Coal news and updates

Coal India's pension fund is at risk and set to deplete in five years and workers have demanded that the government levy a cess on every tonne of coal sold as well as increase its contribution which is capped at Rs 27 per employee. "Even Rs 1 cess on every tonne of coal sold will raise the pension fund size by at least Rs 50 crore every year. This would double to Rs 100 crore by 2020 and help adequacy," said S Q Zama, general secretary, AITUC.

An actuarial study shows that the fund would run into a negative balance because outgo on account of pension is higher than inflow into the fund. The gap will increase every year as more people retire and will deplete in five years. The pension fund receives money from contribution made by existing Coal India employees. It also earns interest from instruments that the fund managers' invest in apart from a small contribution by the Centre. At present the fund supports about 4.70 lakh former Coal India employees. But only about 4.39 lakh employees of Coal India contribute to the fund.

"A very high rate of retirement at around 17,000 every year has led to a situation where lesser number of employees are supporting a larger number of pensioners for the last few years. This is slated to turn worse as more employees retire over the next five¬six years," he said. At the present rate of superannuation, by the end of 2021¬22, some 3.71 employees will have to support some 5.28 pensioners by which time the fund will totally deplete.

This year's total inflow into the fund is estimated at around Rs 1,890 crore while outgo would be Rs 1,920 crore. By 2021¬22, inflow is estimated at Rs 1,875 crore while outgo would be Rs 5,740 crore ¬ the year when the fund cannot support all pensioners.

Source: Economic Times