Extract of Defence Pension et al from 7 CPC Report (Pages 417 to 420)

Extract of Defence Pension et al from 7 CPC Report

(Pages 417 to 420)

Parity in pension between pre and post Seventh CPC defence forces retirees

10.2.78. The differential in pension between past and new retirees from the defence forces has been an issue that has engaged the attention of the government and various Parliamentary Committees. A number of committees and bodies have been appointed to examine the issue. This differential arises on account of the fact that computation of pension depends upon the pay scale of the person at the time of retirement. With the passage of time and revision of pay scales by successive Pay Commission, the pay and therefore the pension, of those retiring in later years undergoes a change.

10.2.79. The Estimates Committee (1980-81), in its report on resettlement of Ex-Servicemen, noted that the disparity in pension between past and present pensioners of equal rank was inequitable and recommended that the matter should be examined and a just solution found.

10.2.80. The IV CPC, on the other hand, observed that the amount of pension undergoes changes as and when the pay scales are revised. Any attempt to equalise pension with reference to revised scale of pay would, in fact, amount to the retrospective application of these scales of pay.

10.2.81. In 1991 the government set up a High Level Empowered Committee which recommended a One Time Increase (OTI) in pension from 01.01.1992. All pre-1973 pensioners (JCOs/ORs/ Commissioned officers) were brought to the level of post-1973 retirees. Graded addition with reference to post-1973 rates of pension was also made to determine OTI in rates to bridge the gap to some extent up to post 1986 level.

10.2.82 The V CPC, after taking into account the historical background including the recommendations of High Level Committees, recommended that total parity may be brought between pre 01.01.1986 and post 01.01.1986 retirees. Thereafter, for all pre 01.01.1996 retirees, their pension was consolidated as per the specified fitment formula. If the resultant figure fell short of the pension applicable to the post 01.01.1996 retirees for the same rank, it was to be stepped up to the minimum pension prescribed for the same rank (Para 165.8). It went on to state that every Pay Commission gives certain benefits in pay which are over and above the impact of inflation, either due to upgradation of recruitment qualifications or change in job contents. The benefits accorded on this account need not necessarily be passed on to the pensioners. Thus, the additional benefits suggested by them for future pensioners would not be fully available to the pre 01.01.1996 retirees. It, however, recommended partial parity known as modified parity in respect of pre and post–01.01.1996 pensioners. This provided that in case the revised consolidated pension of a person was less than 50 percent of the minimum of the revised pay scale, it would be stepped up to that level.

10.2.83. The Commission notes that a number of improvements have been brought about aimed at narrowing the gap between past and current pensioners. These include:

a. All pre 1997 PBOR pensioners have been brought at par with post 1997 pensioners.

b. Pension of all pre 2006 PBOR pensioners has been reckoned with reference to notional maximum pay in post 01.01.2006 revised pay structure corresponding to the maximum pre VI CPC pay scales as per fitment table of each rank with enhanced weightage awarded by the group of Ministers.

c. A separate pay scale of ₹67,000–79,000 was created to address the issue of disparity in pension of pre and post 01.01.2006 pensioners at the level of Lieutenant General and equivalent in the other two services to enable them to get pension at the rate of ₹36,500

and

d. Linkage of full pension with 33 years of qualifying service has been removed w.e.f. 01.01.2006 instead of 01.09.2008 in case of commissioned officers.

10.2.84. Pension payout to defence forces personnel over time: The evolution of the pension regime over time and the role of the Judiciary in settling the law on the subject has been detailed in Chapter 10.1. There is clear evidence that governments have, over time, progressively moved towards a liberalised regime for past pensioners. The VI CPC has further provided for additional pension with advancing age. In the case of defence forces personnel particularly, a number of improvements have been effected after implementation of the VI CPC recommendations. Two Committees were set up, one in 2009 and another in 2012, under the Chairmanship of the Cabinet Secretary. Based on recommendations made by them, changes in the pension rules were notified in years 2010 and 2013. Each notification went a step further in bridging the gap between pre 2006 and post 2006 pensioners. What this has effectively translated into is testified by examples of pension fixation of defence forces personnel across groups who have retired in the past decades. For example, a Lt Colonel (in GP of ₹8,000 in VI CPC, retired on 31 July, 1990 with a basic pension of ₹2,703 per month. The basic pension got revised to ₹7,550 and ₹25,700 per month after implementation of the V and VI CPC respectively. The basic pension was further revised in September 2012 to ₹26,265. With the benefit of dearness relief39, the pensioner is on date entitled to total pay out in terms of pension and dearness relief of ₹57,520 per month. Similarly, a Subedar (in GP of ₹4600 in VI CPC, retiring on 30 June, 1991 with a basic pension of ₹1,300 per month got revised to ₹6,188 and ₹9,325 per month after implementation of the V and VI CPC respectively. After further revision, the basic pension of the Officer was fixed at ₹11,970 per month. With the benefit of dearness relief, the pensioner is on date entitled to total pay out in terms of pension and dearness relief of ₹26,214 per month.

10.2.85. The illustrations point to substantial increases in pension, across various categories of defence pensioners.

10.2.86. Recommendations: The concept of pension, so far as Civilian employees including CAPFs are concerned, has undergone a complete change. Entrants on or after 01.01.2004 on the civilian side are covered under the National Pension System. In the case of defence forces personnel however, the government has continued with the Defined Benefits pension regime. This regime, as far as past pensioners is concerned, has also witnessed significant improvements with a view to establishing parity between old and new pensioners. The Commission has dwelt on the judicial pronouncements regulating the regime of pensions in detail in Chapter 10.1.

10.2.87. The Commission recommends the following with regard to fixation of pension for past defence forces personnel retirees:

i. All the Defence Forces 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. Military Service Pay shall be added to the amount which is arrived at after notionally fitting him in the Seventh CPC matrix. Fifty percent of the total amount so arrived at shall be the revised pension.

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 shall be entitled to the higher of the two.

It is recognised that the fixation of the pension as per the above formulation (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 pension, may be fixed in terms of formulation (ii) above, till final fixation of the pension under the Seventh CPC matrix is undertaken.

10.2.88. Illustration on fixation of pension for defence forces personnel based on recommendations of the Seventh CPC

Case I

10.2.89. Pensioner ‘A’ retired at last pay ₹46,310 in PB-4 with GP 8700 on 31 March, 2006 under the VI CPC regime, having drawn one increment in the V CPC pay scale ₹15,100-450-17,350.

		Amount in ₹
1	Basic Pension fixed in VI CPC	30,505
2	Initial Pension fixed under Seventh CPC (using a multiple of 2.57)	78,398 Option 1
3	Minimum of the corresponding pay level in 7 CPC	1,25,500
4	Notional Pay fixation based on one increment	1,29,300
5	Notional Pay after adding Military Service Pay of ₹15,500	1,44,800
6	50 percent of the notional pay in pay level so arrived and Military Service Pay	72,400 Option 2
7	Pension amount admissible (higher of Option 1 and 2)	78,398

Case II

10.2.90. Pensioner ‘B’ retired at last pay ₹13,100 in GP 2800 on 31 May, 2015 under the VI CPC regime, having drawn two increments in PB-1.

		Amount in ₹
1	Basic Pension fixed in VI CPC	8950
2	Initial Pension fixed under Seventh CPC (using a multiple of 2.57)	23,002 Option 1
3	Minimum of the corresponding pay level in 7 CPC	35,400
4	Notional Pay fixation based on 2 increments	37, 600
5	Notional Pay after adding Military Service Pay of ₹5,200	42, 800
6	50 percent of the notional pay in pay level so arrived and Military Service Pay	21,400 Option 2
7	Pension amount admissible (higher of Option 1 and 2)	23, 002