The Centre plans to merge Coal Mines Provident Fund Organisation (CMPFO), which manages more than Rs 1.13 lakh crore of coal workers’ retirement funds, with the Employees’ Provident Fund Organisation (EPFO), as a large asset-liability mismatch is imminent in the CMPFO’s pension fund.
The CMPFO has struggled in recent years as its payments started exceeding inflow since 2016-17, making it financially precarious. As a result, the contribution of employees and employers was increased to 14% in 2018. It pays pensions to about 500,000 former coal employees.
Currently, it pays monthly pensions of about Rs 230 crore while inflow is about Rs 280 crore. With an increase in the number of retired coal employees and fall in the number of contributing members, the pension fund is now facing the possibility of running completely dry by 2028.
“Following a ministerial direction, the CMPFO recently formed a panel to examine merger of the two organisations. It will submit a report to the government on feasibility and pros and cons of the proposed merger,” a senior member of the CMPFO told ET on condition of anonymity.
The members of the panels are additional commissioner AK Sinha, joint commissioner UP Kamal and regional commissioner Navin Kumar.
This is the Centre’s second effort at merger. The first was almost three years ago, when it formed a panel to consider the merger but it was put on the back-burner after a three-day strike by the unions against the proposal.
“We collectively averted the merger three years ago,” said DD Ramanandan, president, All India Coal Workers Federation. “We feel the Centre’s decision of merger will adversely affect coal workers’ old age financial security. Despite a national lockdown we will resist the current move and will resort to demonstrations or strikes, if necessary.”
A senior Coal India executive, who did not wish to be identified, said: “The CMPFO’s pension scheme is the country’s best. Pension payment from the fund has no upper cap, unlike the Employees’ Pension Fund Scheme managed by the EPFO and everyone from a worker to chairmen of coal companies are covered.”
The CMPFO covers employees of Coal India, Singareni Collieries, 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.
Source: Economic Times