Wednesday 27 December 2017

Non-Effective Benefits for Armed Forces Proposed by the Fourth Central Pay Commission



Fourth Central Pay Commission Report

Part II, Chapter 13

Recommendations for Non-Effective Benefits for Armed Forces



Some Aspects for Consideration of Readers



1.        Part II of the Report (189 pages) deals entirely with pension, gratuity and post-retirement benefits like CGHS (ECHS did not exist?)



2.        Emphasis has not been supplied nor portions highlighted to allow a complete reading and understanding of the entire contents of this post.



3.        However, for the sake of continuity, relevant extracts from other chapters referred to have been inserted at appropriate places of this post in blue.



Please read on



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CHAPTER 13



DEATH – CUM-RETIREMENT BENEFITS OF ARMED FORCES PERSONNEL



13.1.      We have made recommendations regarding the structure of emoluments, allowances, benefits, etc for armed forces personnel in Part I of our report. In making these recommendations, we took note of the peculiar conditions of their service, rigours and hazards of service life, their truncated career, liability for recall, constraints of organisational structure, etc. We expect that the package of compensation recommended by us will provide the required incentives to young entrants taking service in the armed forces as a career. The retirement benefits have also to be treated as an integral part of the remuneration structure and to be meaningful these have to be comprehensive and related to the peculiar conditions of service in the armed forces. We have kept this in view while making our recommendations.            



13.2.         The retirement benefits which are known as “non-effective benefits” in the armed forces, include benefits like retiring pension, family pension, disability pension, commutation of pension and death-cum-retirement gratuity. Our examination of the non-effective is based on the proposals received from the three services headquarters. Initially we received separate proposals. In June 1985 we received joint proposals in regard to these benefits. After receipt of Part I of our report, the services headquarters sent revised proposals on pension structure for the past and future pensioners of the armed forces in August 1986. In our examination of the pension structure for the service personnel, we have taken into account the joint proposals received in August 1986, comments of the Defence Ministry on various points as also various clarifications received from time to time. We also had discussions with the three Service Chiefs and with the Defence Ministry and other officers of the Defence Ministry on these matters. The discussions were very useful for our work.   



13.3.         The pension code for armed forces personnel came into effect from June 1, 1953 on the recommendations of the Armed Forces Pension Revision Committee (AFPRC). Subsequently, death-cum-retirement gratuity (DCRG) was introduced for servicemen in September 1970. The recommendations of the Third Pay Commission introduced certain major changes in the pension code. In January 1982 a study group was constituted under the chairmanship of a senior officer to carry out in-depth study of the existing pension structure of servicemen, to identify the areas of short-comings and to make recommendations considered necessary. The recommendations of this study group in regard to pensionary and other terminal benefits of servicemen were examined by the government and it was decided that the matter should be considered by Fourth Pay Commission.  



Retiring Pension



Officers



13.4.          AFPRC had made recommendations regarding the periods of standard service and also the standard rates of pension for each rank. The standard rate of pension was admissible if the standard period of service has been rendered. Where the service rendered fell short of the standard service, pension was reduced at the prescribed rate.



13.5.         The concept of standard period of service and standard rate of pension was recommended to be continued by Third Pay Commission also. They also recommended certain weightages to the standard period which were modified by the government as follows (tabular form by Aerial View): -



Rank  
Standard period of service
Weightage recommended by Third Pay Commission
Weightage allowed by Government

2nd Lt/Lt
20
7
9
Captain
20
7
9
Major
22
6
8
Lt Col (TS)
26
5
5
Lt Col (Selection)
24
5
7
Colonel
26
5
7
Brigadier
28
5
5
Maj General
30
-
3
Lt General
30
-
3
General
30
-
3



            The concept of standard period of service and standard rate of pension to be calculated adding the weightages continues. The rates of standard pension have been modified as ands when any change occurred in the emoluments or the formula like the slab system for calculating pension.                                                                   



Other Ranks

13.6.    The concept of standard rate of pension is not applicable to personnel below officer rank with the difference that no standard period of service is fixed. The retiring pension is calculated with reference to qualifying service with weightage of 5 years. Standard rate of pension is worked out separately for each of the ranks in different pay groups. This was recommended by Third Pay Commission which had come to the conclusion that for servicemen retiring around the age of 35-40 years the pension should not be viewed as their sole means of livelihood because at that age the servicemen can be reasonably expected to be gainfully occupied after retirement. The slab system is also applicable to personnel below officer rank for working out their retiring pension. 



13.7.    In their earlier joint proposals regarding pay structure and non-effective benefits, Services Headquarters had suggested running pay band covering all officers and had also suggested retiring pension to be calculated separately for each officer with reference to last pay. In the subsequent proposals received after submission of Part I of our report, they have suggested continuance of rank pension although an integrated pay scale covering officers up to the rank of Brigadier had been recommended in Part I of our report. Ministry of Defence has pointed out that as rank pensions are based on maximum of scales, it may not be feasible to lay down standard rates of rank pension. In so far as personnel below officer rank are concerned, the Services Headquarters have suggested continuance of rank pension with existing weightages of 5 years being increased to 10 years.



13.8.    Having regard to rank structure and other service conditions, an integrated pay scale covering a span of 28 years along with rank pay as a separate element, has been recommended by us for officers from the rank of 2nd Lt to Brigadier in Part I of our report. This ensures a steady pay progression, even for those who are not able to make the mark because of organisational constraints. In view of the integrated scale of pay the existing system of rank pension for officers needs to be modified. In fact as already mentioned this was proposed by Services Headquarters while suggesting running pay band for officers. We recommend that retiring pension may be based for each officer, who has completed the prescribed service for earning pension, on his pay and the actual qualifying service rendered by him. We also recommend that the weightage of service, as presently admissible may continue subject to the condition that total qualifying service including weightage will not be more than 33 years. 



13.9.     In the case of personnel below officer rank, we recommend continuance of the existing system of standard rate of pension for each rank in the various pay groups with existing weightage.



13.10.       The Services Headquarters have suggested that the quantum of pension for each rank should be calculated at a flat rate of 50 per cent of the maximum pay (including rank pay). We have recommended improved pay scales for armed forces personnel in Part I of our report. The time span of many of the scales for personnel below officer rank has been further improved by government at the time of implementation of our recommendations. We have recommended in chapter 5 that pension which confers a long term benefit should be related to basic pay only and that instead of the slab system, it should be calculated at 50 per cent of pay drawn during the last ten months of service. We recommend that for armed forces personnel also pension should be worked out on a similar basis with rank pay added to basic pay.  



            We have recommended ceiling of Rs 4500/- per mensem on basic pension in Chapter 5. This will apply to armed forces personnel also.



[From Chapter 5, Para 5.19 – Pension Fixation: - The existing pay slabs in the pension formula are related to the pre-revised pay structure. These would need modification in the light of the revised pay structure recommended by us in Part I of the report. The Parliament has in a recent enactment, namely the High Court and Supreme Court Judges (Conditions of Service) Amendment Act, 1986 fixed a pension of Rs 4500/- per mensem for Judges of the Supreme Court on salary of Rs 9000/- per mensem and a pension of Rs 4000/- for judged of the High Court on salary of Rs 8000/- per mensem. The pension thus payable works out to 50 per cent of the salary. Keeping this in view and to simplify and rationalise matters, we recommend that pension may be calculated at 50 per cent of pay for all categories of Central Government employees.]  



13.11.       Services Headquarters have suggested that full pre-commissioned service rendered under the central government whether in civil department or in armed forces should be taken into account for working out the qualifying service for earning pension. It has also been suggested that the requirement of a satisfactory service certificate for admissibility of pension may be dispensed with. Ministry of Defence has supported these suggestions. We agree and recommend accordingly. 



Commutation of Pension



13.12.      Our recommendation in Chapter 8 regarding commutation of pension will apply to armed forces personnel also.



[From Chapter 8



Para 8.3.       (For civilian employees….. medical examination for commutation of pension within a period of one year from the date of retirement has been dispensed with. If commutation of pension is sought from a date after one year of the date of retirement, it can be allowed only after medical examination.



 Para 8.4.      In armed forces where retirement age is lower, commissioned officers can commute up to 43 per cent, and personnel below officer rank up to 45 per cent. The other conditions relating to commutation as applicable to civilian employees also generally apply to armed forces. 



Para 8.9.       It has been suggested that the present commutation plan may be replaced by another scheme where pension is restored after a comparatively short period. In such a scheme, while the lump sum amount admissible may be a little less, restoration of pension will be easier. The above suggestion merits consideration and government may examine the feasibility of introducing a scheme under which pension will be restored after a short period of about 7 years or so both for civilian and defence pensioners.



Retiring/Service Gratuity



13.13.      The minimum qualifying service for retiring pension is 20 years for officers and 15 years for personnel below officer rank. Where the service rendered is less than 20 years/15 years respectively, retiring/service gratuity is paid.           



13.14.       Service gratuity is admissible at reduced rates in cases of discharge on compassionate grounds/personal reasons. We recommend that retiring/service gratuity may be paid at a uniform rate of one month’s pay for every completed year of service for armed forces personnel. It has been suggested the Ministry of Defence that since premature retirement/discharge is permitted by government only in deserving cases, there should be no reduction in service gratuity irrespective of the type of retirement. We agree and recommend accordingly.



Death-cum-Retirement Gratuity (DCRG)



13.15.       Our recommendations in Chapter 5 regarding DCRG will apply to armed forces personnel also. It has been pointed out that the weightage of service for working out retiring pension is not added for purpose of DCRG. Service Headquarters have suggested a weightage of 5 years for this purpose. Ministry of Defence has also suggested the same. We agree and recommend that 5 years may be added to the actual qualifying service for determining DCRG subject to the actual qualifying service plus weightage not exceeding 33 years.



[ Chapter 5, Para 5.27 – …… The ceiling on gratuity has been revised by government and the amount raised to Rs 50, 000/- in March 1985. The same ceiling has also been fixed for Judges of Supreme Court and High Courts. We do not recommend any change in the existing rules governing payment of DCRG.]



Disability pension



13.16.        Any disablement caused due to a wound, injury or disease which is attributable to or aggravated by military service, is compensated by grant of disability pension in cases where servicemen are invalided/released/retired from military service. This disability pension comprises service element and disability element. The service element is determined with reference to service rendered up to the time of invalidment and disability element is determined with reference to degree of disablement. At present the disability element is admissible at the following rates where disability is assessed as 100 per cent: -



Rank
Amount per mensem
Officers
Rs 200/-
Hony Commissioned Officers
Rs 170/-
Subedar Major/Subedar/Naib Subedar and equivalent in other services
Rs 110/-
Havildar/Naik and equivalent in other services
Rs 60/-
Sepoy and equivalent in other services
Rs 45/-
Non-combatants (enrolled)
Rs 40/-



For disabilities lower than 100 per cent and up to 20 per cent the above rates are reduced proportionately.



13.17.        A committee on disability pension was appointed under the Ministry of Defence in April 1986 to examine the existing criteria/principle on the basis of which disability element is assessed and to make recommendations for rationalising the same to remove the anomalies, if any, in the existing criteria. The committee submitted its report in July 1986 and a copy of the report was also received by us.  



13.18.       The Services Headquarters have suggested that where invalidment occurs prior to completion of 20 years of service in case of officers and 15 years in case of personnel below officer rank. The service element in disability pension should be equal to the retiring pension admissible to the appropriate ranks in the 20th and 15th year of service, respectively. It has been suggested by Ministry of Defence that for the sake of simplicity, service element, both for officers and personnel below officer rank may be fixed at retiring pension admissible at the time of invalidment after including service weightage even if actual length of service does not qualify for pension. We agree with the suggestion of the Ministry of Defence and recommend accordingly. In the case of personnel below officer rank, the service element may continue to be not less than 2/3rd of the minimum retiring pension of the rank.



13.19.     In regard to quantum of disability element, the Services Headquarters have suggested that the existing difference between officers and personnel below officer rank may be dispensed with and disability element given at a uniform rate of Rs 600/- per month. The entitlements of officers and personnel below officer rank for disability element have all along been different since 1939 when the disability pension was sanctioned for the first time. The AFPRC had recommended disability element of Rs 150/- for 100 per cent disability for officers and disability element ranging between Rs 25/- and Rs 90/- for personnel below officer rank. The existing rates which are based on the recommendations of Third Pay Commission also maintain the differentiation as indicated in paragraph 13.16.  



13.20.      Taking all factors into consideration, we recommend that the existing rates for disability element may be revised as follows for 100 per cent disability: -



            Officers and Honorary Commissioned Officers                    Rs 600/- per month



            Junior Commissioned Officers, personnel                             Rs 450/- 

below officer rank and Non-combatants (enrolled) per month



            For disabilities lower than 100 per cent and up to 20 percent, the above rates may be reduced proportionately. The rates of disability element recommended by us may be extended to all existing disability pensioners also.



13.21.     We have also examined the suggestion if the Services Headquarters for payment of 100 per cent commuted value of disability element when the disability is assessed as permanent, but the individual retained in service. We agree with the suggestion and recommend accordingly.



13.22.    It has been pointed out that the existing procedure for adjudication of the claim for disability pension takes considerable time. The committee on disability pension had suggested that the powers regarding adjudication of the claim for disability pension may be withdrawn from the Ministry of Defence/Controller of Defence Accounts (Pension) and that the recommendations of the medical boards may be accepted.



13.23.   We do not recommend any change in the existing procedure for adjudication of the claim for disability pension for officers. The adjudication of the claim for disability pension in case of personnel below officer rank may be entrusted to a committee under the military wing of the cabinet secretariat with representatives of Ministry of Defence, its finance division, Director General Armed Forces Medical Services and three Service Headquarters. There may be an appropriate Appellate Committee in the Ministry of Defence.



Constant Attendant Allowance



13.24.    Armed Forces personnel in receipt of disability pension for 100 per cent disablement are granted constant attendant allowance if in the opinion of the invaliding/resurvey board such services are required. Based on the recommendations of Third Pay Commission, constant attendant allowance for non-battle casualties was fixed at Rs 60/- per month for officers and Rs 45/- per month for personnel below officer rank. As regards battle casualties, the rate of constant attendant allowance was Rs 75/- per month. These rates were revised in 1985 to Rs 150/- per month for non-battle casualties and Rs 200/- per month for battle casualties. The difference between officers and personnel below officer rank in the matter of constant attendant allowance was abolished. We are of the view that where in the opinion of the medical board it is necessary to have a constant attendant, there may be a uniform rate of the allowance both for battle and non-battle casualties. We accordingly recommend that the constant attendant allowance may be sanctioned at the rate of Rs 300/- per month for officers and personnel below officer rank, subject to fulfilling all existing conditions. In case of existing disability pensioners in receipt of this allowance, the amount may be raised to Rs 300/- per month. 



Invalid Pension



13.25.        Where armed forces personnel are invalided out of service on account of causes neither attributable to nor aggravated by military service, they are paid invalid pension if the service rendered is not less than 10 years. DCRG is also payable in addition to the invalid pension/gratuity if the minimum qualifying service of 5 years has been rendered. It has been suggested that the service element of disability pension may be given as invalid pension. We agree and recommend accordingly.



Ordinary Family Pension





13.26.         Ordinary family pension is granted to the family of servicemen who dies while in service or after discharge from service on account of causes which are neither attributable to nor aggravated by military service. Our recommendations in regard to family pension in Chapter 6 will apply to armed forces personnel also.



[Chapter 6, Para 6.8…… Taking all factors into account, we recommend that the existing rates for grant of family pension may be revised as follows: -



(a)       Pay in revised scale of Rs 1500/- and below: - 30 per cent of pay subject to a minimum of Rs 300/- 



(b)       Pay in the revised scale above Rs 1500/- : - 15 per cent of pay subject to a minimum of Rs 450/- and a maximum of Rs 1000/-



Special Family Pension



13.27.       Special Family Pension is granted to the family of serviceman who dies on account of causes which are attributable to or aggravated by military service. This consists of special family pension to widow till death/disqualification, children allowance and children education allowance. Our recommendation in Chapter 7 regarding consolidated rates of special family pension will apply to armed forces personnel also.



[From Chapter 7, Para 7.11…..Accordingly, we recommend the following consolidated rates of family pension inclusive of children’s pension and education allowance where applicable:



            (A)      Ordinary family pension



(i)        If the widow is childless – At rates recommended by us for family pension under the pension rules.



(ii)       If the widow has a child/children – 40 per cent of basic pay subject to a minimum of Rs 500/- and a maximum of Rs 1500/-



            (B)       Special Family Pension



(i)        If the widow is childless – At the higher rates recommended by us for family pension under the pension rules.



(ii)       If the widow has a child/children – 60 per cent of basic pay subject to a minimum of Rs 750/- and a maximum of Rs 2500/-





13.28.        If an officer does not leave behind a widow or children, his parents or minor brothers/sisters largely dependant upon him, may be granted a dependents pension at the following rates: -



(i)        Both parents – 75 per cent of the special family pension admissible to the widow.



(ii)       One parent – 75 per cent of the dependent’s pension that would have been admissible in the case of two parents.



(iii)      Brothers/sisters in the absence of parents – Rs 50/- per month for each, subject to a maximum of 50 per cent of special family pension that would have been admissible to the widow.



13.29.        The dependent’s pension is admissible if the parents or brothers and sisters were largely dependent upon the deceased and their pecuniary circumstances justify the grant. The “means limit” for judging the pecuniary circumstances of the parents is Rs 12000/- per annum for two parents and Rs 9000/- per annum for one parent.



13.30.       Special Family Pension granted to widow of personnel below officer rank is known as First Life Award. When it ceases on account of death/disqualification of widow, it is continued to father/mother as Second Life Award, depending upon their pecuniary conditions. The whole or a portion of the special family pension may be continued subject to a maximum of Rs 50/- per month in case of Junior Commissioned Officers and Rs 35/- per month for Other Ranks.



13.31.       We are of the view that the existing rates of dependent’s pension for officers and Second Life Award for personnel below officer rank need to be simplified. We accordingly recommend that the dependent’s pension and second life award may be granted at 50 per cent of the special family pension admissible to the widow of the deceased if they are largely dependent upon the deceased serviceman for support and are in pecuniary need. With this, the existing conditions regarding “means limit” may be dispensed with.   



Liberalised Family Pensionary Award (Battle Casualties)



13.32.       The liberalised family pensionary award (battle casualties) is admissible to the family of serviceman who is killed in action or dies of wounds sustained in action or of injuries sustained during hostilities. For Officers, the special family pension (battle casualty) is admissible at 3/4th of the basic pay of the rank held ate the time of death for a period of 7 years or till the deemed age of retirement, whichever is later. Thereafter the special family pension is equal to normal retiring pension of the rank last held plus children allowance, subject to the condition that the total of family pension and the children allowance does not exceed 3/4th of the basic pay of the deceased. For personnel below officer rank, special family pension is equal to last pay drawn.



13.33.            The Services Headquarters have suggested that the special family pension (battle casualty) is made equal to the last pay drawn both for officers and personnel below officer rank and the same should be admissible till  death/disqualification of the widow/nominated heir. We agree and recommend accordingly. No children allowance or children educational allowance should be paid in addition. 



War Injury Pay



13.34.           Service personnel invalided out after sustaining injuries during war are entitled to war injury pay which consists of service element and disability element. At present service element is equal to the normal retiring pension. The disability element is calculated by deducting from the emoluments last drawn, the service element and the pension equivalent of DCRG, the disability element being limited to Rs 500/-. Where the disability is less than 100 per cent, the disability element is proportionately reduced up to 20% disability. The Services Headquarters have suggested that while the service element may be equal to the minimum retiring pension, the disability element for 100 per cent disablement should be equal to the minimum retiring pension subject to a minimum of Rs 800/-.    



13.35.           Ministry of Defence has suggested that the war injury pay should be equal to emoluments last drawn for life, thereby merging the service and disability elements. We recommend that the war injury pay for 100 per cent disability may be equal to the last pay drawn on the date of invalidment. For lower disabilities up to 20 per cent, war injury pay may be reduced proportionately. Ministry of Defence have stated that with the liberalised rates of war injury pay, there will be no justification for including any amount in lieu of rations. We agree.



Terminal Benefits for Short Service Commissioned Officers



13.36.            Short service commissioned officers who are not granted regular commission are given terminal gratuity at the rate of Rs 1200/- for each completed year of service. The Services Headquarters have suggested that this may be fixed at the rate of two months pay for each completed year of service. Ministry of Defence has recommended terminal gratuity to be equal to one month’s pay for each year of service. We agree with the Ministry and recommend accordingly.



Special Pay Over and Above Pension for Field Marshals



13.37.          The rank of Field Marshal was granted to General SHFJ Manekshaw, MC with effect from January 1, 1973. A special pay of Rs 400/- per month over and above the pension admissible under the rules was sanctioned to hi. Subsequently, the rank of Field Marshal was conferred on General K M Cariappa also with effect from January 15, 1986 and he was also given the special pay of Rs 400/- per month. It has been suggested that the total amount admissible as pension and special pay to Field Marshal should be higher than the pension of retiring Service Chiefs. Our recommendations in respect of past pensioners will apply to the pension of the Filed Marshals also. Government may decide the amount of special lay to be granted to them from time to time keeping in view all relevant factors. 



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Post Script:



Some Questions for retrospection: -



1.       Wasn’t it Standard Rate of Pension i.e. for One Rank there was one pension irrespective of the numbers of years of service?



For ready reference from 3rd CPC report Volume III (also elsewhere in this blog)



6……….The standard rates of pension for officers of the three Services in force from time to time are given in the table below: - 



TABLE IV

(in rupees)

Rank
Between
1-6-53 and
16-4-56
Between
17-4-56 and 30-9-61
From 1-10-61
Post DCR Gratuity pension after 10-9-70
(1)
(2)
(3)
(4)
(5)
2nd Lt/Lieut
275
275
300
272
Captain
350
350
425
377
Major
475
475
550
482
Lt Colonel
625
625
675
587
Colonel
675
675
750
638
Brigadier
725
800
825
696
Maj General
800
875
875
735
Lt General
900
900
900 (975 from 12.10.1970)
819
General
1000
1000
1000
840



The amounts in columns (4) and (5) of the above table are current rates of pension; rates in column (4) pertain to the amount of pension admissible where no DCR Gratuity is payable and those in column (5) to pension admissible in conjunction with DCR Gratuity.



xxxx                            xxxx                            xxxx



13.     After much deliberation, we have reached the conclusion that the most appropriate method of providing a compensatory element in pension rates would be to add a certain number of years of service to the period of qualifying service prescribed for earning full pension for the various ranks and applying for each year of service the rate of 1/80 of the maximum pay fixed for that rank. In the context of our conclusion that the standard rate system for the pension of Service officers should be continues, the weightage of additional years cannot be added to the length of service actually rendered but it has to be added to the minimum period prescribed for earning pension of the rank.



Our calculations show that the two benefits in combination, viz., (a) taking the maximum of pay of the rank and (b) adding a period of 5 years, subject to the total not exceeding 33 years, would provide a reasonable degree of compensation. This approach can be adopted only for officers retiring in the rank of Brigadier or below. Further, in the case of Lt Colonel, we have found it necessary to give additional weightage in order to maintain comparability in the order of increase proposed over the existing pension rates in the Armed Forces and on the civil side. Thus, we have added an extra year for officers in the rank of Major and two years for officers in the rank of Captain or below. It is to be noted, however, that the chances of a Service officer retiring below the rank of major on a normal pension are remote and these rates have relevance mainly for determining the amounts of disability and invalid pensions. For senior officers, the pension will have to be determined on the basis of reasonable differential because in their case the pay of the rank exceeds the maximum of the emoluments reckoned for pensions on the civil side.   



14.     In accordance with the above principles, we recommend the following standard rates of pension for Service officers after provision of the DCR Gratuity: -



TABLE V



Rank
Minimum length of qualifying service
Proposed pension
(Rs p.m.)
Subaltern
20 years
325
Captain
20 years
500
Major
22 years
625
Lt Colonel
24 years
700
Colonel
26 years
850
Brigadier
28 years
1000
Maj General
30 years
1050
Lt General
30 years
1100
General
30 years
1150



2.      So, was there a One Rank One Pension (OROP) i.e. Same Rank, Same Years of Service Same Amount as Pension from Independence till Third CPC abolished it?



3.       Was the Committee of Petitions of the Rajya Sabha (known popularly as Koshyari Committee) given wrong inputs on OROP?



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