vaagmiji
your understanding is not fully correct.
Govt[if it is employer] /any employer employing more than 10 persons is forced by law to contribute 10 percent of
basic salary to pension. the employee makes an equal contribution..this is in GPF cases
those who are in casual employment as domestics etc , they avail of widow or senior citien pension which is fully given by govt . the amount varies from state to state and I think itis minimum 1000 or so
so at best one can call it subsidised pension if it is not free. The state/employer has a role in pensions.
even cost of living compensation is inbuilt into this pensions.the longer a person lives , the more he collects.
I stand by the comment on parasites. Railways are bleeding due to pension liability running into crores and making
huge losses. the pensions are also subject to revisions. The seventh pay commission is around the corner to make it
worse for the railways. They may go bankrupt if they are not already that.Have you heard of any senior citizen in
railways givingup pension since railways are bleeding.
Over the years senior citizen are living longer. adding to the misery of pension authorities.
there are some malpractices relating to pension liability also. many MNCs in india fix basic salary low to avoid higher PF/pension contributions.so there is nothing to be proud of being a pensioner.they are in the class of subsidised poor
I did not want to get into an argument on this. But I did a bit of research after reading your post. You can not be more wrong in your understanding of the whole subject.
1. We are talking here about only pensioners. Not about those who are outside the system of pensions, being employees of small time enterprises.
2. Employers who have pension as part of a compensation package do collect an amount from the employees as contribution to the pension fund and they also contribute an equal amount to the fund. This is apart from the PF contribution which is paid back to the employee when he retires. When the pensioner/family pensioner dies the corpus is not returned but stays with the pension fund.
3. Every year at the time of finalizing the financial position of the company by drawing a Balance sheet the company engages specialist statisticians to assess the likely pension liability of the company. The statistician does a detailed analysis of the company's work force as to its age profile, history of hazards in the processes of the company, the general life expectancy in the country etc., and determines the pension liability of the Company. Then the company takes a view as to what is the gap between the pension fund and the likely pension liability and makes a provision from the profit account. The auditors who certify the accounts as a fair representation of the affairs of the company are supposed to look into the details of the statisticians work sheet and include their views if they have any comment to make. this is the case in the case of Companies.
In the case of Government and Railways, the Government being the owner, 'grants' are added instead of provision from profit. Government's role is different from the private enterprise. It has people's welfare as the sole criterion. So we have railway lines laid at substantial cost where the train trundles once in a day stopping at every station picking up goods and cattle in addition to, incidentally, people also.
Usually pension fund is invested in risk free sovereign bonds or deposits and treasury bills. The return is low with minimum risk and that combination being a pair always there is no way to do anything about it. That is the reason for the detailed statistical analysis and provision making every year.
Those companies who want to get away from this recurring liability would like to move over to the National pension Scheme because the baby's ownership and liability can be dumped while the pleasure of fruits of labour can be enjoyed. More can be written about the NPS but this is not the place.
Your views about Railways does not take into account the fact that it is a part of Government. The business processes are outdated and profit motive is absent. It takes eons to bring in any reform and politics too plays a role.
