The extent of mismanagement of the new pension scheme (NPS) has come to light with the pension regulator or the PFRDA pointing out the gap to the ministry of finance. Under NPS, individuals joining the government on or after January 1, 2004, do not get a defined pension, but contribute 10% of their basic pay towards pension. The government makes a matching contribution and the corpus is to be invested by PFRDA-appointed pension fund managers as per specified guidelines.

When contacted, D Swarup, Chairman, PFRDA, told The Indian Express, “Our calculations show that the pension corpus of 3.5 lakh employees who have joined government services after January 1, 2004 should be about Rs 4,500 crore. The Controller General of Accounts, designated to keep the record of all individual subscribers to the NPS has not maintained the data well.”

However, based on the recommendations of the CGA, which falls under the purview of the expenditure department in the ministry of finance, only Rs 1,177 crore was transferred to the pension kitty on April 1 this year.

PFRDA has selected pension funds promoted by SBI, LIC and UTI Mutual Fund to manage this corpus.

According to Swarup, his estimates were not out of thin air. The average annual pay and allowances of government employees, according to the Sixth Pay Commission, stood at Rs 1.5 lakh. “If you take 20 per cent of this (10 per cent employee contribution towards his pension and a matching 10 per cent contribution by the government), it works out to Rs 30,000 a year. For 4 years and 3 months, and 3.5 lakh employees, this sum comes to around Rs 4,462 crore.” Pension deductions by autonomous organisations such as ICAR, CSIR would add another Rs 1,000 crore, he said.

The Controller General of Accounts (CGA), the accounts advisor to the government, was designated as the interim central record-keeping agency till the PFRDA appointed National Securities Depository Ltd (NSDL) last year to maintain the pension records of each individual subscriber of the NPS.

Chief Controller (Pensions) U S Pant in the CGA office, however, said, “The Rs 1,177 crore transferred on April 1 this year is based on the revised calculations the CAG received from various government departments and ministries. There may be a difference of up to Rs 100 crore, but it cannot be radically different that what the CAG recommended.”

Pant claimed that the “stand-alone” fashion in which the PFRDA functioned without involving all relevant stakeholders might create huge problems in the coming days. When a section of employees get a much higher return, say 14% (compared with the 8% interest the government paid on their pension corpus till March 31, 2008) due to better investment management by pension fund managers, it could lead to serious problems.