The Labour Ministry looks to appoint an actuary to assess if the Employees’ Pension Scheme (EPS) is sustainable over a long term. The EPS, 1995 is one of the three schemes meant for old-age social security of employees run by the Employees’ Provident Fund Organisation (EPFO). The other two schemes are Employees’ Provident Fund Scheme, 1952 and Employees’ Deposit Linked Insurance Scheme, 1976.
Earlier, the labour ministry had conducted actuarial valuation of EPS for fiscal ended March 2014. “It is now required to assess the long-term financial viability of EPS’95 by conducting the annual valuation of Employees’ Pension Fund as at March 31, 2016 and March 31, 2017 for which expression of interest is called for,” Labour Ministry said in its request for proposal for the appointment of valuer for actuarial valuation of EPS, 1995 of EPFO.
The actuary will have to submit a report on the longtime financial sustainability of EPS’95, it said. “It may be ascertained if the contribution rate of 9.49 per cent under the given asset return assumptions is sufficient for EPS and the scheme is sound in a fundamental sense,” the labour ministry said listing the task for the valuer.
Apart from the valuation, the scope of work for the actuarial firm will involve making projection on impact of various amendments/changes in the EPS during the valuation period and future. It has to analyse and advise on EPS investment and portfolios, mortality rate, growing trend in demographic profile, attrition behaviour, possible impact of HIV/AIDS epidemic and bilateral social security agreements.
The actuarial will also be tasked to quantify the impact of amendments in EPS such as increase in wage ceiling from existing Rs 6,500 per month to Rs 15,000 per month and calculate the pensionary benefits on higher wage ceiling.
It will also have to assess the long term impact and government liability on increase in minimum pension to Rs 1,000 per month under EPS as well as impact of allowing pension on higher salary.
The last date for receipt of the request for proposal is May 23, 2018. The pension corpus under EPFO is managed by fund managers who are required to make investments only in accordance with the pattern prescribed by the labour ministry.
As per the data available with the labour ministry, the EPS had received contribution of Rs 32,037.08 crore in 2015-16 and it made benefit payments of Rs 13,545.17 crore during the year. In 2014-15, the contribution were of Rs 24,251.50 crore while payouts were Rs 12,600.94 crore. As on March 31, 2016, EPS scheme had a membership of 15,84,70,437 and number of pensioners were 51,04,397.