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'Coal companies must make extra voluntary contribution to staff pension fund'

Coal Mines Provident Fund Organisation commissioner Animesh Bharti told ET: “Following a recent resolution by the trustee board of the CMPFO, coal companies will soon be asked to make voluntary contribution of Rs 10 per tonne of coal produced.

, ET Bureau|
Last Updated: Jan 16, 2020, 11.38 AM IST
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Pensions are calculated on the basis of 10 months’ average salary before retirement.
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KOLKATA: Coal producers need to make an additional voluntary contribution to their pension fund, or they will be removed from the scheme, the trustees of the Coal Mines Provident Fund Organisation (CMPFO) have decided.

The fund’s size is around Rs 13,000 crore. Each month, Rs 230 crore is paid as pensions while the inflow is Rs 280 crore. The fund pays pensions to five lakh former coal employees, while another 4.8 lakh current employees are its members. It is facing the possibility of running completely dry by 2028.

CMPFO commissioner Animesh Bharti told ET: “Following a recent resolution by the trustee board of the CMPFO, coal companies will soon be asked to make voluntary contribution of Rs 10 per tonne of coal produced. We will be writing to them shortly.” Such contributions are estimated to add at least Rs 700 crore to the fund annually, including Rs 600 crore from Coal India, which would be more than enough for the fund to meet its obligations.

Pensions are calculated on the basis of 10 months’ average salary before retirement. In 2016-17, the outgo from the fund had exceeded the inflow, prompting employees and employer’s contribution to be revised from around 5% to 14% in 2018.

“It is the country’s best scheme. Pension payment from this fund has no restrictions or upper monthly cap unlike the Employees’ Pension Fund Scheme and everyone from a worker to the chairman of Coal India is covered,” said Bharti. “From now on, outgo from the fund is expected to increase exponentially as employees retire with salaries that are a few times higher than former employees. The fund is once again expected to see outflow far outstripping inflow in the next couple of years,” said Bharti.

“Following the likelihood of a deficit, the trustee board passed the resolution for a voluntary contribution, the onus of which will be on the coal companies ... companies that do not contribute will be excluded from the scheme since it will lead to the fund going bust,” said Bharti.

Employees of Coal India, Singareni Collieries, the mining division of DVC, coal mining workers of SAIL, Jindal Steel & Power, Jindal Power, Usha Coal Mine, Jayaswal Neco Industries, Monnet Ispat & Energy and Sarda Energy & Minerals are covered by the fund. Members’ monthly contribution to the fund is matched by their employers. A bulk of it, along with interest and bonus, is returned to employees on superannuation as provident fund. A portion of this contribution goes into the pension fund, to be used for providing a steady pension.
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