Saturday, 6 August 2016

Has DP & PW read the D S Nakara Vs UoI order of the Honourable Supreme Court

From  Para 11 of Annexure  to 

dated  the 4th August, 2016

Revision of Pension of pre 7th CPC retirees. 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.

(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.

It is recognized 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.(Para 10.1.67 and Para 10.1.68 of the Report)

Decision by Government: Both the options recommended by the 7th  Central Pay Commission as regards pension revision be accepted subject to feasibility of the implementation.

Revision of pension using the second option based on fitment factor of 2.57 be implemented immediately (emphasis supplied).
The first option may be made applicable if its implementation is found feasible after examination by the Committee comprising Secretary (Pension) as Chairman and Member (Staff). Railway Board, Member (Staff), Department of Posts, Additional Secretary & Financial Adviser, Ministry of Home Affairs and Controller General of Accounts as Members.

The illustrations from F.No.38/37/2016-P&PW(A) (ii) dated 04 Aug 16 available on pensioners portal
The pension shall be calculated by multiplying the pension/family pension, as had been fixed at the time of implementation of 6th Central Pay Commission (CPC) recommendations, by 2.57.

In case, a pensioner ‘A’ retired at last drawn pay of Rs. 79,000 on May 31, 2015 under the 6th CPC regime in the scale of Rs. 67,000-79,000 and the basic pension fixed in 6th CPC being Rs. 39,500, the revised pension under the 7th CPC (using a multiple of 2.57) would be Rs. 1,01,515. (Please note rationalisation factor is 2.72 for this pay for post 1.1.2016 retirees). 

In case II, if a pensioner ‘B’ retired at last drawn pay of Rs. 4,000 in January, 1989 under the 4th CPC regime in the pay scale of Rs. 3,000-100-3,500-125-4,500, the basic pension fixed in the 4th CPC being Rs. 1,940, which was revised in the 6th CPC to Rs. 12,600, the revised pension would be Rs. 32,382 (using a multiple of 2.57). 

So, now, the 4th Aug 2016 Resolution of the DP & PW has (at least temporarily) made two classes of the above pensioners.

It will also be unfair on all pre-1.1.2016 retirees if two different methods are used to divide a homogeneous class i.e pensioners, to calculate differently pensions in the 7th CPC regime.

But isn't that against the Nakara order? The Honourable Supreme Court stated, inter alia:

 "We are satisfied that by introducing an arbitrary eligibility criteria: 'being in service and retiring subsequent to the specified date' for being eligible for the liberalised pension scheme and thereby dividing a homogeneous class, the classification being not based on any discernible rational principle and having been found wholly unrelated to the objects sought to be achieved by grant of liberalised pension and the eligibility criteria devised being thoroughly arbitrary, we are of the view that the eligibility for liberalised pension scheme of being in service on the specified date and retiring subsequent to that date' in impugned memoranda, Exhibits P-I and P-2, violates Art 14 and is unconstitutional and is struck down. Both the memoranda shall be enforced and implemented as read down as under: In other words, in Exhibit P-1, the words: "that in respect of the Government servants who were in service on the 31st March, 1979 and retiring from service on or after that date" and in Exhibit P-2, the words: "the new rates of pension are effective from 1st April 1979 and will be applicable to all service officers who became/become non-effective on or after that date" are unconstitutional and are struck down with this specification that the date mentioned therein will be relevant as being one from which the liberalised pension scheme becomes operative to all pensioners governed by 1972 Rules irrespective of the date of retirement. Omitting the unconstitutional part it is declared that all pensioners governed by the 1972 Rules and Army Pension Regulations shall be entitled to pension as computed under the liberalised pension scheme from the specified date, irrespective of the date of retirement."

P.S:   Hitherto, Cab Secy, Chiefs, Army Cdr & equivalents and Secretaries received 50% of the last pay drawn (as they did not get Grade Pay and/or MSP) as pension because they had a fixed pay & no increments.

The pre-1.1.2016 Cab Secy, Chiefs retirees who will get last pension drawn i.e Rs 45000 x 2.57 = Rs 1, 15, 630 as pension whereas those in the same category retiring after 1.1.2016 will get Rs 1, 25, 000 as pension i.e approx Rs 10, 000 more!

Similarly, Army Cdr & equivalents and Secretaries who retired before 1.1.2016 will get Rs 40, 000 x 2.57 = Rs 1,02,800 whereas those in the same category retiring after 1.1.2016 will get Rs 1, 12, 500 i.e. Rs 9,700 more!

1 comment:

  1. Sir, this brings out, what I had mentioned previously as well, the very critical aspect of fixing the index numbers in the VII CPC matrix, especially as related to armed forces pensioners. The index number would have to be determined by the number of increments a current retiree with equal service would have earned in the VI CPC pay-band of the same or the next higher time-bound rank if applicable (e.g. Lt Col for older Maj pensioners and Col(TS) for older Lt Col pensioners with QS>26 years). Using the number of increments in the V CPC pay scale earned by, for example, a Wg Cdr with 28 years of service who retired before December 2004, would place his pension at par with a Wg Cdr with 6 to 7 years less service instead of placing it at par with the pension of a current Gp Capt(TS) retiree with equal service.

    Not only that, for a correct "inter temporal equity" (language used by the Commission) there would be a need to select the correct "level" for the older pensioners too (e.g. Level 12A for older Sqn Ldr/ Maj / Lt Cdr retirees with QS more than 13 years and not level 11; Level 13 for older Wg Cdr/ Lt Col /Cdr pensioners with service > 26 years and not level 12A).

    For the ranks that you have mentioned which have a provision of equal pay across pay-commissions, the only logical solution is to introduce the concept of "equal pension" as well. But under OROP that has to come about, the 2.57x calculation being just an interim measure. Though the term "interim" in some cases can produce understandable unease, in view of past experiences.

    For all increment based ranks it is very critical for services HQs to quickly obtain a complete rationalization of the manner in which fixations can take place as I have tried to point out in this example :