Centre tells states to speed up Pension Bill

New Delhi: The centre has asked the states to speed up the setting of the Pension Fund Regulatory and Development Authority (PFRDA), so that the bill could act as a backbone for all pension-related reforms.

The Bill to set up the PFRDA, which was introduced in the Lok Sabha in March this year and is currently with the standing committee on finance, needs to be passed quickly, state governments were informed at the 51st meeting of the National Development Council (NDC), which met yesterday in the capital to take stock of economic growth and other the implementation of various measures.

According to the finance ministry projections, the average annual increase in expenditure on pension was as high as 30 per cent between 1996 and 2001, making it the fastest-growing expenditure in the central and state budgets. Pension liability has also grown faster than the GDP.

In the last 17 years, while nominal GDP grew by a compounded annual rate of 14.5 per cent, the centre''s outgo on pension increased at a compounded annual rate of 17.8 per cent. Pension payment for state governments zoomed from Rs1,391 crore in 1987 to Rs35,585 crore in 2004-05, the ministry''s projection states.

To bring down the government''s liability in pension payment, the New Pension Scheme that came in to effect from January 1, 2004, is based on individual contributions and already nine states have joined it for their own employees. The centre has called upon other states to follow suit as that alone can make use of the demographic advantage of having a very large population in the working age.