Subsidy by Government versus Acturial Deficit under EPS,’95

“Subsidy by Government versus Acturial Deficit under EPS,’95”

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Minimum Pension of 1,000/- was implemented from September, 2014.

1)During the full financial year of 2015-2016, 18,55,273 out of 53,57,781 i.e., 34.03% were provided 821.76 Crores as subsidy.

2) After 7 years i.e., during 2022-2023, 20,55,878 out of 75,58,913 i.e., 27.20% were provided 969.76 Crores as subsidy.

This means the subsidy is never crossing 1,000 Crores mark even after seven years. This is because the percentage of Pensioners requiring subsidy and quatum of subsidy (shortfall to 1,000/-) gradully getting decreased. Hence the figure is not crossing 1,000 Crores.

2022-2023:

a) 70,61,826 Pensioners out of 75,58,913 i.e., 93.42% are getting Pension which is leas than 3,000/-.i.e., they were paid 11,350.63 Cr. If 3,000/- Minimum Pension is paid to the above 70,61,826 per month, the expenditure is 25,422.57 Crores. Thus Government has to provide 14,071.93 94 Crores per annum.

b) 74,61,013 Pensioners out of 75,58,913 i.e., 98.70% are getting less than 4,000/- i.e., they were paid 13,384.34 Cr. If the above 74,61,013 Pensioners are to be paid 4,000/- Minimum Pension per month, the expenditure is 35,812.86 Crores. Hence the Government has to provde a subsidy of 22,428.52 Crores per annum

2023-2024:

a) 72,16,887 Pensioners out of 78,49,338 i.e., 91.94% getting less than 3,000/- per month i.e., were paid 11,412.87 Crores. If these 72,16,887 are provided with a Minimum of 3,000/- per month, the expenditure is 25,980.79 Cr. Thus the Government has to provide a subsidy of 14,567.93 Cr per annum.

b) 76,80,345 out of 78,49,338 i.e., 97.85% getting less than 4,000/- per month i.e., were paid 13,596.93 Crores. If these 76,80,345 are to be provided with a Minimum 4,000/- Pension, then the expenditue is 36,865.66 Crores. Thus Government has to provide 23,268.72 Crores per annum as subsidy.

Submmary:
2022-2023: 14,071.94 Crores as subsidy for providing 3,000/- Minimum Pension.
2022-2023: 22,428.52 Crores as subdidy for providing 4,000/- Minimum Pension.

2023-2024: 14,567.93 Crores as subsidy for providing 3,000/- Minimum Pension.
2023-2024: 23,268.72 Crores as subsidy for providing 4,000/- Minimum Pension.

Against these figures, the Actuary, in the report of the High-Emplowered Monitoring Committee, showing a deficit of 1,82,232.52 Crores for 3,000/- Minimum Pension and 3,00.741.38 crores for 4,000/- Minimum Pension. These figures are calculated as on 31-03-2017 i.e., 7 years back.

The return on Investment of EPS,’95 Contributions is 8.5% as per 2016-2017 Acturial report.
On 1,82,232.52 Cr, deficit for providing 3,000/- Minimum Pension, the yearly yield of Interest is 15,489.76 Crores, whereas the subsidy to be provided is 14,567.93 Crores during 2023-2024 i.e., less than Monthly Interest.

Again for providing 4,000/- Minimum Pension, the deficit worked out is 3,00,741.38 Cr, and the Interest yield @ 8.5% is 25,563.02 per annum against Annual subsidy of 23,268.72 Cr. Again less than Monthly Interest.

Conclusion:
What the Actuary is saying that if the present Employees contribute 1,82,232.52 Crores more, then it will be kept “permanently” in investments and the monthly interest derived can be paid for Minimum Pension of 3,000/- per month to the Pensioners as on 31-03-2017 (seven years back)

If the present employees contribute 3,00,741.38 Crores more as Contribution, it will be “permanently” kept in Investments and the yearly Interest yield can be paid for implementing Minimum Pension of 4,000/- to Pensioners as on 31-03-2017 (seven years back)

Finally, it can be ascertained that the Contributions were/are/will remain permanently in Investments and only through interest EPS,’95 is run since the past more than 29 years.

From the pen of G. Srinivasa Rao

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