The Union Ministry of Steel has given a nod to the introduction of pension scheme for the employees of Rashtriya Ispat Nigam Limited (RINL) and Steel Authority of India Limited (SAIL).

According to a circular issued on Monday, certain conditions were stipulated for the implementation of the scheme. The order has been sent to the RINL CMD and Chairman of SAIL.

Welcoming the decision, Steel Executives’ Association (officers body of RINL) general secretary Katam S.S. Chandra Rao said the pension scheme would be implemented with effect from 2007.

According to the circular, the RINL and SAIL need to implement pension scheme as per the conditions stipulated in the Ministry’s letter dated July 19 last year and the Department of Public Enterprises guidelines.

Contribution norms

The pension contribution is to be made according to the profit and loss during a financial year and to be met from the profit generated . Thus, the funds needed for operating the scheme should be met from the profits generated by the company taking into account the full financial year and not a part of the year.

The circular pointed out that transfer of contributions to pension trust for fund management may be made only after the end of financial year. The upper ceiling of pension contribution may not be more than 9% of the basic pay and DA.

A formula may be devised by RINL and SAIL for calculation of rate of contribution and same may be reviewed annually by the board depending upon the profit or loss of the company.

The rate of contribution should not be a fixed one, depending upon the quantum of profits made by the company in a financial year including the year of loss, the circular said, adding that the selection of fund manager should be done in a transparent manner.