Ministry of
Finance03-May, 2017
20:28 IST
Cabinet
approves modifications in the 7th CPC recommendations on pay and pensionary
benefits
The Union Cabinet chaired by the Prime Minister Shri
Narendra Modi approved important proposals relating to modifications in the 7th
CPC (Central Pay Commission) recommendations on pay and pensionary benefits in
the course of their implementation. Earlier, in June, 2016, the Cabinet had
approved implementation of the recommendations with an additional financial
outgo of Rs 84,933 crore for 2016-17 (including arrears for 2 months of
2015-16).
The benefit of the proposed modifications will be
available with effect from 1st January, 2016, i.e., the date of implementation
of 7th CPC recommendations. 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. Some of the important decisions of the Cabinet are mentioned
below:
1. Revision of
pension of pre – 2016 pensioners and family pensioners
The Cabinet approved modifications in the recommendations
of the 7th CPC relating to the method of revision of pension of pre-2016
pensioners and family pensioners based on suggestions made by the Committee
chaired by Secretary (Pensions) constituted with the approval of the
Cabinet. 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 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.
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.
In order to provide the more beneficial option to the
pensioners, Cabinet has accepted the recommendations of the Committee, which
has suggested revision of pension based on information contained in the Pension
Payment Order (PPO) issued to every pensioner. 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.
2.
Disability Pension for Defence Pensioners
The Cabinet also approved the retention of
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.
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