The Hindu Business Line : Plan to hike retirement age to cut EPFO pension liability

TO bring down the Employees' Provident Fund Organisation's (EPFO) pension liability in the long run, the Government is considering the proposal of increasing the retirement age from 58 to 60 for those employees who are members of the Employees' Pension Scheme (EPS) introduced in 1995.

The Seventh Valuation Report of the EPS has disclosed a projected deficit of Rs 19,291 crore as on March 2003. In order to bring down the gap, the report has also suggested some measures for reducing liability.

According to officials, the first step could be to go in for structural adjustments. If the retirement age is increased by two years, then the fund managers get a four-year advantage. Firstly, since the person is retiring after serving for another two years, he will take pension for two years less. Additionally, since he is working for two more years, he will contribute also for two more years, officials said.

The Minister for Labour and Employment, Mr K. Chandrasekhar Rao on Monday said in Parliament that apart form changing the retirement age, the other considerations could be controls on withdrawals under the scheme and increasing the rate of contribution.

As of now, the EPS runs with money coming in from the employers' contribution into the provident fund account - 8.33 per cent of the employer's contribution goes towards the employee's pension account and another 1.16 per cent comes from the Government.

Officials said that the current rules of withdrawal needs a change. At present, any person who wants to leave the scheme post retirement is paid a 10 per cent interest on his deposits. Officials indicated that this rate might be reduced to align with the earnings of the schemes.

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