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S.K.Verma
I.P.S.
D.G.Police (Rtd)
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654, Sector 11,
Chandigarh-160011
Cell: +91-9815711654
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Dated: 14.12.13
To,
The Secretary,
Deptt of Pension &
Pensioners’ Welfare,
Ministry of Personnel,
Public Grievances & Pensions,
Govt of India, Lok Nayak
Bhawan,
3rd Floor, Khan Market,
New Delhi-110003
Sub:
Regarding Excess Recovery of Commuted Pension.
Sir,
It is
strange but true that pensioners of all services, including the IAS, are victims
of excess recovery of commuted pension. Calculation given ahead would
scientifically prove my point.
As per
rules, commuted pension is restored after 15
years after full recovery of the commuted amount with interest. This period
is arbitrary and has no mathematical basis. This results in the recovery that
exceeds much more than what is due as explained ahead.
I belong
to the 1967 batch of the Indian Police Service. I retired on superannuation on
30th November 2005 on attaining the age of 60 years. Since 1.3.1971 and until 31.12.2005, the
Commutation Factor (CF) was 9.81 for the 61 year old (age next birth day)
retirees and the prescribed rate of interest was 4.75% p.a. I retired at the
top of the pay scale (Rs.26,000) and was sanctioned commuted pension amount of
Rs.9,18,216 with a deduction of Rs.7,800 per month. The principal amount of
Rs.9, 18, 216 is fully recoverable in 9.81 years [9.81 x 12 x 7800 = 9, 18, 216].
a)
If we
consider the prescribed interest rate of 4.75% p.a. as simple interest, the total
interest works out to Rs.2, 12, 114. This is recoverable in 2.27 years
[212114/7800 = 27.2 months or 2.27 years]. Thus, total recovery period of the
commuted amount works out to 9.81 + 2.27 = 12.08
years. Even after full recovery, the pensioner keeps on paying for 15 –
12.08 = 2.92 years. Thus, excess recovery = 2.92 x 12 x 7800 = Rs.2, 73, 312.
b)
If we
consider the prescribed interest rate of 4.75% p.a. as compound interest, the
total interest works out to Rs.3, 20, 367. This is recoverable in 3.42 years
[320367/7800 = 41.07 months or 3.42 years]. Thus, total recovery period of the
commuted amount is = 9.81 + 3.42 = 13.23
years. Even after full recovery, the pensioner keeps on paying for 15 –
13.23 = 1.77 years. Thus, excess recovery in 15 years = 1.77 x 12 x 7800 = Rs.1, 65, 672.
It is to
be noted that the interest charged on various Govt Advances like House Building
Advance, Car Advance, Festival Advance, Marriage Advance etc. is simple
interest and not compound interest. Applying the same principle, the commuted
amount of pension is fully recoverable with interest from me in 12.08 years.
There is no justification for the Govt to recover anything more than what it
has advanced to me.
You are
requested to take cognisance of this injustice and modify the period of
restoration of commuted pension to 12.08
years for all retirees of my category. Accordingly, my commuted pension should be treated as
fully paid up and my full pension should be restored on 30.11.2017.
Modified
order may kindly be issued after satisfying yourself with the calculations I
have provided.
Thanking
you,
Yours
Faithfully,
(S.K.Verma)
Forum of Retired IPS Officers
B-64, DGS-CGHS, Sector-22, Dwarka, New Delhi-110077
Dated: 14.12.13
To,
The Secretary,
Deptt of Pension & Pensioners’
Welfare,
Ministry of Personnel,
Public Grievances & Pensions,
Govt of India, Lok Nayak
Bhawan,
3rd Floor, Khan Market,
New Delhi-110003
Sub: Regarding
Wrong Period of 15 Years Prescribed for Recovery of Commuted Pension.
Sir,
First of
all, I would like to draw your personal attention to the fact that the subject
is not specific to the IPS. It concerns and affects all services including the IAS, irrespective of the rank/ level
from which they retired. The subsequent paras would be an eye opener.
As per
extant rules, commuted pension is restored after 15 years after the Govt has made full recovery of the commuted
amount with interest. This period of 15 years is arbitrary and has no
mathematical basis at all. Calculations show that the recovery exceeds much
more than the dues.
Retirees between 1986 and 1995
The age of
retirement during this period was 58 years. This category of retirees have all
completed the prescribed period of 15 years for restoration of pension. Since
1.3.1971 and until 31.12.2005, the Commutation Factor (CF) was 10.46 for the 59
year old (age next birth day) retirees and the officially prescribed rate of
interest was 4.75% p.a. Commutation allowed was 1/3rd of the basic pay. The
basic pension of Secretaries/DGs who
superannuated between 1.1.86 and 31.12.95 at the top of their pay scale
(Rs.8,000) was fixed at Rs.4,000 and the commuted portion of their pension was
Rs.1,67,318 with a deduction of Rs.1,333 per month. The principal amount of
Rs.1,67,318 was fully recovered in 10.46 years [10.46 x 12 x 1333 = 1,67,318].
2.
If we consider the prescribed interest rate of 4.75%
p.a. as simple interest, the total interest works out to Rs.36,250. This is
recoverable in 2.27 years [36250/1333 = 27.2 months or 2.27 years]. Thus, total
recovery period of the commuted amount works out to 10.46 + 2.27 = 12.73 years. Even after full recovery,
the pensioner kept on paying for 15 – 12.73 = 2.27 years. Thus, excess recovery
= 2.27 x 12 x 1333 = Rs.36,311.
3.
If we consider the prescribed interest rate of 4.75%
p.a. as compound interest, the total interest works out to Rs.54,750. This is
recoverable in 3.42 years [54750/1333 = 41.07 months or 3.42 years]. Thus,
total recovery period of the commuted amount is = 10.46 + 3.42 = 13.88 years. Even after full recovery,
the pensioner kept on paying for 15 – 13.88 = 1.12 years. Thus, excess recovery
= 1.12 x 12 x 1333 = Rs.17,916.
Retirees between 1996 and 2005
The age of
retirement was raised to 60 years after the 5th Central Pay Commission (CPC).
Permissible commutation was also raised to 40% of the basic pay. Those who
retired between 1996 and 1998 have already completed the prescribed period of
15 years for restoration of pension. Since 1.3.1971 and until 31.12.2005, the
Commutation Factor (CF) was 9.81 for the 61 year old (age next birth day)
retirees and the officially prescribed rate of interest was 4.75% p.a. Secretaries/DGs who superannuated
between 1.1.96 and 31.12.05 at the top of their pay scale (Rs.26,000), were
sanctioned commuted pension amount of Rs.9,18,216 with a deduction of Rs.7,800
per month. The principal amount of Rs.9,18,216 is fully recovered in 9.81 years
[9.81 x 12 x 7800 = 9,18,216].
4.
If we consider the prescribed interest rate of 4.75%
p.a. as simple interest, the total interest works out to Rs.2,12,114. This is
recoverable in 2.27 years [212114/7800 = 27.2 months or 2.27 years]. Thus,
total recovery period of the commuted amount works out to 9.81 + 2.27 = 12.08 years. Even after full recovery,
the pensioner keeps on paying for 15 – 12.08 = 2.92 years. Thus, excess
recovery = 2.92 x 12 x 7800 = Rs.2,73,312.
5.
If we consider the prescribed interest rate of 4.75%
p.a. as compound interest, the total interest works out to Rs.3,20,367. This is
recoverable in 3.42 years [320367/7800 = 41.07 months or 3.42 years]. Thus,
total recovery period of the commuted amount is = 9.81 + 3.42 = 13.23 years. Even after full recovery,
the pensioner keeps on paying for 15 – 13.23 = 1.77 years. Thus, excess
recovery = 1.77 x 12 x 7800 = Rs.1,65,672.
Retirees from 2006 Onwards
The age of
retirement continues to be 60 years. After the 6th CPC, since 1.1.06, the
Commutation Factor (CF) has been downgraded from 9.81 to 8.194 for the 61 year old (age next birth day) retirees,
thereby reducing the commuted amount by a whopping 16.5% !!! On top of that,
the prescribed rate of interest has been enhanced from 4.75% to 8% p.a. which is an astronomical jump of 68% even in this
low interest regime !!! The basic pension of Secretaries/DGs who superannuated on or after 1.1.06 at the top of
their pay scale (Rs.80,000) was fixed at Rs.40,000. Their commuted pension
amount is Rs.15,73,248 with a deduction of Rs.16,000 per month. As per the old
CF of 9.81, they would have been entitled to a commuted sum of Rs.18,83,520.
Thus, there is a huge drop of
Rs.3,10,272 !!! The currently sanctioned principal amount of Rs.15,73,248
is fully recovered in 8.194 years [8.194 x 12 x 16000 = 15,73,248].
6.
If we consider the prescribed interest rate of 8% p.a.
as simple interest, the total interest
works out to Rs.5,10,417. This is recoverable in 2.66 years [510417/16000 =
31.9 months or 2.66 years]. Thus, total recovery period of the commuted amount
is = 8.194 + 2.66 = 10.85 years.
Even after full recovery, the pensioner keeps on paying for 15 – 10.85 = 4.15
years. Thus, excess recovery = 4.15 x 12 x 16000 = Rs.7,96,800.
7.
If we consider the prescribed interest rate of 8% p.a.
as compound interest, the total interest works out to Rs.9,93,007. This is
recoverable in 5.17 years [993007/16000 = 62.06 months or 5.17 years]. Thus,
total recovery period of the commuted amount is = 8.194 + 5.17 = 13.37 years. Even after full recovery,
the pensioner keeps on paying for 15 – 13.37 = 1.63 years. Thus, excess
recovery = 1.63 x 12 x 16000 = Rs.3,12,960.
The above
calculations are only illustrative, applicable to retired Secretary/DG rank officers who retired on or after 1.1.86 at the
top of their pay scale and their pension was fixed at the maximum. Calculations
can be made similarly for other cases and the results would tally.
I may
point out that the interest charged on various Govt advances like House
Building Advance, Car Advance, Festival Advance, Marriage Advance etc. is
simple interest and not compound. Applying the same policy, the commuted amount
of pension was fully recovered with interest in 12.73 years in case of 1st
category of retirees (who retired between 1986 and 1995), in 12.08 years in
case of 2nd category of retirees (who retired between 1996 and 2005) and in
10.85 years in case of 3rd category of retirees who retired in 2006 or after.
There is no justification for the Govt to recover anything more than what it
has advanced to the retirees.
You are
requested to kindly take cognisance of this wrong and modify the period of
restoration of commuted pension as under:-
a)
1st category of retirees (who
retired between 1986 and 1995): They have already repaid the entire amount with
interest. The excess amount recovered should be refunded to them with the same
rate of interest as was charged from them for recovery (i.e. 4.75% p.a.).
Ø
The same policy should be adopted towards those who
retired before 1986. Similar calculations can be done in their case.
b)
2nd category of retirees (who
retired between 1996 and 2005): Those who retired 15 years ago have already
repaid the entire amount with interest. The excess amount recovered should be
refunded to them with the same rate of interest, i.e. 4.75% p.a. For others,
the recovery should be stopped and full pension should be restored after
completion of 12.08 years.
c)
3rd category of retirees who
retired in 2006 or after: The recovery should be stopped and full pension
should be restored after completion of 10.85
years.
Thanking you,
Yours Faithfully,
Sd/--------------------
(J.K. Khanna)
IPS (Rtd)
Secretary, FORIPSO
0120-4322330,
09810940403
D.G.Police (Rtd)
A-102, Sector-55,
Noida-201307 (UP)
Also sent separately to:
To,
The Secretary (PG), Directorate of Public
Grievances, Cabinet Secretariat, Sardar Patel Bhawan,
Parliament Street, New Delhi-110001.
To,
The Chief Controller (Pension), Govt. of
India, Ministry of Finance,
Deptt. of Expenditure, Central Pension Accounting Office (CPAO),
Trikoot – II, Bhikaji Cama Place, New
Delhi – 110066.
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COMMUTATION VALUES
FOR A PENSION OF Re. 1 PER ANNUM
Effective from 1st
march, 1971
[See Rules 8,26 (7), 28 (5) and 29
(1) and 29 (2) ]
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Age next birthday
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Commutation value expressed as
number of year’s
Purchase |
Age next birthday
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Commutation value expressed as
number of year’s
Purchase |
Age
next birthday
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Commutation value expressed as
number of year’s
Purchase |
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(x)
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(y)
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(x)
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(y)
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(x)
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(y)
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(1)
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(2)
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(1)
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(2)
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(1)
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(2)
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17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
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19.28
19.20
19.11
19.01
18.91
18.81
18.70
18.59
18.47
18.34
18.21
18.07
17.93
17.78
17.62
17.46
17.29
17.11
16.92
16.72
16.52
16.31
16.09
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40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
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15.87
15.64
15.40
15.15
14.90
14.64
14.37
14.10
13.82
13.54
13.25
12.95
12.66
12.35
12.05
11.73
11.42
11.10
10.78
10.46
10.13
9.81
9.48
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63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
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9.15
8.82
8.50
8.17
7.85
7.53
7.22
6.91
6.60
6.30
6.01
5.72
5.44
5.17
4.90
4.65
4.40
4.17
3.94
3.72
3.52
3.32
3.13
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NOTE:-
1.
This Table is based on a rate of interest of 4.75 per
cent per annum.
2.
Commuted Value (CVP) = 0.4(Maximum) x P x CF x 12
where P =
Pension Ordered
CF = Commutation Factor
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