The Centre may soon do away with a stipulation that requires at least 15 years of service for a public sector enterprise (PSE) executive to be eligible for superannuation schemes of such entities.

This could pave the way for PSEs to join the new pension system (NPS) and thereby enable all their employees (without service stipulation) to subscribe to the scheme.

If this were to happen, then PSE employees can enjoy tax breaks even on the contributions made by their employers towards NPS, it is learnt.

Although PSEs have been allowed to frame their own superannuation schemes, they do have the option of joining NPS. But the service stipulation of at least 15 years had come in the way for many employees to opt for pension schemes.

“We have already written to the Department of Public Enterprises (DPE) asking them to remove the 15 year service stipulation. A Cabinet note is being moved by DPE soon I am told,” Yogesh Agarwal, Chairman of Pension Fund Regulatory and Development Authority (PFRDA), told reporters on the sidelines of an Assocham event.

He said a number of Central PSEs had written to him stating that their employees wanted to join the NPS, but could not do so because of the minimum 15 years of service condition.

“As per DPE guidelines, an employee cannot join NPS if he does not have minimum 15 years of service,” Agarwal said.

PFRDA is keen to encourage even employees who are two months old in an organisation to join the NPS.

Earlier, in his address at the event, M.S. Sahoo, Secretary, Institute of Company Secretaries of India, suggested that insurance companies should be coaxed to set up a fund to indemnify investors who have lost monies for no fault of theirs (due to mis-selling).

srivats.kr@thehindu.co.in

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