New Delhi, Sept 03: A few days after cabinet cleared the new pension scheme for government employees, Labour Minister Sahib Singh Verma today expressed concerns over it, even as he said his ministry had no objection to the proposed scheme. "There is no guarantee from government on minimum pension in the proposed scheme and in the event any new pension fund manager mismanages, there is no provision to safeguard the investments of employees as well as to prevent mis-selling," Verma said here, addressing a seminar, jointly organised by the India Invest Economic Foundation and Assocham. Citing the Chilean model, based on which the new pension scheme had been framed, he said there were problems in entrusting pension funds to private hands as that always had an element of risk, and the country could face political problems.
It was important that no mis-selling took place under the proposed scheme, he said and indicated that the new scheme was likely to have high administrative and accumulation costs. "Publicly managed pension funds have low administrative costs" in comparison to privately managed pension funds, Verma said.
On accumulation costs, which is a "serious problem", he said it would be on the higher side as the market was not developed.
He said there was no provision for family pension in the proposed scheme and it "clearly brought out lack of basic protection if the bread-earner of the family passed away."
"My ministry has no objection to the proposed scheme and we need to have contributory scheme," he hastened to add. Bureau Report