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COMMON MEMORANDUM ON PENSIONERS & OTHER RETIREMENT BENEFITS
Final Draft of Common Memorandum on Pensioners & other Retirement Benefits to be submitted to the VII CPC published by NCCPA.
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Tuesday, June 10, 2014
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Monday, June 2, 2014
MEMORANDUM ON PENSION AND OTHER RETIREMENT BENEFITS BY NCCPA
NCCPA
MEMORANDUM ON PENSION AND OTHER
RETIREMENT BENEFITS
CHAPTER – I
Introduction
The Government of India, Ministry of
Finance, Department of Expenditure, Resolution No.1/1/2013-EIII(A) dated 28th
February, 2014 in its Para 2(f) has included the following terms of reference
of the 7th Central Pay Commission:
“(f) To examine the principles which should govern the structure
of Pension and other retirement benefits, including revision of pension in the
case of employees who were retired prior to the date of these recommendations,
keeping in view that the retirement benefits of all Central Government
employees appointed on and after 01.01.2004 are covered by the New Pension
Scheme (NPS).”
1.2 The
principles that should govern the structure of pension etc have to be evolved
taking into account the relevant constitutional provisions as well as judicial
pronouncements by the Supreme Court of India in this regard.
1.3 Article 366(17) of the Constitution of
the Country defines pension as under:
“ Pension: Pension means a pension whether
contributory or not, of any kind whatsoever payable to or in respect of any
person and includes retired pay so payable; a gratuity so payable and any sum
or sums so payable by way of the return, with or without interest thereon or
any other addition thereto, of subscription to a Provident Fund.”
From this what is to be inferred is that
the gratuity as well as commutation are also part of the pension as a whole.
These are also to be treated as pensionery benefits.
1.4 The IV CPC went into the conceptual question of pension in
detail. Some of the observations contained in their report are relevant in
understanding the purport in the background in which the Central Government
employees are placed today.
“
Para 2.13: Part II: But the concept of ‘pension’ however old in its origin,
had the latent and real desire to provide for an eventuality – known and
unknown. The known eventuality was old age and probable reduction in earning
power, while the unknown eventuality was disability by disease or accident or
death. Its real purpose was security, even though the beginning was oblique,
indiscernible and faint. But the germ of an effort to provide security ran
through the provision and it is natural that it should have grown and flowered
with the development of human understanding and desire to look after and
provide for those who deserved it for man has constantly been seeking means by
which to enhance his economic security. But the extension of the pension
provision from military service to civilian public employment, resulted largely
from consideration for the employees and the pressure of their organisations.
Some benevolent employer goes to the extent of regarding pensions as an
absolutely indispensable complement of wages – a terminal benefit. That
however, is apart from another aspect bearing on pension – the social aspect.
The demographic structure of the population is changing because of the greater
expectation of life. Thus, those who are now in middle age are going to be nearly
twice as big as economic burden to their children as their parents are to them.
The problem in such cases, has been tackled as a social obligation, including social insurance for
citizens generally.”
“Para
2.17: In the very nature of things, every employee, who lives long enough,
reaches a stage of diminished outturn of work or what may generally be called
non-productive years. That may, speaking generally again, be set to be the
responsibility of his employer for whom he has spent the best years of his
life. In a welfare state that may also be set to be the responsibility of
the Government (where he is not in his employment) and, in more modern
society, it may also be set to be the responsibility of the individual.
So all three namely, the employer, the Government and the employee or one or
the other of them, may be expected to contribute towards the pension according
to the social or administrative set up of the country or society where the
individual undertakes the service but the one common feature and object of
pension is to provide for the old age of the employee for the simple reason
that time has eroded his capacity to earn and he is unable to provide for
himself. In a country like ours, where we have solemnly resolved to constitute
it into a “Socialist” Republic and to secure to us all social and economic
justice (Preamble), it behoves the Government to take care of its employees by
providing terminal benefit like retirement pension when they become entitled to
them. We may refer to the directive principle of the State Policy enshrined in
Article 39 (a) of the Constitution that the State shall in particular direct
its policy towards securing that the citizens have the right to an “adequate
means of livelihood” ….. If, such a
citizen is an employee of the State, is it out of ordinary, and not as of a
Constitutional directive, that the State should appreciate its duty to provide
for him by means of a pension and/or other terminal benefits? (emphasis
added) …. The concept of pension, therefore carries within it the germ of
certainty, periodicity, and “adequacy”. ……. Ours is a Socialist State
1.5 The
concept of pension has been explained more precisely in the Encyclopaedia of Social Sciences, Vol.11 as under:
“administrators
and civic leaders interested in the improvement of Government services
formulated the idea of pension as an efficiency device necessary for the
orderly and humane elimination of superannuated and disabled employees no
longer able to function efficiently for the proper operation of the system of
promotions, for the attraction of better type of employees and for the
improvement of working morale”
1.6 On
the doctrinal approach the Encyclopaedia further states that:
“
A doctrine recently advanced and more far reaching in its implications regard
the Public Service as the logical pioneer in the meeting of the old age problem
as it affects wage earner in modern society. This doctrine considers a pension
as a compensation paid to the employee for the gradual destruction of his wage
earning capacity in the course of his work. Retirement being a proper charge
against the employees, entire period of active service, the employer should
make contribution towards the employees eventual retirement during each year of
service of the employee, in a manner similar to that in which he annually sets
aside a reserve against depreciation and obsolescence of his plant and
machinery. Pensions, according to this doctrine, are an absolutely indispensable compliment of wages.”
1.7 In
para 2.20 the IV Pay Commission has observed:
“but
even though the Government service pension scheme in our country is
non-contributory, it has been contended again by way of doctrinal approach,
that this is not really so and that some allowance is made for the missing
contribution while determining the salaries”
1.8 The
Supreme Court in their Landmark Judgment (which has been approvingly quoted by
the 5th CPC in D.S.Nakara and
others Vs Union of India (AIR 1983
SC 130) held that Pension is neither a bounty nor a matter of grace
depending upon the sweet will of the employer. It is not an ex-gratia payment
but payment for past services rendered. It is a social welfare measure
rendering socio economic justice to those who in the hey-days of their life ceaselessly
toiled for their employer on an assurance that in their old age they would not
be left in lurch. The 5th CPC paying due respect to the above
observation of the Honourable Apex
Court Para
127.6 of its report has stated that the pension
is the statutory, inalienable, legally enforceable right of employees which
has been earned by the sweat of their brow. As such the pension should be
fixed, revised, modified and changed in ways not entirely dissimilar to the
salaries granted to serving employees.
1.9 While
examining the goals that a pension scheme should seek to sub-serve, the
Honourable Apex Court held that “a pension scheme consistent with available
resources must provide that the pensioner would be able to live:
(i) free from want, with decency,
independence and self respect, and
(ii) at a standard equivalent at the
pre retirement level”
The Court observed that we owe it to
the Pensioners that they live, not merely exist.
1.10 From
the above observation of the Supreme Court it is clear that pension is payable
by the employer i.e., the Central Government to its retired employees which is
their statutory and legally enforceable right from which they cannot be
deprived. That the amount of pension must be enough to enable a pensioner to
live free from want with decency, independence, and self-respect and at a
standard equivalent at the pre-retirement level.
1.11 Keeping
the above observations and principles and judicial pronouncements in view, we
submit below our suggestions for restructuring the existing pensionery scheme
in appropriate chapters. We have made
our submissions only in respect of issues where we want Commission to consider
improvements in the existing provisions.
CHAPTER – II
New Pension Scheme (NPS)
2.1 The
contributory pension system brought in by the GOI through their notification
dated 22.12.2003, now renamed as National Pension System under PFRDA Act, has
been imposed on Government employees who entered service on or after 1.1.2004.
2.2 This
is an illegal act in as much as the Supreme Court of India had held Pension as
an enforceable inalienable fundamental right. Therefore it should be scrapped
or at least not made applicable to Government employees. This has also divided
the CG employees into two categories and therefore it is discriminatory in
respect of persons who have entered service on or after 1.1.2004 who had been
denied the statutory pension. Any discriminatory scheme is illegal and
ultravires of Article 14 of the Constitution. On this count also the NPS cannot
be made applicable to the Government employees.
2.3 The
Centre for Economic Studies and Policy, Institute for Social & Economic
Change, Bangalore
2.4 The
above mentioned study under the heading “Arguments against pension reforms”
states as follows:
“Deferred Wage: In the context of civil
servant pension payments, it is argued that, the principle guiding the fixation
of pay package is one of intentionally spreading out the compensation over a
long period of time, where by the wages paid out during the course of work
tenure is kept low by design, and the pension payments made during the
retirement phase compensate for the low working wages. The Supreme Court of
India held that pension is neither a bounty nor a matter of grace depending upon
the sweet will of the employer. It is not an ex-gratia payment, but a payment
for past services rendered. It is a social welfare measure, rendering
socio-economic justice to those who in the heyday of their life ceaselessly
toiled for the employer on an assurance that in their old age, they would not
be left in the lurch.”
“Larry
Williams observes “Actually, civil service pensions, because they are not based
on contributions, are best described as deferred wages. Civil servants accept a
lower current wage in exchange for the promise of a pension in their old age.
If this pension were contributory, they would insist on a higher wage and
government would have to either increase taxes or borrow (issue debt) to pay
it. The real cost of civil servants is thus much higher than recorded under the
current system of cash accounting. A good reform would be to move to a system
of accrual accounting setting up at least a notional fund to pay these deferred
wages” (Larry Wilmore, 2004)”
“Public and private sector pay differentials:
A comparison of the public and private sector wages reveals that while the
public sector wages for the lower grades compares well with that of the private
sector, the salaries of the employees belonging to the higher grades are highly
unfavourable to the public sector employees. The post-retirement benefits that
the government employees are entitled to act as some incentive to retain them
in government sector.”
2.5 The
above study had pointed out that expenditure on pensions of civil servants of
high income OECD countries on an average is 2% of GDP (less than 1% in Ireland
and more than 3.5% in Austria*)(* Source: OECD Social Expenditure Database).
But in the 8 South Asian countries it is less than 1% of GDP (Source: World
Bank Data base). However, in India
2.5 The
above study had submitted the following estimated pensionery outgo which tends
to increase during the period from 2014-2038. It is only after 2043 that it
starts declining and will be reduced to zero only in 2088. The table is given
below:
Table showing estimated pensionery outgo
Year
|
Employee Pension
Payout (in Rs Crores)
|
Family Pension Pay out (in Rs.Crores)
|
Total pension payout (in Rs.Crores)
|
2004
|
11300.69
|
2983.38
|
14284.07
|
2008
|
13532.84
|
3572.68
|
17105.52
|
2013
|
16549.07
|
4368.94
|
20918.02
|
2018
|
21862.54
|
5771.79
|
27634.33
|
2023
|
27723.68
|
7319.11
|
35042.80
|
2028
|
34076.27
|
8996.13
|
43072.41
|
2033
|
39321.68
|
10381.01
|
49702.69
|
2038
|
45164.50
|
11923.41
|
57087.90
|
2043
|
41747.23
|
11021.30
|
52768.53
|
2048
|
35011.92
|
9243.18
|
44255.10
|
2053
|
25405.44
|
6707.07
|
32112.51
|
2058
|
16303.15
|
4304.07
|
20607.22
|
2063
|
8179.51
|
2159.39
|
10838.90
|
2068
|
3159.88
|
834.19
|
3994.07
|
2073
|
800.68
|
211.34
|
1012.02
|
2078
|
110.26
|
29.17
|
139.43
|
2083
|
3.52
|
0.97
|
4.49
|
2088
|
0.00
|
0.00
|
0.00
|
2.6 From
the above projection it is very clear that the benefit of NPS will commence
only after 44 years i.e. in 2044. And
during the period it will increase exponentially as because in addition to the
Statutory pension liability the Government will be contributing to the NPS also
@ 10% of annual salary bill of the CG Employees who have entered service on or
after 1.1.2004.
2.7 The
final conclusion of this study team has been as
under:
“Mainly given the fact that the
future liability although may be large in terms of the absolute size is not
likely to last very long and does not constitute an alarmingly big share of the
GDP which is also on the decline, it appears that pursuing the existing Pay As
you Go to meet the liability would be an ideal solution.”
2.8 Applying
this conclusion we may suggest that the NPS may not be made applicable to the
Government employees and all those who had been covered under NPS may be
reverted back to statutory pension scheme. The Government may be asked to study
the experiences of this scheme in several other countries in the world. In
Chile such a scheme has been reversed as because the return which the low paid
employees got out of the annuity purchased was not as good as 50% of LPD but as
low as 20% of LPD. The UK Government had to pay out of the exchequer large
amount by way of subventions in order to ensure that that annuities purchased
yield 50% of LPD as pension. It is well known that in USA where there were
similar pension schemes dependent upon the market had collapsed during the
financial melt down from 2008 onwards. It is estimated that more than 3.5
trillion $ worth of pension wealth was lost. The workers not only lost their
pension but also their jobs. Our respectful submission is that taking into
account the demographic considerations the India
Chapter – III
Pension Entitlement
- Emoluments
for Pension:
3.1 The entire
income in form of basic pay, special pay or personal pay if any, deputation
duty allowance etc are the elements of pay proper and therefore confining the
emoluments to the basic pay as recommended by the IV and V CPCs is to be
undone. The Dearness Allowance is meant to restore the purchasing power of pay
is only an addition to pay. In many countries there is no system of DA.
Periodically the Pay is revised / indexed taking into account the rise in cost
of living. Here also there is a system of merging the DA as DP for purposes of
pensionery benefits. In respect of gratuity already the DA is being included
with Pay and therefore there is no reason for excluding the DA from the
emoluments. We therefore suggest that
the emoluments for the calculation of pension should include:
- Basic Pay
- Any Special pay or personal pay, or deputation
duty allowance.
- Dearness Allowance
- Non-practicing allowance in respect of Doctors
- 75% of the running allowance in respect of
Railway Running Staff retired after 4.12.1988.
- Average emoluments:
3.2 The
VI CPC has already recommended that the ten monthly average emoluments or the
last pay drawn, whichever is more beneficial, should be the basis of
computation of pension. We have therefore no further suggestion to place before
the Commission on this issue.
- Qualifying
service for pension:
3.3 The VI CPC
has done away with the requirement of 33 years of qualifying service for full
pension. They have said that full pension may be granted to those who
voluntarily retire from service having the qualifying service of 20 years.
Other employees who retire on superannuation with ten years of service are
eligible for pension. We suggest that employees with five years of qualifying
service also can be made eligible for pension in the background that many are
regularised with less than ten years in government service.
- Rate
of Pension:
3.4 We should
keep in mind the observation of the Apex
Court
- Free from want, with decency, independence and
self-respect, and
- At a standard equivalent at the pre-retirement
level.
(The Court had further
observed that we owe it to the pensioners that they live; not merely exist.)
3.5 Therefore
taking into account that on superannuation an employee is left with a ‘two unit family’ generally and
therefore if he is to be enabled to maintain
a standard equivalent to the pre-retirement level, the rate of pension
should be 67% of the last pay drawn. We therefore suggest that full
pension should be at the rate of 67% of LPD or 10 months average emoluments,
whichever is more beneficial.
3.6 It is
pertinent to point out that several countries in the world pay higher rate of
pension to their civilian pensioners. France is paying 75% of last six months
average emoluments as pension; Belgium is paying 75% of last five years average
as pension; Cyprus is paying 67% of final salary as pension; Malta is paying
80% of average of best 15 years wages as pension; Our neighbour Srilanka which
is also in the lower middle income group of countries like India in South Asia,
is having a scheme called “Public Servants Pension Scheme (Defined Benefit
Scheme) established in 1901, as a mandatory scheme financed by the Government
budget is paying 85% to 90% (for 30 years of
service) of last one y ear annual salary at retirement as pension
(Source: Srilanka Pension Department Circular No.3/2004 dated 16.01.2004); The
life expectancy in Srilanka at 60 is 20.2% which is 3.5% higher than India.
3.7 In Pakistan
“Number
of years of service X Last Basic Pay X 7 and divided by 300. If an employee has
served 35 years of service and received last basic pay as Rs.10,000/- then that
employee shall get a pension of 8.167/- (i.e., 81.67%).
3.8 In Bangladesh Bangladesh
is 17.9 which is same as in India India Bangladesh
3.9 From the
above comparison with some of the world countries of both European as well as
our own South Asian countries, it is clear that all those countries are paying
better percentage of pension to their Civilian employees. India
3.10 It has
already been well recognised that as the age after superannuation further
advances, not only the pensioner becomes weak in limbs but also becomes more
susceptible to various geriatric diseases. He will have to incur additional
expenses for his upkeep. There are also the social obligations and increased
expenses on medical treatment etc.
E. Additional
Pension
3.11 The Government of India
3.12 In our opinion this needs certain
revision. According to SSO survey (2007-08) 7.5% population only is above the
age of 60. Naturally this may reflect among the pensioners also. Life
expectancy at 60 is only 17.9 and at 70 it is only 11.8 (Source: Sample
Registration System O/o the Registrar General India). This means a Government
servant is receiving pension for 18 to 22 years. In the age group of 60 to 79,
in Rural areas 5% and in Urban areas 5.5% is confined to bed. In the same age
group 22.4% in Rural areas and 20.2% in Urban areas is confined to home due to
physical immobility (Source: National Sample Survey, 60th Round,
2004). After retirement, their income from pension is nearly 1/3rd
of their gross salary at the time of retirement. But they have to spend more on
medical care. This age-group therefore also needs some relief by way of
additional pension. Incidentally Afghanistan
which is one of the low income countries in Asia ,
is having a retirement age of 65 with a formula of grant of additional pension
at the rate of 3% for each year after 65 years of age and the maximum 80%
additional pension is paid.
3.13 Therefore we seek the 7th
CPC to consider addition to the pension after granting 67% of last pay drawn
(LPD) / Average of emoluments as full pension on superannuation at 60 years of
age as under, because of prevailing life expectancy of Indian Citizen Age
is 69.6 (assessed during the year 2011-15) and the old pensioner who is also
considered to be senior citizen has to wait for a period of twenty years on his
retirement to get an increase at his age of 80 maintaining his health from
disease burden.
On attaining Age
|
Increased to the % of LPD* / Average Of 10 months emoluments
|
65 Years
|
70
|
70 Years
|
75
|
75 Years
|
80
|
80 Years
|
85
|
85 Years
|
90
|
90 Years
|
100
|
- LPD = Last Pay Drawn
E.Minimum Pension
3.14 Though
the concept of minimum pension and the method of computing it have not been
explained by any of the pay commissions or the Government, it is clear that the
Minimum Pension is 50% of the Minimum Wage. The rationale behind the percentage
has nowhere been explained. We however
think that in order to ensure that it is adequate, 100% of the minimum wage
should be the Minimum Pension. The very concept of Need Based Minimum Wage
is that this is a level of wage below which a worker’s family cannot subsist /
survive and remain capable to perform. That being the concept of minimum wage,
it should also apply in the case of Minimum Pension on the premise that any pension lower than the Minimum pay is insufficient to enable a pensioner /
family pensioner to live or survive.
F. Dearness Compensation
3.15 We
have no suggestions for improvement of this issue except that Pensioners may be
paid the same dearness compensation viz., at the same rate as it is being paid
to the serving employees. It should be periodically merged with the basic
pension so that deficiency in the 100% neutralization in the cost of living is
partially compensated.
G. Merger
of Dearness Relief with Basic Pension
3.16 As on
01.01.2014, the Dearness Relief compensation stands at 100%. The suggestion for merger of DR to partially
compensate the erosion in the real pension was first suggested by the Gadgil
Committee in the post 2nd Central Pay Commission period. The 3rd CPC had recommended such
merger when the cost of Living Index crossed over 272 points i.e. 72 points
over and above the base index adopted for the pension revision. In other words, the recommendation of the 3rd
CPC was to merge the Dearness Relief when it crossed 36%. The Government in the
national council JCM at the time of negotiation initially agreed to merge 60 %
Dearness Relief and later the whole of the DR before the 4th CPC was
set up. The 5th CPC merged
98% of DR with pension.
3.17 The methodology adopted for compensating
the erosion in the real value of pension in the interregnum period had always
been through the mechanism of merger of a portion of Dearness Relief. The 5th CPC had recommended that
the Dearness Relief must be merged with basic pension as and when the
percentage of Dearness compensation exceeds 50% accordingly even before the
setting up the 6th CPC the Dearness Relief to the extent of 50% was
merged with pension.
3.18 It was totally ironic to note that
deviating from all other Pay Commissions, the 6th CPC had made a
reversal and recommended that no Dearness Allowance / Dearness Relief should be
merged with the Basic Pay of employees / Basic Pension of Pensioners. The
recommendation had dealt a severe blow below the belt as this recommendation
denied everyone from having any cushion against the erosion caused in the real
value of pension in between two pay commissions. Had the recommendation of V
CPC been continued, there would have been two automatic mergers of Dearness
Relief by this time as V CPC recommended such a merger automatically whenever
the dearness relief index crosses 50% mark.
3.19 The Central Government also taking undue
advantage out of the recommendations in the name of 6th CPC, stiffly
denying any such merger of DA/ DR. This issue requires course correction and we
suggest that the 7th CPC should recommend for automatic merger of DA
/ DR as and when the index crosses the 50% mark and before setting up another
Pay Commission entire DA should be merged with pay as was done by the V-CPC.
CHAPTER – IV
Parity Between Past And Future
Pensioners
4.1 The
Government have recently announced that ‘One
Rank One Pension’ shall be implemented in respect of Armed Forces so that the glaring disparity between the persons of
equivalent rank and status do not draw vastly unequal pensions if they retire
at different point of time is undone. Already there is a complete parity in
pension among the Judges of Supreme Court, High Court and the Comptroller and
Auditor General of India
4.2 In
so far as the Civilian Employees are concerned the principle of parity in
pension between the past and the future pensioners was implemented by the
Government as had been recommended by the V
CPC. The V CPC recommended that “as a follow up of our basic objective of parity
we would recommend that the pension of all pre-1986 retirees may be updated by
notional fixation of pay as on 1.1.1986 by adopting the same formula (Revised
Pay Rules) as far as the serving employees. This step would bring all the past
pensioners to a common platform on to the 4th CPC pay scales as on
1.1.1986. Thereafter, all pensioners who have been brought on the 4th
CPC pay scales by notional fixation of pay and those who have retired on or
after 1.1.1986 can be treated alike in regard to consolidation of their pension
as on 1.1.1996 by allowing the same fitment weightage as may be allowed to the
serving employees”. They further recommended that “the consolidated pension
shall not be less than 50% of the minimum pay of the post as revised by the CPC
held by the pensioner at the time of retirement”. The V CPC further said that
“this attainment of reasonable parity needs to be continued so as to achieve
complete parity over a period of time”. However the VI CPC totally ignored
these recommendations of the V CPC and has reintroduced by not adopting the
same formula for post 1996 retirees, and by not recommending the same fitment
benefit and other recommendations liberalising the pension rules in respect of
pre-2006 retirees. Thus a huge disparity between pre-2006 and post-2006
retirees has been created by the VI CPC.
4.3 The
VI CPC had however recommended a modified parity between them which has also
actually been slashed down by the Government interpreting it as the Pay Band instead of ‘Pay in the Pay Band’. Honourable Courts
have however directed the Government that the formula of modified parity may be implemented as recommended by the 6th
CPC and was accepted by the Government initially.
4.4 We
therefore urge that pay of every pre-2014 retiree should be notionally
re-determined (corresponding to the post from which he or she retired and not
corresponding to the scale from which he or she retired) as if he or she is not
retired and then the pension be computed under the revised liberalised rules which
are to be applicable to the post-2014 retirees.
CHAPTER – V
Family Pension
- Family
Pension
5.1 At present
the family pension is given at the rate of 30% of Pay last drawn. However,
family pension shall be equal to 50% (67% as proposed by us) of pay last drawn
or twice the rates given above, whichever is less and the amount so admissible
shall be payable from the date following the date of death of the Government
Servant for period of 7 years or for a period up to the date on which the
deceased Government Servant would have attained the age of 67 years had he
survived / 10 years in case of death in harness. The family pension is not less
than Minimum Pension.
5.2 The above
Rule is applicable to a Government Servant who is not governed by Workman
Compensation Act, 1923, if he dies while in service, after having rendered not
less than 7 years of continuous service.
5.3 The
prescribed period for which the family pension is payable is as under:
(i) In the
case of a widow or widower, up to the date of death or remarriage
whichever is earlier.
(ii) In the case of a Son until he attains the
age of 25 years.
(iii) The
unmarried / widowed / divorced daughter.
- The disabled
mentally retarded child of the Government Servant.
5.4 We suggest
as under:
(a) The period of 7 years may be raised to
10 years / 15 years in case of death in harness. The period of 7 years is
inadequate for stabilisation of a family after the death of a Government
Servant.
(b) The quantum of family pension for the
period of 10 years should be equal to the pension of the Government Servant was
entitled as per Rules.
(c) After the expiry of the above 10 years
period, the family pension may be reduced to 75% of full pension or 50% of last
pay drawn whichever is higher.
(d) In case of a Son, the family pension may
be allowed up to the age of 28 years. This is suggested because the recruitment
age has been raised in certain cases to 28 years.
(e) The concession extended to a disabled
mentally retarded child to receive family pension until his / her death is
subject to the condition that the said disability should have manifested before
the death of Government employee. We suggest that this condition may be
removed.
5.5 A
Government Servant retired on medical invalidation after rendering less than
10 years of service ( 5 years as per our
proposal) gets no pension. We suggest that he should be granted full notional
pension (i.e., 67% of his emoluments / Minimum pension, whichever is higher. On
death of such a Government Servant his family should get:
(a) Full notional pension / Minimum pension
during first 10 years after his death.
(b) 75% of the above or Minimum pension,
whichever is higher, thereafter.
- Additional
Pension:
5.6 In the case
of family pensioners also taking into account their solitude and inability to
earn and the ever rising cost of living etc we request for the enhancement of
the family pension at the following rates:
On attaining age of
|
Increase
in % of family pension
|
65
years
|
20
|
70
years
|
40
|
75 years
|
60
|
80
years
|
80
|
85
years
|
90
|
90
years
|
100
|
- Extra
Ordinary Pension
5.7 The 5th
CPC in Para 135.17 of its Report has
recommended that regulation of compensation or disabilities categorized under
(b) and (c) follows:
“II –
Cases of disability (100%) resulting in discharge from service”
“Normal
pension and gratuity admissible under CCS (Pension) Rules, 1972, without
insisting on the requirement of minimum service of ten years plus Disability
Pension equal to the normal Family Pension, i.e., 30% (as per our proposal 50%)
of the basic pay”.
5.8 The
Department of Pension & Pensioners Welfare, while issuing orders on
acceptance of the recommendation vide OM
No.45/22/97-P&PW(C) dated 3.2.2000 (incorporated in Appendix-3 of Swamy’s
Pension Compilation) the well-meaning recommendation has been altered as
follows:
“III – Disability Pension – for cases covered under
categories ‘B’ and ‘C’.
5.9 Extra
Ordinary Family Pension:
“(1) Normal pension and gratuity admissible under the CCS
(Pension) Rules, 1972 plus – Disability Pension equal to 30% of basic pay for
100% disability.”
This has resulted in a Group ‘D’ employee with 6 years’
service, who has been invalidated (with 45% disability) and boarded out of
service not getting the minimum pension towards ‘Service element’. This
injustice is required to be set right.
CHAPTER – VI
Gratuity And Commutation Of Pension
Gratuity
6.1 Retirement Gratuity is paid at ¼ of basic pay for each
completed six monthly period of qualifying service subject to a maximum of 16.5
times of the emoluments. There is also a monetary ceiling of 10 lakhs. This is
applicable to all Government Servants who retire on completion of 5 years of
service. However, if a person dies in
harness his family is granted the gratuity at certain prescribed rates:
6.2 We
suggest that the gratuity may be calculated on the basis of 25 effective days
as against 30 days in a month. We make this suggestion because the Government
Servant should not be paid at a rate lesser than what is admissible under the
Gratuity Act.
6.3 The
ceiling of 16.5 times should also be removed. This is because under existing
rules gratuity is reduced in the case of a Government Servant who has put in
less than 33 years of service. In the banking industry there is no such ceiling
of 16.5 months’ salary but the retiring bank employees are getting at the rate
of ½ a month salary for every year of service even over and above 33 years of
service. Therefore, it is but logical that for a service span exceeding 33
years, the gratuity should be higher and the above ceiling be withdrawn.
Commutation of Pension and its Restoration
6.4 Central
Government employees are permitted to commute up to 40% of their basic pension.
We have no suggestion to make in this regard.
6.5 In
the light of Supreme Court decision, commuted value of pension is restored on
completion of 15 years or on reaching 75 years of age whichever is later. Most
of the State Governments are restoring full pension after 12 years or on
reaching 70 years of age. We, therefore, propose that full pension be restored
after 12 years, or on reaching the age of 72 years, whichever is earlier. From
the old table given below it will be seen that the entire commuted value gets
repaid to the Government by the Pensioners within 12 years.
Sl.No
|
Details
|
Age next
birth day = 61 years
|
1
|
Commutation
factor
|
9.81
|
2
|
Amount
commuted
|
Rs. 100
|
3
|
Commuted
value received
|
Rs.11,772
|
4
|
Amount
recovered in 12 years
|
Rs.14,400
|
5
|
Amount
recovered in 15 years
|
Rs.18,000
|
6
|
Excess
recovered in 12 years
|
Rs. 2,628
|
7
|
Excess
recovered in 15 years
|
Rs. 6,228
|
6.6 Now when the commutation factor has
been reduced and is applicable after 2008, the restoration of commuted pension
should be after 10 years. It will be seen that entire commuted value gets
repaid within 10 years as could be clear from the table given below.
Sl.No
|
Details
|
Age next birth day = 61 years
|
1
|
Commutation factor
|
8.194
|
2
|
Amount commuted
|
Rs.100
|
3
|
Commuted value received
|
Rs.9,833
|
4
|
Amount recovered in 12 years
|
Rs.12,000
|
5
|
Amount recovered in 15 years
|
Rs.18,000
|
6
|
Excess recovered in 12 years
|
Rs.2,167
|
7
|
Excess recovered in 15 years
|
Rs.8,167
|
6.7 Taking
all these factors we suggest that the commuted pension may be restored on
completion of 10 years or reaching the age of 70 years, whichever is earlier.
CHAPTER – VII
Medicare
.1 The
following landmark judgments of the Supreme Court of India have held that the
enjoyment of highest attainable standard of health is recognized as a
fundamental right of all workers / pensioners in terms of Article 21 read with
Article 39, 41, 43 and 48 of the Constitution:
- Consumer education
and Research Central and others Vs Union of India (AIR 1995 Supreme Court
922)
- Laxman Thammappa
Kothagiri Vs General Manager Central Railway & Others [2005(1) SCALE)
- Indian Medical
Council Vs V.P.Shantha & Others (1995(6) SCC651)
Therefore improvements in the existing Medicare systems
are absolutely essential.
7.2 Nursing Homes / All India Delhi
7.3 CGHS: We wish to invite attention of 7th
CPC to the recommendation made by the V CPC as detailed in Para
140.11 of their report regarding extension of CGHS. Unfortunately, the well
intentioned recommendation has remained still as recommendation only. Under
some plea or the other, there had been practically no expansion whatsoever in
this regard, which is regrettable. A number of proposals had been forwarded to
the government by the All India Central Confederation of Pensioners
Associations, Delhi
7.5 Discrimination
to P&T Pensioners: The
Central Government Pensioners, whether they were beneficiaries or not while in
service, are permitted to join CGHS on retirement. However the Ministry of Health
& FW had issued an order dated 1.8.1996 according to which all P&T
Pensioners who were not participating in CGHS while in service have been
debarred. This in itself is a very grave discrimination, which is not
permissible under Article 14 of the Constitution. This was therefore was
challenged in Courts and the latest position achieved is that the Courts have
held that the P&T Pensioners may be permitted to participate in CGHS or
alternatively covered under CSMA Rules, 1944.
- P&T
Dispensaries: In the meantime,
following the recommendations of the V CPC and VI CPC, 19 P&T
Dispensaries in 12 CGHS Cities have been merged with the CGHS. Instead of
now allowing all P&T pensioners irrespective of the station they
live, only those who are living in these 12 Cities have been allowed to
participate in the CGHS. This is also discriminative because all other
Central Pensioners are permitted to join CGHS irrespective of the fact
where they are living. It is therefore urged that the 7th CPC
should recommend that the above discrimination is put an end to and all
P&T Pensioners may be allowed to participate in CGHS.
- Smart
Cards to Pensioners: Smart
Cards may be issued to all Pensioners from all Department (including
Postal Pensioners) and their dependents for cashless and hassle less
medical facilities across the country in all Government hospitals; all
NABH accredited Multi Super Speciality Hospitals which have been allotted
land at concessional rates or given any other aid or concession by any
Government; all CGHS, RELHS and ECHS empanelled Hospitals.
- Hospital
Regulatory Authority: We
suggest that a Hospital Regulatory Authority shall be set up to ensure
that the hospitals provide reasonable care to Smart Card holders. This
Authority can undertake periodical revision of CGHS approved rates for
several kinds of medical treatment as well as for lab tests in consonance
with the prevailing market conditions so that no crisis develops like
refusal of treatment by empanelled
hospitals.
- Fixed
Medical Allowance: The
Government fixed the rate of FMA as 300/- per month to the Pensioners not
covered under CGHS etc. Several appeals for revision of this amount in a
realistic manner to suite the conditions prevailing on counts like
Doctor’s fees, cost of medicines, rate of lab tests etc went in vain as
the Government stoutly refused to enhance this FMA in a reasonable
manner. It can be seen that the Employees Provident Fund Organisation
under the Central Government’s Ministry of Labour was paying a monthly
FMA to its employees at the rate of 1200/- prior to 6th CPC
when the other Central Government employees were drawing only 100/- per
month. The same EPF Organisation came forward to enhance the said FMA
from 1200/- to 2000/- per month w.e.f. 1st March, 2013 for the
serving employees, EPF pensioners and family pensioners. When an
organisation under the same Central Government has taken steps to
suitably enhance the Fixed Medical Allowance in consonance with the
market conditions, there is no justification whatsoever for the Central
Government to adamantly refuse to keep this FMA at a lowest level of
Rs.300/- per month which everyone knows is totally inadequate to the
medical needs of a pensioner’s family. We suggest that the 7th
CPC recommend for refixation of FMA @ 2000/- per month plus DA thereon.
In addition this FMA shall be permitted to those pensioners who want to
undergo only Unani or Ayurveda or Homeopathy type of treatments even
though they live in areas covered by CGHS.
- CS (MA) Rules 1944: In the interregnum period of permitting all
pensioners into the CGHS without any discrimination, the CSMA Rules, 1944
should be extended to pensioners living in non-CGHS areas and stations,
which are at present not covered by CGHS. As recommended by V CPC, vide
Para 140.18 of their report, benefit of CS (MA) Rules, 1944 should be
extended to pensioners in non-CGHS areas at least to the extent of full
reimbursement of expenses incurred for hospitalization in a Government
hospital or hospitals recognized under CS (MA) Rules for the serving
employees or those hospitals recognised by State Governments for such
purposes for their employees. To cite examples, in the City of
- Several cases of
claims for reimbursement of medical expenses incurred by pensioners lving
in non-CGHS areas have been decided in favour of pensioners by the CATs
and even the High Court of Gujrat at Ahmedabad. 7th CPC is
therefore requested to make suitable recommendation in this regard in
order that even if CGHS dispensaries are not opened, for whatever reasons
they may be, the Central Government pensioners may avail medical
in-patient facilities (in hospitals recognized under CS (MA) Rules, 1944
for serving employees) and get reimbursement of expenses from the
departments to which they belong.
- It is a fact that
ESIC medical scheme caters for more than 35 millions of beneficiaries in
the private factory employment sector. If the ESI System with a network
of 144 hospitals, 42 Annexes, 1400 dispensaries and tie up with 2041
private medical practitioners besides with a large number of Super Specialty
Hospitals can provide medicare, why should not CGHS / CSMA cater for the
medicare needs of more than 40 lakhs of employees and more than 30 lakh
of pensioners spread all over the country like the ESIC beneficiaries?
The 7th CPC may kindly examine the feasibility of improving
the present CGHS / CSMA formats to ensure Medicare to all Central
Government employees and Pensioners. There is no need absolutely to scout
for alternate method. The recommendation of the 5th CPC for
suitably amending CS (MA) Rules, 1944 for providing indoor medical
attention to a very small segment of Central Government Pensioners
residing in non-CGHS areas should not pose any insurmountable hurdles. It
is fortunate that the nodal Ministry viz., Ministry of Health and Family
Welfare, has accepted the need for Medicare to 60 plus retired personnel
that they should not be deprived of the medicare and the Judiciary have
taken cognizance of this principle, there should be no hesitation in
amending the CS(MA)Rules, 1944 for providing in-door attention to the
retired employees.
CHAPTER – VIII
Miscellaneous
8.1 Pension
should be net of income tax. Such a recommendation was made by the V CPC in Para 167.11 of their report but the Government did not
accept it. It should reiterate with emphasis this demand for reconsideration.
8.2 Casual Labour / Contingent Paid Employees:
At present Casual labourers / Contingency paid employees are allowed to count
their service towards pension @ 50% of the total period falling between
acquiring the temporary status and regularization and full service thereafter.
The above benefit is also subject to further condition that such employees
should be regularized and absorbed against a regular post. The operation of
this condition is so harsh that there are many cases in which the entire
service rendered non pensionable because the employee may be retired /
retrenched / die before such regularization. We therefore propose that the 50%
of service before acquiring temporary status and full service after acquiring
temporary status irrespective of whether he / she was regularized or not should
count towards pension. Similarly these employees have to remain for long
durations without any regularisation and are deprived many amenities which a
regular employee gets. Not to treat their service pensionable for a
considerable period leaves them with very meagre pension and in some cases with
no pension. This is against the principle of social justice and therefore our
above suggestion should be considered by the 7th CPC.
8.3 Pensionable service of Casual and GDS:
Recent judicial pronouncements have directed the Government to take into
account the date of entry in the service as a casual labourer or a temporary
status Mazdoors etc into criterion and not the date of regularisation to
determine as to whether he or she is to be brought under the CCS (Pension)
Rules, 1972 or under the NPS. Therefore we propose that all casual labourers,
Gramin Dak Sewaks in the Department of Posts etc are to be brought under the
Defined Benefit Pension Scheme under the CCS (Pension) Rules, 1972 for grant of
pension on their regularisation in the services, even though they are getting
regularisation after 1.1.2004 because they should be treated as having entered
the services before 1.1.2004 as per the judgment of Court. We therefore propose
that entire service rendered as a casual labour irrespective of the fact
whether he was granted temporary status or ultimately regularised should be
treated as pensionable service and the service rendered as GDS in Department of
Posts also should be treated in the similar fashion.
8.4 Interruption causing forfeiture of
service for pension: The existing provisos defining interruptions in
service causing forfeiture of past service for purposes of pension are quite
antiquated, unnecessary and unreasonably harsh, which should be removed from
the statue book. In formative years when the British Authorities were
recruiting Indians in their Administrative Services, it was noticed that during
sowing and harvesting seasons, a large number of employees used to go back to
the fields without any regular leave etc. As a deterrent, the rules regarding
interruption in service had been legislated then. Since most of the employees
have now lost their rural roots, such frequent and recurring interruptions are
no longer there. Interruption as and when rarely caused is due to reason mostly
beyond the control of an employee. We therefore, propose that instead of
treating interruption to cause an automatic forfeiture of past service for
pensions, it should be dealt with under CCA Rules. The provision causing
forfeiture of service for pension purposes on account of interruption may,
therefore,, be deleted.
8.5 Housing: Central Government employees
in occupation of Government Staff Quarters on retirement are constrained to
hire private accommodation at exorbitant and prohibitive rental. They are per
force to spend a sizable portion of the pension on rent alone. While in
services, though they are entitled to get house building advance etc, most of
them are unable to avail the facility and construct house for the salary income
they earn is incapable of making the both ends meet. It is therefore necessary
that a provision for reserving a percentage of the number of residential units
constructed by the State / Central Housing Boards and Corporations, for outright
purchase of allotment on instalment basis to pensioners. We therefore suggest
that 10% of the total units constructed by the State Housing Boards, Central
Housing Corporations etc to be reserved for pensioners. Similarly quite a
number of staff quarters sometimes lie vacant without occupation by serving
employees and such quarters may be allotted for pensioners on payment of just
licence fee only. In addition, dormitory type single room tenements with common
dining hall, library, cultural centre, auditorium, basic medical facility etc
may be constructed at the outskirts of the cities and allotted to pensioners on
payment of a reasonable amount. Until such schemes are accepted and worked out,
HRA may be granted to the Pensioners on the same rates as is given to serving
employees.
8.6 Travel Concession: Senior Citizens on
attaining the age of 60 years (Males) and 58 years (females) are given fare
concession in Railway travel at the rate of 40% and 50% respectively. We
suggest that retired Government Servants may be allowed the facility of travel
concession once in 4 years to any place inside India
8.7 Resignation as retirement: Resignation
is tendered by a Government Servant in varying circumstances. It is felt,
therefore, that resignation need not always result in forfeiture of past
services (Rule 26 of Pension Rules) and denial of Pension. An objective view is
required to be taken by the appointing authority in the case of all those who
tender resignation after completion of 20 years of service. Such resignation
may be treated as voluntary retirement and benefits extended accordingly. In
this connection we may cite the following decisions of the Judiciary:
(a) CAT Mumbai full bench OA
No.1384/1985 decided on 8.7.1997
(b) CAT Ahmedabad OA No.498/2002
decided on 18.03.2004
(c) CAT Jabalpur O.S No.623.1991
decided on 13.10.1995
(d) Bombay High Court WP No.615/1996
and WP No.2586/1997 decided on 28.02.2002.
Even 5th CPC in Para 133.79
had recommended that terminal gratuity at difference rates be paid to those who
resign after putting in certain years of service and resignation after 20 years
of service may be treated as voluntary retirement and pension may be paid
accordingly. We, therefore, request the 7th CPC that the above
recommendation may be reiterated.
8.8 There
are certain employees who are in the CPF Scheme but could not opt for the
Pension Scheme in the year 1986. These are mostly women employees employed in
Atomic Energy Commission etc who could not make up their mind as to whether
they could render the requisite number of service necessary for grant of full
pension. In certain autonomous bodies while options for Pension scheme have
been obtained, this is not being granted.
They may now be allowed to revise their option. Our suggestion is that
CPF / SRPF retirees may be granted Minimum Pension.
8.9 Death Relief to Pensioner’s families: The serving personnel of Union
Government are now granted death relief of Rs.10000/-Immediately on their death
for meeting funeral expenses. Even State Governments like Andhra extend such
benefit to Pensioners’ families. Such a benefit may, it is suggested, be
extended to Pensioners and family pensioners of the Union Government as the
latter are also facing such similar contingencies as in case of serving
employees for a sudden need of the money for spouse or legal hairs of the
pensioner on his death. Similar relief may be extended in cases where spouse of
the Pensioner predeceases the Pensioner.
8.10 Family
Security Fund: The family of the Pensioner shall be granted a lump sum of
1,00,000 on the death of the Pensioner by introducing a scheme for Family
Security Fund with the arrangement for contribution by the pensioners. At
present such scheme is in existence in states like Tamilnadu, where the
Pensioner is contributing a monthly contribution of 80/- and in the event of
his / her death, the spouse is given a sum of Rs.50,000 as family security
fund. Therefore the 7th CPC is requested to examine this proposal
for framing such a scheme for facilitating payment of at least 1,00,000 rupees
on the demise of the pensioners to their
spouses.
8.11 Pension Adalats: The system of Pension Adalat was
introduced initially by Department of
Pension and Pensioners Welfare and later on adopted by Railways, Defence,
P&T Departments. The V CPC in Para 139.17
had recommended that this system is very effective in finalising disputed cases
of pensions and should be introduced in all the departments. These adalats
should also function for settling the cases of field formations and meet at
least once in quarter. The representatives of the Pensioners Associations
should be allowed to present the cases of the concerned pensioner who may not
be conversant with the rules. The above recommendation which were not mandatory
has not been implemented. We therefore request 7th CPC that it
should be made mandatory onall the Ministries and Departments of Indian
Government to conduct these Adalats periodicaly and without fail. We also
suggest that these Adalats may be conducted at different levels with the
following frequency:
i) Divsional level Once in 3 Months
(ii) Zonal / Regional level Once in 6 Months
(iii)Head quarter level Once in a Year
(iv)Ministerof State
8.12 SCOVA: The forum of SCOVA (Standing
Committee of Voluntary Associations) is facilitated by the Central Government
for interaction with the Pensioners’ Organisations for discussing the issues of
pensioners. This forum has no statutory authority as like the negotiating forum
founded for negotiating issues of Central Government employees viz., the
National Council JCM with mandatory facility for compulsory arbitration and other
benefits like National Anomaly Committee to sort out the anomalies arising out
of implementation of Pay Commission reports etc. Similarly there is no system
of granting recognition to representative organisations of Pensioners and at
present it is at the pleasure of the Central Government some of the Pensioners
Organisations are invited to SCOVA as Members on a rotational basis only. The
number of central government pensioners belonging to various departments is no
doubt in great numbers and therefore there is necessity to establish a forum
with formal authority for discussing and negotiating issues of pensioners. It
can be seen that there are hundreds of pensioners’ federations, associations,
organisations in the country like mushroom growth and there is no orderliness
amongst them and each and every pensioner organisation is raising its own
demands. There is no orderliness in this system. Therefore, we suggest, that
the VII CPC may recommend to the Government to upgrade the status of the SCOVA
like the other forum of National Council JCM with separate Rules framed for
granting recognition to Pensioners Organisations to give them representation in
the SCOVA. All the All India Pensioners
Associations/Federations may be accorded recognition & extended such facilities
as have been granted to the serving employees Association/Unions/Federations.
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