,500 per month and is deemed not adequate for many.
With the report out now the ministries could get into detailed discussion on how to bring more people more effectively under its ambit.
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Updated Date: Dec 20, 2014 10:11:31 IST