New Delhi: The Sixth Pay Commission has suggested a more remunerative and earlier retirement from government, outsourcing part of the pension process to public sector banks or institutions, and the introduction of market-based salaries for top personnel of economic and financial services regulators to attract talent.
As an example, the report suggests that the wages of the Securities and Exchange Board of India’s chairman be pegged at Rs24 lakh a year, along with accommodation and a car.
At present, government employees have to work 33 years to receive full pension benefits. The commission has suggested lowering this to 20 years to boost its larger goal of reducing the general age profile. “I personally think it is a good move,” said Gautam Bhardwaj, head of Invest India Economic Foundation, who has served the finance ministry as consultant on pension issues.
The commission has also suggested that the government tap independent professional expertise to handle a part of the pension process. “The government may consider outsourcing the process of commutation of pension to any PSU (public sector unit) bank/institutions,” the report said. “It’s a good half-step,” Bhardwaj said.
The pay panel believes the government will be able to absorb the rise in pension liabilities, which will cover about 3.8 million people, including soldiers. The government’s annual liability is around Rs35,000 crore and the commission’s recommendations are expected to add Rs1,365 crore a year.
The panel says robust economic growth should be enough to cover pension liabilities. Beyond that, the government should consider setting aside some money annually to partially cover its pension liabilities, the report said.