Thiruvananthapuram: All the liabilities related to gratuity and pension benefits of KSEB employees will be transferred to a ‘master trust’ which is being constituted. The formation of the ‘master trust’ is one of the major decisions included in the notification issued by the government on December 20 revesting the assets and liabilities of KSEB with the newly-formed company, KSEB Limited.
The unfunded pension and gratuity liabilities as on September 30, 2011 is Rs 7,584 crore. This liability will be shared by the state government and KSEB Limited. The new company will issue two series of bonds to the ‘master trust’; a 20-year bond with a coupon rate of 10 percent per annum for Rs 5,021 crore and a 10-year bond with a coupon rate of 9 percent per annum for Rs 2,039 crore.
The bonds will be issued to the ‘master trust’ which will meet the liability of pension in future from the interest and principal repayment from KSEB Limited against the bonds issued in favour of the trust. The state government will provide Rs 3,186 crore over the next 10 years to KSEB Limited for meeting the unfunded terminal expenses.
The two bonds together will raise only Rs 7,060 crore. The remaining Rs 524 crore will be funded by the state government through budgetary provision over the next 10 years. The state government will also allow KSEB Limited to retain the electricity duty collected by KSEB from April 2008 to March 2012. Any addition to the liability of Rs 7,584 crore will again be shared by the state government and KSEB Limited in the 35.4:64.6 ratio.
The notification also states that the state government and KSEB Limited will have to step in if the ‘master trust’ is unable to meet the pension demands. However, the payment of pension of employees who have joined KSEB after April 1, 2013 will be governed by the National Pension System.
