Thursday, June 29, 2017

7th Central Pay Commission recommendations for Defence Forces

Certain modifications in the 7th CPC (Central Pay Commission) recommendations on pay and pensionary benefits in the course of their implementation are on the anvil. 

The Union Cabinet chaired by the Prime Minister Narendra Modi had earlier approved two important recommendations impacting the Defence Forces in the country. 

Two important decisions by the government - 

(a) The government has decided to make modification in recommendations of the seventh CPC relating to the method of revision of pension of pre-2016 pensioners and family pensioners based on recommendations of a high-level panel. 

(b) The government decided to continue with an earlier system of disbursing disability pension and not to go ahead with a new regime recommended by the seventh pay commission. 

(a) Revision of pension of pre-2016 pensioners and family pensioners 

The Cabinet had already approved the modifications in the recommendations of the 7th CPC relating to the method of revision of pension of pre-2016 pensioners and family pensioners. The recommendations were based on suggestions made by the Committee chaired by Secretary (Pensions) constituted with the approval of the Cabinet. 

The revised process : In order to provide the more beneficial option to the pensioners, Cabinet has accepted the recommendations of the Committee, which has suggested a revision of pension based on information contained in the Pension Payment Order (PPO) issued to every pensioner. 

The committee felt that the revised procedure of fixation of notional pay is more scientific, rational and implementable in all the cases. The Committee reached its findings based on an analysis of hundreds of live pension cases. The modified formulation will be beneficial to more pensioners than the first formulation recommended by the 7th CPC, which was not found to be feasible to implement on account of non-availability of records in a large number of cases and was also found to be prone to several anomalies. 

The impact: The modified formulation of pension revision approved by the Cabinet will entail an additional benefit to the pensioners and an additional expenditure of approximately Rs.5031 crore for 2016-17 over and above the expenditure already incurred in the revision of pension as per the second formulation based on fitment factor. It will benefit over 55 lakh pre-2016 civil and defence pensioners and family pensioners. 

The modus operandi: While approving the implementation of the 7th CPC recommendations on 29th June 2016, the Cabinet had approved the changed method of pension revision recommended by the 7th CPC for pre-2016 pensioners, comprising of two alternative formulations, subject to the feasibility of the first formulation which was to be examined by the Committee. 

In terms of the Cabinet decision, pensions of pre-2016 pensioners were revised as per the second formulation multiplying existing pension by a fitment factor of 2.57, though the pensioners were to be given the option of choosing the more beneficial of the two formulations as per the 7th CPC recommendations. 

(b) Disability Pension for Defence Pensioners: Percentage-based regime retained 

The Cabinet had approved the retention of a percentage-based regime of disability pension implemented post 6th CPC, which the 7th CPC had recommended to be replaced by a slab-based system. 

The issue of disability pension was referred to the National Anomaly Committee by the Ministry of Defence on account of the representation received from the Defence Forces to retain the slab-based system, as it would have resulted in reduction in the amount of disability pension for existing pensioners and a reduction in the amount of disability pension for future retirees when compared to percentage-based disability pension. 

The decision which will benefit existing and future Defence pensioners would entail an additional expenditure of approximately Rs. 130 crore per annum. 

In principle benefits 

The government had also agreed in principle to address three major grievances of the armed forces relating to their salary structure including providing pay protection to those getting promotion from the rank of brigadiers. The current system has certain anomalies and some of those promoted to higher ranks lose on the military service pay. 

After a recent meeting of the Union Cabinet, Defence Minister Arun Jaitley had also assured that the government was addressing the demand of extending pay matrix from 24 years to 40 years and carrying out rationalisation of pay Lt Colonels and Colonels. 

Why modifications 

The government was under attack from the opposition parties as well as the military establishment over slab-based system following which the matter was referred to the National Anomaly Committee by the Ministry of Defence. 

The armed forces felt the new system would result in a reduction in the amount of disability pension for existing as well as future retirees compared to percentage-based disability pension. The military personnel were upset as civilian pensioners were to be paid pension according to the earlier percentage system. 

The benefit of the proposed modifications will be available with effect from January 1, 2016, the date of implementation of 7th CPC recommendations. 

The decision will benefit existing and future pensioners of the armed forces and would entail an additional expenditure of approximately Rs 130 crore per annum. With the increase approved by the Cabinet, the annual pension bill alone of the central government is likely to be Rs 1,76,071 crore. 

Source:-The Economic Times

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