Pension and Related Benefits of Civilian
Employees
Chapter
10.1
Terms
of Reference of the Commission
10.1.1
The term of reference of the Seventh CPC with regard to pension is as under: “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 have retired prior
to the
date
of effect of these recommendations, keeping in view that retirement benefits of
all Central
Government
employees appointed on and after 01.01.2004 are covered by the National
Pension
System (NPS).”
Pensions-
Constitutional Provisions and Judicial Position
10.1.2
Article 366(17) of the Constitution defines pension as: “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
subscriptions
to a Provident Fund.”
10.1.3 Pension has
been the subject matter of a number of landmark judgements by the
Supreme Court of
India in which its nature, obligations of the government thereon and the
recognition of
distinctiveness in categories of pensions and pensioners has been settled.
10.1.4 In its
judgment in D.S. Nakara and others Vs Union of India [AIR 1983 SC 130] the
Supreme Court held
that a pension scheme consistent with available resources must provide
that a pensioner
would be able to live free from want, with decency, independence and self
respect and standard
equivalent at pre-retirement level. It held that pension is not an ex-gratia
payment but payment
for past services rendered. At the same time in Indian Ex-Services
League & Others
Vs Union of India & Others [(1991) 2 SSC 104] the Supreme Court held that
the decision in the
Nakara case has to be read as one of a limited application and its ambit
cannot be enlarged to
cover all claims made by the pension retirees or a demand for an identical
amount of pension to
every retiree from the same rank irrespective of the date of retirement,
even though the
reckonable emoluments for computation of their pension be different. In the
judgement in Vasant Gangaramsachandan
Vs State of Maharashtra & Others [(1996) 10 SSC
148] Supreme Court
reiterated that pension is not a bounty of the State. It is earned by the
employee for service
rendered to fall back upon after retirement. It is attached to the office and
it cannot be
arbitrarily denied.
10.1.5 In the case of
petitioners who were retired Railway employees, covered by or who opted
for the Railway
Contribution Fund Pension Scheme, the Supreme Court in Krishna Kumar Vs
Union of India and
Others [(1990) 4 SSC 207] averred that it was never held that both the
pension retirees and
PF retirees formed a homogenous class and that any further classification among them
(viz., pension retirees and PF retirees) would be violative of Article 14.
Under the
Pension Scheme, the government’s
obligation does not begin until the employee retires but it
begins on his/her retirement and
then continues till the death of the employee. Thus, on the
retirement of an employee,
government’s legal obligation under the PF account ends while
under the Pension Scheme it
begins. The rules governing the PF and its contribution are entirely
different from the rules
governing pension. An imaginary definition of obligation to include
all the government retirees in a
class was not decided and could not form the basis for any
classification for this case.
Strength of
Pensioners as on 01.01.2014
10.1.6 Pensioners can be broadly
categorised into Civil and Defence. Within civil pensioners
there exist three broad
categories: Central Civil, Railways and Post.
10.1.7 As on 01.01.2014, as per
data reported to the Commission, the total number of
pensioners were 51.96 lakh. The category wise
break up is shown in the pie chart below.
Pensioners and
Family Pensioners
10.1.8 The break-up of the total 51.96
lakh pensioners as on 01.01.2014 between pensioners
and family pensioners, category wise, is as under:
10.1.9 The table above brings out
the following:
i. Of the total 51.96 lakh
pensioners as on 01.01.2014, 11.83 lakh viz., 23 percent were
family pensioners.
ii. Civilian pensioners
consisting of Central Government Civil, Railways and Posts, as on
01.01.2014 number 27.81 lakh
while defence pensioners (including defence civilians
were 24.15 lakh. Defence
pensioners (including defence family pensioners and defence
civilians) constitute 47 percent of all pensioners.
Age
Analysis of Pensioners as on 01.01.2014
10.1.10 Payment of additional
pension/family pension with advancing age came into force
based on recommendations of the
VI CPC. This Commission, with a view to ascertain the
strength in various age groups,
called for information on age profile of pensioners and family
pensioners. The data with regard
to pensioners in terms of various age groups, as reported to
the Commission, for the five
categories of pensioners’ viz., Central Civil, Railways, Post,
Defence (Civil) and Defence (Services) is as under:
# Others includes those below 60
years of age and those above 100 years.
@ Others under Central Civil
additionally includes cases whose revision had not been effected,
certain categories of pensioners
like Judges of Supreme Court and High Courts, Ex-MPs, freedom
fighters.
^ Railways have included those
less than 60 years of age in the 60-70 age group.
10.1.11 From the table above it
can be observed that of the total 51.96 lakh pensioners, 37
percent are in the 60-70 age
group, about 26 percent each are in the 70-80 and ‘Others’ age
group. The balance 11 percent are
in the 80 plus category and thus entitled to enhanced pension
based on advancing age.
10.1.12 The stacked bar graph
brings out for each category of pensioners the break up in
percentage terms of each age
group viz., 60-70 years, 70-80 years, 80-90 years, 90-100 years
and Others.
Railways have
included those less than 60 years of age in the 60-70 age group
10.1.13 The graph above brings
out the following:
i. Railways, in comparison to
other categories have largest percentage of pensioners
above the age of 80 years. While
in all other categories this percentage is in the range
of 7-9 percent, in the Railways
it is 21 percent.
ii. Defence Services have a large
percentage of personnel retiring at an early age, as is
confirmed by the data. 57 percent
of defence service pensioners fall in the ‘Others’ age
group. Central Civil which also
includes CAPFs has 25 percent in ‘Others’ age group.
Expenditure on
Pension and other Retirement Benefits
10.1.14 Expenditure on pensions
consists of superannuation and retirement pension,
commuted value of pension, gratuities,
family pensions, leave encashment benefits,
compassionate allowance,
government’s contribution for defined pension scheme for civil
personnel joining on or after
01.01.2014 etc. It also includes expenditure on medical treatment
of CGHS pensioners. The total
expenditure of the Union Government on pensions between FY
2007-08 and 2013-14 is as under:
10.1.15 The table above brings
out broadly the following:
i. Substantial growth in
expenditure on pensions by 3.1 times during the period 2007-08
to 2013-14, particularly in FY
2008-09 and 2009-10, in the aftermath of
implementation of the
recommendations of the VI CPC.
ii. As a percentage of GDP
expenditure on pension rose significantly from 0.69 in FY
2007-08 to 1.20 in FY 2009-10.
While there has been a fall in the ratio it was 0.92 in
FY 2013-14, well above the levels
prior to the implementation of the Report of the VI
CPC.
iii. After the spurt in
expenditure in FY 2008-09 and 2009-10, the expenditure stabilised
from FY 2010-11. Yearly increases
thereafter can be attributed largely to the increase
in number of pensioners and
additional dearness relief paid to pensioners from time to
time.
iv. Expenditure on defence
pensions has been the single largest component over the years
ranging between 43.5 percent and
48.7 percent of total expenditure of the Union
Government on pensions.
Pension Regime
Over Time
10.1.16 The changes in the
pension payout regime in the recent decades, in terms of certain
key parameters relating to
pension, are listed below.
10.1.17 Minimum and Maximum
Pension: The minimum and maximum pension as
admissible based on
recommendations of successive CPCs/decision of Government thereon is
as under:
10.1.18 Minimum and Maximum
Family Pension: The minimum and maximum family
pension as admissible, based on
recommendations of successive CPCs/decision of
Government thereon is as under:
10.1.19 Gratuity:
10.1.20 Commutation: The
15 year period of restoration has been uniform through the
currency of the IV, V and VI CPCs.
10.1.21 Ex Gratia Lump Sum Compensation
Circumstances and Amount:
10.1.22 Leave Encashment permitted at the time
of retirement:
Demands
made with regard to Pension
10.1.23 The principal demands
made before the Seventh Central CPC in respect of pensions
for civil personnel and those
common to both civil and defence personnel are:
i. Raising the existing rates of
pension and family pension
ii. The quantum of minimum
pension should equal the minimum wage
iii. Increase in the rate of
additional pension and family pension to the older pensioners as
also reducing the age the
eligibility for its receipt from the existing 80 years
iv. Increasing the existing time
period of seven years for enhanced family pension.
v. Enhancement in the gratuity
ceiling of ₹10 lakh and its indexation
vi. Rationalisation of death
gratuity
vii. Reduction in the time period
for restoration of basic pension, reduced on account of
commutation
viii. Ex-gratia lump sum
compensation
ix. Enhancement of ceiling of
Earned Leave for purposes of Leave Encashment
x. Enhancement in the existing
rates of Fixed Medical Allowance
xi. Enhancement in the rates of
Constant Attendance Allowance
xii. Parity in Pension between
pre and post Seventh CPC retirees
Raising
the Existing Rates of Pension and Family Pension
10.1.24 In representations to and
in meetings with the Commission a number of entities have,
while seeking a raise in pension
from the existing level of 50 percent of last pay drawn,
questioned the basis for
determination of pension at 50 percent of last pay drawn. Similarly
representations for increasing
family pension from existing 30 percent to 50 percent of the last
pay drawn have been received by
the Commission.
Analysis and
Recommendations
10.1.25 The Commission sought the
views of the government in this regard. The Department
of Pension and Pensioners Welfare
stated that the VI CPC had recommended calculation of pension @ 50 percent of
last pay or the average emoluments (for last 10 months) whichever is
more beneficial. The Commission
also recommended delinking of pension from qualifying
service of 33 years. Effectively
the dispensation on pension has already been liberalised by the
VI CPC. Further the
recommendations of this Commission in relation to pay of both the
civilian and defence forces
personnel will lead to a significant increase in the pay drawn and
therefore in the ‘last pay
drawn’/‘reckonable emoluments.’ Therefore the Commission does
not recommend
any Quantum of Minimum Pension should Equal the Minimum Wage
10.1.26 In
representations/depositions before the Commission it has been stated that the
existing minimum pension fixed at
₹3,500 is low and it has been argued that minimum pension
be fixed equal to minimum pay for
sustenance.
Analysis and
Recommendations
10.1.27 The Commission sought the
views of the government in this regard. The Department
of Pension and Pensioners Welfare
stated that as per the orders issued after V CPC, the
minimum pension in the government
was ₹1,275. The normal revised consolidated pension of
a pre-2006 pensioner is 2.26 of
the pre-revised basic pension. The revised minimum pension
of ₹3,500 is much more than 2.26
time of the pre-revised pension of ₹1,275. Further the
recommendations of this
Commission in relation to pay of personnel will lead to a significant
increase in the minimum pay from
the existing ₹7,000 per month to ₹18,000 per month. This,
based on the computation of
pension, will raise minimum pension from the existing ₹3,500 to
₹9,000. The minimum pension based
on the recommendations of this Commission will
increase by 2.57 times over the
existing level.
Increase in the
Rate of Additional Pension and Family Pension to the Older Pensioners
10.1.28 In
representations/depositions before the Commission, a case has been made by a
number of Pensioners
Bodies/Associations for lowering the existing age slabs of old
pensioners for payment of
additional quantum of pension and family pension from the existing
80 years of age. Enhancing the
rates for payment of additional quantum of pension and family
pension with advancing age have
also been made.
Analysis and
Recommendations
10.1.29 The additional pension
with advancing age came into force based on the
recommendations of the VI CPC.
The rates as applicable for the additional pension are as
under:
· 80 years to
<85 years: 20% of basic pension
· 85 years to
<90 years: 30% of basic pension
· 90 years to
<95 years: 40% of basic pension
· 95 years to
<100 years: 50% of basic pension
· 100 years and more:
100% of basic pension
10.1.30 The Commission sought the
views of the government in this regard. Department of
Pension and Pensioners Welfare
stated that the additional pension for old pensioners of the age
of 80 years and above has been
allowed as per the recommendations of VI CPC. However, it
is felt that the same should be
allowed from 75 years onwards. The Ministry of Defence has
not supported the proposal. The
Commission is of the view that the existing rates of
additional
pension and additional family pension are appropriate.
Increasing the
existing time period of seven years for enhanced family pension
10.1.31 The Commission has
received representations seeking enhancement in the period of
enhanced family pension from the
existing seven years or 67 years, whichever is less, to ten
years in case of death of
retirees.
Analysis and
Recommendations
10.1.32 The current rates of
enhanced family pension are–
i. In the case of death in
service: Payable to the family of a government servant for a
period of ten years from the date
of death of a government servant, without any upper
age limit.
ii. In the case of death after
retirement: Payable for a period of seven years or up to the
date on which he would have
attained 67 years had he survived, whichever is less.
10.1.33 The Commission notes
that the revision with regard to period of eligibility for the
enhanced family
pension of ten years was made based on recommendations of the VI
CPC Report. No
further change is being recommended by this Commission.
Enhancement in
the Gratuity Ceiling and its Indexation
10.1.34 A number of
representations have been received by the Commission stating that there
is a need to revise the existing
ceiling of ₹10.00 lakh with regard to payment of service gratuity.
Analysis and
Recommendations
10.1.35 Rule 49 and 50 of the CCS
(Pension) Rules provides that a government servant is
entitled to get retirement
gratuity equal to one-fourth of his emoluments for each completed
six monthly period of qualifying
service subject to a maximum of 16.5 times of the last
emoluments subject to a maximum
of ₹10 lakh.
10.1.36 The Commission sought the
views of the government in this regard. The Department
of Pension and Pensioners Welfare
stated that the VI CPC has increased the amount of gratuity
from ₹3.5 lakh to ₹10 lakh w.e.f.
01.01.2006. This amount, in the view of the department, is
not commensurate with emoluments
that are available to senior officers at the time of
retirement. The department has
suggested to the Commission that a view could be taken to
index gratuity with amount of DA
admissible at the time of retirement.
10.1.37 The Commission notes that
there is merit in the argument advanced to index the ceiling
on gratuity so that the benefits
of the enhanced ceiling are available to personnel in a manner
which is more even over a time
frame. The Commission recommends enhancement in theceiling of gratuity from
the existing ₹10 lakh to ₹20 lakh from 01.01.2016. The
Commission
further recommends, as has been done in the case of allowances that are
partially
indexed to Dearness Allowance, the ceiling on gratuity may increase by 25
percent whenever
DA rises by 50 percent.
Rationalisation
of Death Gratuity
10.1.38 The Commission has
received representations pointing to a need for rationalization of
current slabs for death gratuity,
especially for the slab of 5 to 20 years of qualifying service in
which family pensioners are
stated to be placed at a disadvantageous position.
Analysis and
Recommendations
10.1.39 As per Rule 50 of Pension
Rules, the death gratuity admissible will be as follows,
subject to the maximum limit prescribed for the
gratuity:
10.1.40 The Commission sought the
views of the government in this regard. Department of
Pension and Pensioners Welfare
stated that it had received similar demands from pensioners’
association and it feels a need
for a review of the existing slabs for death gratuity.
10.1.41 The Commission, after
examination of the matter, recommends the following
revised rates for payment of death gratuity:
10.1.42 The Commission has
received a number of representations requesting reduction of
restoration period of commuted portion of pension
from the existing 15 years.
Analysis and
Recommendations
10.1.43 The Commission notes that
prior to V CPC the commutation allowed was one-third.
However, there was no
restoration. The Supreme Court, vide their judgement dated
09.12.1986, allowed restoration
of pension after 15 years. The Supreme Court in its judgement
specifically stated that though
the amount is recovered in 12 years, yet since there is a risk
factor and some of the states are
restoring pension after 15 years, the period of restoration is
fixed at 15 years. The V CPC in
its recommendation increased the percentage of commutation
to 40 percent and recommended
restoration period at 12 years. But the reduction of restoration
period was not accepted by the
government. The VI CPC did not recommend any change in
the maximum percentage of
commutation allowed or in the period of restoration. This
Commission also
does not recommend any change either in the maximum percentage of
commutation or
in the period of restoration.
Enhancement of
ceiling of Earned Leave for purposes of Leave Encashment
10.1.44 The Commission has received
representations seeking raising the ceiling limit of 300
days to 450 days for purposes of
Leave encashment.
Analysis and
Recommendations
10.1.45 The Commission notes that
based on the recommendations of the VI CPC, serving
employees are entitled for
encashment of Earned Leave up to 60 days while in service. This is
not to be deducted from the
maximum number of Earned Leave of 300 days encashable at the
time of retirement. The VI CPC,
therefore, has further liberalised the regime of leave
encashment.
10.1.46 The recommendations in
relation to pay of both the civilian and defence forces
personnel will
also lead to a significant increase in the pay drawn and therefore in the
total amount of
leave encashment available for an employee. Therefore raising the
present ceiling
of 300 days is not recommended by the Commission.
Ex-gratia lump
sum compensation
10.1.47 The Commission has
received representations seeking enhancement in ex-gratia lump
sum compensation for Next-of-Kin
(NoK) of CAPF, Assam Rifles and defence forces
personnel who die in harness in
performance of their bona fide official duties.
10.1.48 The issue has been dealt
with in Chapter 10.2.
Fixed Medical
Allowance
10.1.49 The Commission has
received representations seeking enhancement in Fixed Medical
Allowance, currently payable at
the rate of ₹500 per month for pensioners not covered under
Central Government Health Service
(CGHS).
10.1.50 The Commission has examined the matter in
Chapter 8.17.
Constant
Attendance Allowance
10.1.51 The Commission has
received representations seeking enhancement in Constant
Attendance Allowance from the
present rate of ₹4,500 per month.
10.1.52 The Commission has
examined the matter in Chapter 8.17.
Parity in
Pension between Pre and Post Seventh CPC Retirees
10.1.53 This Commission has
received a number of representations on the issue of disparities
in pensions between past
pensioners and existing pensioners. The JCM-Staff Side, has in its
memorandum, stated that the pay
of every pre-Seventh CPC retiree should be notionally redetermined
(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 Seventh
CPC retirees. A similar view has
been expressed by a number of other Associations/Bodies
representing Central Government
pensioners. Further, certain groups of pensioners have
contended that based on the
recommendations of the VI CPC, the new pay structure consisting
of Pay Bands and Grade Pays has
led to bunching of a number of pre revised pay scales into a
particular Pay Band. This, in
their view, has placed pre-01.01.2006 pensioners in certain pay
scales/Pay Bands at a
disadvantage not only compared to the post 01.01.2006 pensioners in the
corresponding pay scales but also
in comparison to post 01.01.2006 retirees of lower pay
scales.
Analysis and
Recommendations
10.1.54 The Commission is of the
view that the issue of parity in pensions is extremely
important from the viewpoint of
inter-temporal equity and merits a careful examination.
10.1.55 Treatment of Existing
and Past Pensioners over time: The concerns of pensioners’
associations and of individual
pensioners on the issue of disparities in pensions amongst
broadly comparable retirees, has
been dealt with in reports of successive CPCs and also by the
government. This is detailed in
the succeeding paragraphs.
10.1.56 Till the III CPC, it was
a general view that past and future pensioners cannot be treated
at par and the practice was that
benefit of improvement in the pension would be available to
newly retiring pensioners from a
prospective date. In fact the III CPC took the view that serving
government employees and
pensioners could not be treated at par as regards grant of DA at the
same rate. A significant change
in the paradigm for treatment of pensioners, past and future,
emerged from the judicial
pronouncement in D.S. Nakara vs Union of India in 1982 (AIR 1983
SC 130), based on which, for the
first time, improvements in pensionery benefits were
extended to pensioners who had
retired prior to the date from which improvements became
effective.
10.1.57 The IV CPC recommended,
for both civil and defence pensioners, additional relief in
terms of a percentage increase in
amount of pension subject to a certain minimum increase.
Separate rates were applicable to
pensioners drawing pension upto ₹500 per mensem and those
above ₹500 per mensem.
10.1.58 The V CPC made a
definitive shift in the treatment of past pensioners. The
Commission took the view that the
process of bridging the gap in pension of past pensioners,
set into motion by the IV CPC by
grant of additional relief in addition to consolidation of
pension, needed to be continued
so as to achieve complete parity over a period of time. It,
accordingly, recommended that
pension of all the pre-1986 retirees may be updated by notional
fixation of their pay as on 1
January, 1986 by adopting the same formula as for the serving
employees. The consolidated
pension so arrived at was to be not less than 50 percent of the
minimum pay, as revised by V CPC,
of the scale of the pensioner at the time of retirement.
This principle by which past
pensioners are brought up to the minimum of the scale which
replaced the scale in which the
pensioner retired has been termed as modified parity. This
consolidated amount of pension
was to be the basis for grant of dearness relief in future.
10.1.59 The VI CPC noted that
modified parity had already been conceded between pre and
post 1 January, 1996 pensioners.
It also observed that full neutralisation of price rise on or after
1 January, 1996 had also been
extended to all the pensioners. Therefore, the Commission felt
that no further changes in the
extant rules were necessary. To maintain the existing modified
parity between present and future
retirees, it recommended that those who retired before
01.01.2006 be given the same
fitment benefit as was recommended for the existing government
employees.
10.1.60 The above points to a
distinct transition in the view taken by successive CPCs and the
government, beginning with the
III CPC. The V CPC, by recommending that pension of all the
pre-1986 retirees should be
updated by notional fixation of their pay, made a landmark
advancement in the regime for
past pensioners. In principle, the VI CPC proposed provision
of the same modified parity as
was envisaged in by the V CPC. However, the new pay structure
introduced by the VI CPC, based
on running Pay Bands and Grade Pays, led to the bunching
of a number of pre revised pay
scales into a particular Pay Band, thereby diminishing the
benefit of the intended modified
parity. This naturally led to several representations following
which certain corrective orders
were issued by the government, some of which were based on
the orders of various Courts.
10.1.61 Judicial
Pronouncements on the Issue: The issue of pension has been a matter of
debate in a large number of cases
before the Hon’ble Supreme Court of India. One of the early
leading judgments on the subject
is the case of D.S. Nakara V/S Union of India & Ors. [1983]
1 SSC 305. In this case, it was
held that pensioners form a class as a whole and cannot be
micro-classified by an arbitrary,
unprincipled and unreasonable eligibility criteria for grant of
revised pension. This ratio
further came up for consideration before another constitutional
bench in the case of Krishan
Kumar V/S Union of India & Ors. [(1990 4 SCC 207)]. This
constitutional bench
distinguished the D.S. Nakara (supra) and held that it has limited
application. The D.S. Nakara case
again came up for discussion in the case of Indian Ex-
Services League V/S Union of
India & Ors [(1991) 2 SCC 104)]. This constitutional bench
further considered the case of
D.S. Nakara and held that this case has limited application and
its ambit cannot be enlarged to
cover all claims made by pensioners retirees or a demand for
an identical amount of pension to
every retiree from the same rank irrespective of the date of
retirement, even though the
reckonable emoluments for computation of their pension be
different. The decision of D.S.
Nakara came up for consideration in two successive
constitutional benches and they
did not approve the ratio enunciated in the case D.S. Nakara
(Supra). Subsequently, the case
of D.S. Nakara (Supra) has been followed by some benches
and some have distinguished it. A
large number of cases have been summed up recently in the
decision given in the case of
State of Punjab V/S Amar Nath Goyal [(2005) 6 SCC 754)]. In
this case, all cases on the
subject were reviewed and it was laid down that the government can
make distinction in the matter of
payment of pension between two classes of pensioners.
Various decisions, including the
aforesaid two constitutional benches i.e., Krishan Kumar
(Supra) and Indian Ex-Services
League (Supra) and the judgement given in D.S. Nakara
(Supra) were considered.
Decisions given in the case of Action Committee South Eastern
Railway Pensioners V/S Union of
India [(1991 Supp. (2) SCC 544)] was also referred to. In
this case also, it was accepted
that distinction can be made between two pensioners. Similarly
in the case of State of Rajasthan
V/S Amrat Lal Gandhi [(1997) 2 SCC 342)], it was held that
financial implication can be a
consideration for making two classes of the pensioners though
similarly placed. Similarly in
the case of State of Punjab V/S Buta Singh [(2000) 3 SCC 733)],
the Supreme Court held that the
position that emoluments of persons holding the same status
who retired after a notified date
must be treated to be the same cannot be accepted. In the case
of State of Punjab V/S G.L. Gupta
[(2003) 3 SCC 736)] it was held that for grant of additional
benefits that had financial
implications, the prescription of a specific future date for conferment
of additional benefits could not
be considered arbitrary. However, the Apex Court has also
taken a contrary view in some
cases relying on D.S. Nakara’s case.
10.1.62 In the case of Dhanraj
& Ors. V/S State of J&K and others [(1994) 4 SCC 30)], it was
held with reference to government
order of J&K, that the distinction between pre and post
retires of June 1981 in payment
of pension cannot be justified and it is violative of Article 14
of Constitution. Similarly, in a
recent judgement of Hon’ble Court given in the case of Union
of India & Anr. V/S SPS Vains
(Retd.) & Ors. [(2008) 2 SCC (LS 838)], the case of D.S.
Nakara (Supra) was followed and
it was held that the disparity created within the same class
i.e., two officers both retired
as Major Generals one prior to 1.1.1996 and other after that date
but getting different amounts of
pension was arbitrary and that the same also offends Article
14 of the Constitution of India.
10.1.63 The legal position that
emerges from the aforesaid decision of the Apex Court is that
classification should be founded
on a rational basis while distinguishing one class from other.
It should not be discriminatory
or violative of Article 14 of the Constitution. The Apex Court
has examined each case on its
merit and wherever they have found that distinction between
similarly placed classes is
discriminatory then the same has been struck down.
10.1.64 Pension Payout to
Personnel in the Central Government: The preceding paragraphs
bring out the evolution of the
pension regime over time and the role of the Judiciary in settling
the law on the subject. There is
clear evidence that governments have progressively moved
towards a liberalised regime for
past pensioners. The VI CPC has further provided for
additional pension with advancing
age. What this has effectively translated into is testified by
examples of pension
fixation of personnel across groups who have retired in the past decades.
For example a Secretary to the
Government of India retiring on 31 August, 1992 was in receipt
of a basic pension of ₹4,000 per
month. The basic pension after implementation of the V and
VI CPC got revised to ₹13,000 and
₹40,000 respectively. With the benefit of dearness relief37
this pensioner is on date
entitled to a total payout in terms of pension and dearness relief of
₹87,600. Further, as a pensioner
who is over 80 years of age he is entitled to an additional
pension equivalent to 20 percent
of basic pension. In effect the pensioner is in receipt of a total
payout of ₹105,120 per month as
on date. Similarly, a Director (in GP 8700 as per VI CPC)
retiring on 30 September, 1994
with a basic pension of ₹2,556 per month got revised basic
pension of ₹7,042 and ₹22,701 per
month after implementation of the V and VI CPC
respectively. With the benefit of
dearness relief38
the
pensioner is on date entitled to a total
payout in terms of pension and
dearness relief of ₹49,715 per month. The basic pension for a
Group `C’ official retiring on 30
September, 1991 from the scale of ₹950- 1500 was fixed at
₹717 per month. His basic
pension, after implementation of the V and VI CPC, got revised to
₹2,188 and ₹4,946 respectively.
With dearness and pensionery increase due beyond 80 years
the pensioner is in receipt of a
total payout of ₹12,998 per month.
10.1.65 The three illustrations
point to a substantial increases in pension, across groups, during
a span of between 20 and 25
years.
10.1.66 Recommendations of the
Commission: For employees joining on or after
01.01.2004, the concept of
pension, so far as Civilian employees including CAPFs are
concerned, has undergone a
complete change. After the enactment of the Pension Fund
Regulatory and Development Act,
2013, it is not the exclusive liability of the government to
pay the pension. As per the new
dispensation the employee and the government are to make
equal matching contribution
towards their pension. This dispensation is not applicable to the
defence forces personnel. They
continue to get the defined benefit pension as before. In this
section the Commission is dealing
with Civilian pensioners under the old pension scheme, i,e,
those who joined before
01.01.2004.
10.1.67 The Commission recommends
the following pension formulation for civil employees
including CAPF personnel, who
have retired before 01.01.2016:
i) All the
civilian personnel including CAPF who retired prior to 01.01.2016
(expected date
of implementation of the Seventh CPC recommendations) shall
first be fixed
in the Pay Matrix being recommended by this Commission, on
the basis of the
Pay Band and Grade Pay at which they retired, at the minimum
of the
corresponding level in the matrix. This amount shall be raised, to arrive
at the notional
pay of the retiree, by adding the number of increments he/she
had earned in
that level while in service, at the rate of three percent. Fifty
percent of the
total amount so arrived at shall be the revised pension.
36 Actual
cases as obtained from Central Pension Accounting Office (CPAO) etc.
37 Dearness Relief of 119 percent, as effective from 1
July, 2015.
38 Dearness
Relief of 119 percent, as effective from 1 July, 2015.
ii) The second
calculation to be carried out is as follows. The pension, as had been
fixed at the
time of implementation of the VI CPC recommendations, shall be
multiplied by
2.57 to arrive at an alternate value for the revised pension.
iii) Pensioners
may be given the option of choosing whichever formulation is
beneficial to
them.
10.1.68 It is recognised that
the fixation of pension as per formulation in (i) above may
take a little
time since the records of each pensioner will have to be checked to ascertain
the number of
increments earned in the retiring level. It is therefore recommended that
in the first
instance the revised pension may be calculated as at (ii) above and the same
may be paid as
an interim measure. In the event calculation as per (i) above yields a
higher amount
the difference may be paid subsequently.
10.1.69 Illustration on fixation
of pension based on recommendations of the Seventh CPC.
Case I
10.1.70 Pensioner ‘A’ retired at
last pay drawn of ₹79,000 on 30 May, 2015 under the VI CPC
regime, having drawn three increments in the scale
₹67,000 to 79,000:
Case II
10.1.71 Pensioner ‘B’ retired at
last pay drawn of ₹4,000 on 31 January, 1989 under the IV
CPC regime, having drawn 9 increments in the pay
scale of ₹3000-100-3500-125-4500:
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