Coal India’s unions are demanding a levy Rs 20 per tonne on the dry fuel to help the company’s pension fund get enough cash. The state-run company is likely to send this proposal soon to the central government, sources said.
“We would want the Centre to impose a levy on each tonne of coal sold to save the pension fund. It would go into inflating the fund size and help reduce the large liability gap it is facing today,” said DD Ramanandan, president of the All India Coal Workers’ Federation.
Employees also want to increase their contribution to the fund to 7% of their salary from 4.91% and the company to contribute a similar percentage. Currently, Coal India doesn’t make any payment. But the government contributes Rs 324 per person every year which also the unions want to be enhanced.
There are around 3 lakh Coal India pensioners. The pension fund may not suffice to pay pensions to all retired employees in the future. Two studies in 2014 showed the fund had an about Rs 26,000 crore deficit and that it was widening.
R Mohan Das, human resource director at Coal India, said the outflows from the fund were almost the same as inflows from interest earnings and employee contributions. “After 2010-11, about 15,000-20,000 employees retired every year for four years and the retirement rate has now come down to 6,000-7,000 every year. However, with so many retiring for the last six years, the fund is under strain,” he said.
A union leader said the fund was in deficit due to wage hikes, which increase the pension as well since it is calculated on the basis of the last drawn salary.
A commissioner from Coal Mines Provident Fund Organisation, an independent body that manages the company’s pension fund, said every year the outgo from the fund was about. Rs 1,440 crore, while employees contributed Rs 1,200 crore, leaving a deficit of about Rs 240 crore.
