Last year I had mentioned that the Insurance Regulatory and Development Authority (IRDA) would be asked to provide a road map for a new pension scheme so that the unorganised sector is provided adequate social security coverage. IRDA has recommended a regulatory framework for setting up pension funds to enable individuals to subscribe on a defined contribution basis to obtain the benefit of pensions on their retirement. Action on these recommendations will be taken by June 30, 2002.
The present pension scheme for Government employees casts an open-ended financial burden on the Government. I had announced the appointment of a High Level Expert Group to develop a new pension scheme, based on defined contributions, for new recruits entering government service. The Expert Group has submitted its report to the Government. It has proposed a hybrid scheme that combines contributions from employees and the Union Government on matching basis, on the one hand, while committing to the employees a defined benefit as pension. The report is being considered by the Government and the new pension scheme for new recruits will be announced and implemented by June 1, 2002.