The Left has not agreed to the Government suggestion that pension funds for group C and D employees, which comprise 92 per cent of government employees, would be parked with public sector financial institutes like SBI, LIC and UTI for three years.
After three years, the employees would have a choice to invest the money in the stock market. Grade A and B employees would have that option as soon as the scheme is implemented.
The Left feels if this suggestion is implemented, it will not give the employee assured returns after retirement, as the returns would be linked to market behaviour.
The Left also feels that while initially three public sector undertakings will manage the funds, at a later stage private fund managers would come into the picture, further diluting the issue of assured returns.
"The UPA did not specify the amount but hinted that when the volume of the pension fund increases, private players might come in to manage the fund," says CPI (M)'s leader in the Lok Sabha, Basudeb Acharia.
The Government too is not keen on accepting the Left proposal that there should be a guarantee that employees after retirement will get 50 per cent of the average salary that he or she got for the last three years.
And in case, this is not fulfilled, the government should step in to pay the employee. The Government has told the Left the new scheme is contributory in nature and did not agree to stand as guarantor.
CPI (M) politburo member Sitaram Yechury, Acharia, and CPI’s Gurudas Das Gupta met External Affairs Minister Pranab Mukherjee and Finance Minister P Chidambaram on Friday to thrash out an agreement. An agreement could not be reached and the two political groups have decided to meet again next week.
But before the four Left parties meet the Government, they will have an internal meeting to decide the next course of action. Yechury, answering a question on who, the government or the Left, was changing stance on the issue, "We (Left) have publicly stated our position on these issues. It is obvious who is."
The UPA, however, is firm to push through the bill at the earliest. In a note that it had submitted earlier to the Left it had said that the government’s pension liabilities have grown faster than the normal GDP growth rate.
"In the last 17 years, while nominal GDP grew by a compound rate of 14.5 per cent, the Central Government’s outgo on pension increased at the compound rate of 17.8 per cent," the note said. It added that state pension payments increased from Rs 1598 crore in 1987-88) to Rs 38370 crore by 2004-05