CIL pension delay draws CAG wrath
Coal India’s pension fund, which is facing a funds crunch that has delayed payments to about 5 lakh retirees in June, is in poor health because of gross mismanagement and blatant violation of investment norms, the Comptroller and Auditor General of India had pointed out in its last report on the matter.
The report concluded that the intended purpose of setting up of the Coal Mines Provident Fund Organisation (CMPFO) would be seriously affected due to inadequacies in the management of funds earmarked for the benefit of the members.
Violating prescribed pattern for investment, the CMPFO invested its entire amount of general provident fund contribution of its own employees for the period under audit (2011-16) in short-term deposits of State Bank of IndiaNSE -1.54 % against the allowed 44% of the total amount of investment. The norm stipulates a maximum of 55% in government securities, 40% in debt securities or term deposits, 5% in money market instruments, and 15% in shares. It was also provided that at no time, investments in any category would exceed 10% of the prescribed limit.
The CAG tabled the report in July 2017 with a note saying the problems in the CMPFO were reported to the government in September 2016 but it had received no response until January last year.
According to the CAG, the CMPFO also failed to implement recommendations of actuaries for revision of contribution to the pension fund, which remained static for the last 17 years, leading to acute deficit of Rs 19,699 crore as on March 31, 2013. The latest actuarial report strongly recommended enhancement of the rate of contribution to 19.46% of salary from existing contribution rate of 4.91% (effective since 1998) for sustainability of the pension fund.
The CAG also noticed instances of excess payment of pension, irregular payment of interest and untraced balances, indicating poor monitoring and control.
Earllier this month, Animesh Bharti, commissioner at the CMPFO, when asked on delay in pension, admitted that there was funds crunch and monthly inflow of fund was Rs 60 crore short of outgo.