TN pension shortfall understates revenue expenditure by Rs 101 crore

CHENNAI:
Tamil Nadu understated its revenue expenditure by Rs 100.71 crore in 2024-25 by failing to make its full contribution to the pension scheme for government employees, according to a Comptroller and Auditor General report tabled in the state assembly. This raised questions over the management of a pension corpus of nearly Rs 89,085 crore.

The shortfall arose under the Defined Contributory Pension Scheme (DCPS), which covers employees recruited from April 1 2003. Under the scheme, employees contribute 10 per cent of their basic pay and dearness allowance, with a matching contribution from the state government.

During 2024-25, employees contributed Rs 4,238.75 crore to the DCPS, while the state contributed Rs 4,139.91 crore — a shortfall of Rs 98.84 crore. For All India Service officers, the government contributed Rs 5.83 crore against the required Rs 7.70 crore, resulting in a further Rs 1.87 crore gap.

The total shortfall of Rs 100.71 crore resulted in an equivalent understatement of revenue expenditure, the audit said.

Despite requests from the Pension Fund Regulatory and Development Authority (PFRDA) in 2008 and 2009 to join the National Pension System (NPS), the state declined in 2010 and has continued to operate its DCPS outside the NPS architecture for more than two decades.

The state has also not appointed a dedicated fund manager for the scheme. Instead, it has invested the pension corpus under the Life Insurance Corporation of India’s New Group Superannuation Scheme with Cash Accumulation Plan.

The investment stood at Rs 89,084.64 crore as of March 31 2025. Interest of Rs 6,198.69 crore earned from LIC during 2024-25 was reinvested in the same fund, the report stated.

Individual DCPS accounts are maintained by the Government Data Centre, which calculates and credits interest annually at notified rates. The state paid Rs 5,642.51 crore in interest on DCPS balances during 2024-25, the report stated.