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BS Economy Bureau

The government may not be able to meet the June 1 deadline to introduce the new pension scheme for new government employees, according to Ramesh Chandra, additional secretary, in the department of personnel and training.

Speaking at a session pension reforms at the silver jubilee of the Indian Civil Accounts department, Chandra said, "The June 1 deadline will be difficult to adhere to as we have had only one round of discussion with the departments."

The Centre has planned to phase out the defined benefit-based pension system for new government employees in favour of a contributory scheme in which the employees and the government will contribute 10 per cent each of salary to a fund.

The scheme is based on the report of a high-powered committee chaired by BK Bhattacharya, former chief secretary of Karnataka. As per the pension scheme the income from this fund will finance a pension package for the employees after they retire.

Chandra said there were various hurdles on the way including making the proposed scheme comparable to the existing scheme.

He also said the financial impact of the change is yet to be worked out as the "liability for the Centre may be more than it appears at surface".

Speaking earlier J Bhagwati, joint secretary in the finance ministry said the risks involved in the switchover should be understood, especially the possibility of an asset-liability mismatch for such proposed pension funds.

He pointed to the fact that many state governments have invested their provident funds in privately held debts which were risky investments.

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