CHENNAI: The Tamil Nadu government could have saved Rs 670.36 crore if it had joined the national pension scheme (NPS) and designated a fund manager to manage the fund in compliance with the Pension Fund Regulatory and Development Authority, a CAG report said.
It said the state continued to invest its defined contributory pension scheme (DCPS) contributions in Life Insurance Corporation of India and T-Bills, which earned a return of 5.47 per cent and 4.29 per cent respectively.
Since the state pays general provident fund (GPF) subscribers 7.10% interest, the difference in interest (nearly 2%) has to be borne by the government. Had the government joined NPS and appointed designated fund managers, PF subscribers would have got higher returns, the report said.
The government did not join NPS and designate a fund manager even though 19 years had passed since the inception of DCPS. Instead, out of the total amount of Rs 53,462.93 crore in the fund as of March 31, 2022, Rs 36,510 crore was invested with the LIC’s 'new group superannuation scheme with cash accumulation plan'.
The report said there was no agreement or MoU between the state and LIC, and the interest earned on investments were based on the LIC's own policies (5.47%), which were much less than the interest paid to account holders by the government (7.10%).
The report also said a sum of Rs 11,803.19 crore out of the balance of Rs 16,952.93 crore had been invested in treasury bills as of March 31, 2022. Interest on investment in LIC amounting to Rs 4,754.63 crore (Rs 1,128.65 crore during 2019-20, Rs 1,630.48 crore during 2020-21 and Rs 1,995.50 crore during 2021-22) has been reinvested in LIC, although related book adjustments have not been incorporated into the accounts by the government.