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Wednesday, September 08, 2010

Retailing of New Pension Scheme through Post Offices begins...

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Disbursement Of Wages Through Post Offices Under NREGS expands

Retailing of New Pension Scheme through Post Offices begins

A Bouquet of Mutual funds “Ujjawal Bhavishya” in Post Offices Launched

The Department of Posts (DoP) opens about eight lakh new “Mahatma Gandhi NREGS’ accounts every month across the country. Till 30th June 2010 has DoP opened 4.48 crore accounts under the scheme and disbursed an amount of Rs. 3,406 crores in the current financial year. More than 95,000 post offices are engaged in disbursement of wages under MGNREGS.

In a tie up with Pension Fund Regulatory and Development Authority DoP has started retailing of New Pension Scheme (NPS) through post offices in the country. So far 5186 NPS accounts have been opened in Head Post Offices in 20 Postal Circles.

As a part of financial inclusion, the DoP in another tie up with UTI Mutual Fund has launched “Ujjawal Bhavishya”, a bouquet of mutual funds relating to Retirement Benefits Pension Fund, Mahila Unit Scheme and Children’s Carrer Balanced Funds in all post offices in the country. The scheme has the convenience of systematic investment plan. It will enable investors in small towns and cities to avail investment opportunities through post offices.

Source: PIB

Expert group calls for separating PF and pension accounts

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Expert group calls for separating PF and pension accounts

An expert group has called for carving out two separate accounts -- PF and annuity -- in the employee provident fund scheme to meet the challenge of fund depletion in the pension scheme and introducing greater transparency for subscribers.

Under the existing scheme, the pension is paid out of the pension fund, which is managed by Employees' Provident Fund Organisation (EPFO).

The Employee Pension Scheme (EPS) 1995, covering 4.45 crore formal sector workers, has become the government's area of concern due to surging deficit that had reached Rs 22,000 crore by March 31, 2006 as per the latest data available.

The committee, headed by former additional Labour Secretary S K Srivastava, has proposed a provident fund-cum-annuity scheme in which two accounts would be maintained for each member a PF account (PFA) and an Annuity Contribution (or pension) Account (ACA).

Among other things, the committee feels that the move will help reduce mounting deficits in the EPS as EPFO will pay off the annuity amount by purchasing a scheme for the subscriber and save various costs in the process.

Annuity refers to a scheme sold by insurers designed to provide payments to the holder at specified intervals, usually after retirement.

The old age regular benefit to the members, under the new arrangement, would be provided in the form of annuity purchased through the accumulation in ACA.

The expert group report is likely to be discussed on September 15 at the meeting of Central Board of Trustees (CBT), the apex decision making body of EPFO.

Currently, a subscriber of Employees' Provident Fund (EPF) gets only one account, but he is eligible for both provident fund and pension.

However, the report says that although subscribers get defined sum in pension through a fixed formula, the scheme is managed in a non-transparent manner.

The new arrangement, the group said, "would ensure that individual accounting of the members, addressing their long-standing demand of transparency in pension fund accounts and commensurate benefits."

At present, 8.33 per cent of workers' salary is contributed towards EPS to which government contributes 1.16 per cent of an employees' pay, which adds up to 9.49 per cent of the salary.

In the proposed scheme, a higher percentage of 13.5 of employee's salary would go to pension account, which would include a government subsidy of 2 per cent. Besides, employee will have an option to increase his contribution in ACA.

The committee says that two separate accounts for provident fund and annuity (pension) will motivate individual members to retain funds in the scheme till superannuation as the scheme would no longer pooled.

The government constituted a committee in March 2008 for comprehensive review of the scheme.

When the EPFO started operations in 1952, there was no family pension benefit for subscribers. In 1971, family pension was introduced wherein the spouse and other family members receive money in case of the subscriber's demise while in service.

Later, under the improved scheme unveiled in 1995 the benefit was extended to subscribers also after retirement and in case of disability during service.

Source: DDI News



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