MEMORANDUM TO 7 th CENTRAL PAY COMMISSION

MEMORANDUM TO 7 th CENTRAL PAY COMMISSION
1. PENSION PARITY
The question of payment and eligibility of pension has been discussed at great
length in previous pay commissions. In our Welfare State it is the responsibility
of the Employer for whom an employee has spent the best years of his/her life
to look after the needs of the employee after the retirement of the employee by
way of payment of pension . The 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 our Constitution, 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.

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 in 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.

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.

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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.
After detailed discussions and deliberations, the Fifth Pay Commission had
concluded 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 to the pre-retirement level

Fifth Pay Commission had recommended modified parity in pension and gave
minimum of 50% of the equivalent pay scale from which the pensioner had
retired. They had also recommended that full parity be considered by the future
Central Pay Commissions (attainment of reasonable parity needs to be
continued.)

Sixth Pay Commission maintained status quo as recommended by the Fifth Pay
Commission.

We now request that full parity in pension with the serving employee’s as
contained in the spirit of Fifth Pay Commission i.e the pension should be fixed
on point to point basis in the revised pay scale to be recommended by the pay
commission.

We further recommend that pension should be at least 60% of the last pay
drawn.

2.Incremental Pension

a. It is a fact of life that as the age advances after superannuation , 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.

 The Government of India has accepted and implemented the 6th CPC
recommendation of age-related additional pension beyond the age of 80.
However the 6th CPC did not recommend any addition to the pension for a
period of 20 years after superannuation at the age of 60. Their argument was
that every pensioner gets increase in his / her pension after 15 years when the
commutated portion of his pension is restored.

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We recommend following increased pension at regular interval of 5 years to be
granted to pensioner for meeting his/her social obligations and to maintain
his/her health:

65Years(+10%of last month pension)i.e 1.10 times last month pension
70 YearS (+10%of last month pension ) i.e 1.10 times LMP
75 Years (+10%of last month pension) i.e 1.10 times LMP
80 Years (+10%of last month pension) i.e 1.10 times LMP
85 Years (+20%of last month pension) i.e1.20 times LMP
90Years(+20%of last month pension ) i.e 1.20 times LMP

b. Presently after 15 years ,the commutated portion of pension is restored. It is
based on age-old calculations when rate of interest was quite low. Since rate of
interest at present has increased considerably ,restoration after 15 years is
neither rational nor justified. It is therefore recommended that the restoration
may be done after 10 years.

3.Dearness Relief/Allowance

a. As DA is subject to income tax, the actual neutralization of dearness
gets reduced in the hands of employees by the value of income tax due/paid
and this reduction is to be compensated from the basic salary with the result
the salary gets reduced as the dearness increases which has recurring effect. To
get the proper neutralization after working out DA as per dearness
index ,the DA should be enhanced by 10% (the lowest income tax slab.)
This will neutralize the lower income tax slab group of pensioners with
partial neutralization for higher groups / Super Senior Citizens who
fall in higher taxation slab.

b.We recommend that Dearness Relief should be merged with basic pension at
50% level and 100% level i.e whenever there is increase in DR by 50%.

4.Family Pension

a. We recommend that in circumstances of early death of spouse, full pension
should be allowed for a period of 10 years from the date of superannuation of
the employee instead of 7 years as at present.

b. At present the family pension is 60% of the pension being
received by the pensioner. It is brought out that after the death of
the pensioner the total expenses of the family are reduced only to the extent of
food consumption by the deceased which is approximately 20%of the expenses
of the household/family and all other expenses remain the same. Therefore, it is
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suggested that the family pension should be increased from 60% to 80% of the
pension being received by the pensioner.

c. Presently the pensioners after attaining the age of 80 years &
above, are entitled for enhanced pension with increase of 20% to 100%.
Normally there is age difference between the age of pensioner and the
wife of the pensioner whose age is generally lower than the pensioner.
If the pensioner who is getting enhanced pension after attaining the
age of say 80 years expires, his spouse whose age is less than 80
years is not entitled for the enhanced pension. Thus the family
pension of the spouse/wife gets reduced to 60% of the pensioner’s
original pension and not of the enhanced pension. Thus there is a
double reduction of Family pension. For illustration if the original
pension of the pensioner is say Rs. 100 and after attaining the age of 80 years, is
getting a pension of Rs. 120, the family/spouse gets 60% of Rs. 100 i.e. the sum
of Rs. 60/-. Thus the family pension becomes 60/120 i.e. 50% and not 60% of
the pension which the pensioner was drawing. Therefore, family pension
should be percentage of the total enhanced pension of the pensioner (including
what he was drawing due to attaining the particular higher age) irrespective
whether the spouse has reached that age or not.

d. It is experienced that release/ start of family pension is abnormally delayed
due to avoidable reasons causing unbearable additional stress to the spouse who
is already suffering the loss of the life partner. After intimation of death of the
pensioner( supported by death certificate)by the spouse the family Pension
based on earlier PPO issued by Pension sanctioning Authority (PSA) should be
started within one month without referring back to PSA . It is recommended that
if the family pension is delayed by more than a month ,strong action should be
taken against defaulters and an interest of 18% for the period of delay be paid to
the spouse as a token compensation of the stress.

e. Increase /additional family pension should be allowed at the rate of 5% after
every five years.

5. Fixation of Pension if the post/appointment is presently abolished

In MES few posts (e.g. Additional Chief Engineer) had now been abolished.
Fixation of Pension for old pensioners in such cases should be based on scale on
which pension is being drawn.

6.CGHS/HEALTH FACILITY for Pensioners

a. Pensioners residing at places not covered by CGHS.
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Most of the pensioners are settling at their villages,towns and cities which are
not covered under CGHS. For their routine illness and emergencies they have to
depend upon state hospitals or private clinics. Nowadays Insurance companies
neither cover OPD , nor provide cashless insurance for indoor patients /
emergencies beyond 65 or 70 years of age. It is irony of fate that a person who
enjoy CGHS facility , group insurance /cashless life insurance throughout his
service , is deprived of everything at fag end of his life (65+) when he needs it
most. As a result he has to dish out a large portion of his pension in routine
treatment/ emergency at private hospitals.It is therefore requested that such
pensioners be covered under Group Medical Insurance scheme which will
provide them Cash less medical services for emergency/IPD/OPD treatment at
nearby private hospitals directly. To finance such Group Medical Insurance
scheme, 25% of the cost can be borne by the Pensioners ( directly deducted
from their Pension emoluments )and balance 75% cost should be borne by the
Govt. Since private companies are not providing insurance to persons after
65/70 years of age ,group insurance can be through government institutions/
companies.

b. Pensioners residing at places covered by CGHS

    These pensioners have to get routine treatment from CGHS welfare centres
or Govt Hospitals only. Since pensioners are living in residential colonies in
suburbs at a long distance from Govt Hospitals/welfare centres, going to Govt
hospitals/ welfare centres for routine treatment is very expensive and
inconvenient . As the age increases, it is a serious burden on attendant to take
the patients who are elderly Senior citizens from residence to hospitals on
regular basis. Taking permission for treatment/ operation in empanelled
hospitals from senior CGHS authorities again becomes a painful exercise .In
order to eradicate the aforesaid trauma to pensioners, it is requested that the
treatment in OPD/IPD of empanelled private hospitals should be authorised (
at par with government hospitals) and be cashless without any sanction/
permission from CGHS .As regard medicines ,it may be purchased from market
and got reimbursed. Alternatively it can be got issued from CGHS.

 Presently a pensioner without prior sanction can go to empanelled Hospitals
for cashless treatment only in case of emergency ( specified in CGHS
notifications) where life is at danger to move to Govt Hospital .However at
times it is experienced that few empanelled hospitals are declining the cashless
treatment under emergency on one pretext or another creating inconvenience
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and endangering life of pensioners or their spouse. Pensioners are forced to
deposit big sum as advance to start the treatment and asked to get the actual
cost (incurred) reimbursed. This in turn creates huge financial burden besides
creating panic at the worst moments.

Therefore to give financial security to the aging pensioner who becomes the
victim of an accidental cruelty, the Govt. should consider an optional Group
Accidental Insurance Scheme through Govt. owned Insurance Companies. To
recover the cost of Insurance, the subsidised premium should be deducted from
the pension

7.FREE TRAVEL CONCESSION /FACILITY
In certain departments and organisations i.e. Railways, state transport bodies,
airlines etc free travel facility is provided to its retired employees and their
family. No such facility is available to the pensioners. Due to family
commitments and social obligations pensioners have to undertake travelling
thus incurring huge expenditure out of their meagre resources. This is an
unavoidable part of the expenses which a pensioner has to undergo and thus
needs to be compensated.
Free Travel Concession once in four years to any place in the Country may be
allowed to the pensioners with their family . Pension disbursing Officers may be
authorised to pass these claims for the class of travel/accommodation pensioner
s were entitled during the service time or a lump sum amount be sanctioned/ be
credited along with the pension after every four years.

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