Restoration of Commuted pension after 12 years instead of 15 years (Anomalies): RSCWS writes to Secretary (Pension)

RAILWAY SENIOR CITIZENS WELFARE SOCIETY
(Estd. 1991, Regd. No. 1881 – Under Registration of Societies Act)
Head Office: 32, Phase- 6, Mohali-160055 (Mob: 9316131598, 8360452584

No. RSCWS/CHD/ Memo Commuted Pension/2023-5

Dated: 28-3-2023

Secretary (Pension),
Government of India,
Ministry of AR, PG & Pension,
5th Floor, Patel Bhawan,
Parliament Street, New Delhi – 110001.
secy-arpg [at]nic.in,

Sub: Restoration of Commuted pension after 12 years instead of 15 years (Anomalies)

Ref: -i) Govt. of Gujrat Resolution No.-NVT/102010/D/66/P (PENSION CELL) Dated 12.10.2022
ii) RSCWS Memorandum No. RSCWS/HO/ CHD/Memo MOS P&PW/ 2022-25 Dated: 12-12-2022 to Dr. Jatindra Singh, Hon’ble Minister of State, GOI, Department of Personnel, PG & Pension.

Respected Sir,

We draw your kind attention to the submissions made by us in our Memorandum cited above and humbly request for early consideration thereof especially in view of the following facts: regarding anomalies in respect of excessive recovery of commuted pension, as last revision of commutation table was done in the year 2008 with an interest rate of 8% compounded annually. Since then the interest rates in various Govt. Schemes have fallen by 33% in the last five years.

More than 14 years have passed, generally a pay commission is formed after every 10 years, the commutation table has not been revised which is the need for the realistic approach to recover commuted portion of the pension in view of decreased rates of interest and increased life expectancy to 70 years as per latest data.

Following facts will support the subject:

Comparative Rate of Interest on Various Govt. Schemes

Rate of interest on PPF from 01.04.1986 to 31.03.2006 was around 12%.

From the above table it is evident that there is a decline in the interest rates and RBI’s repo- rates at present is 5.4% as compared to 6.5% in year 2006.

After 6th CPC i.e. from 01.01.2006 the retirement age is 60 years but Commutation Factor (CF) was downgraded to 8.194 from 9.81 for 61 years (Next Birthday). The reduction in CF has led to reduction in commuted pension by 16.5% which is an added monetary loss. In addition to this Rate of Interest on commuted value increased from 4.75% to 8% i.e., an increase of 68% in the low interest rate regime which is 30% low in the last five years. In view of above there is an immediate need of revised commutation table.

1. Restoration of Commuted Pension after 12 years

5th CPC already recommended to recover the commuted pension in 12 years which was unjustifiably not accepted with exception to certain states like Kerala, M.P., Odissa, Punjab and Gujarat is the latest addition vide above referred letter. The commutation factor decreased by 16.8%, therefore, there is no justification to recover anything more than what is advanced to the retirees.

The decreased commutation factor if equated in terms of years it is 10.85 years which means an extra recovery of 15-10.85=4.15 years

2. Mortality Rate

Life expectancy as per the current data is 70 years and mortality rate has gone low. The WHO statistics has shown life expectancy of 77 years in case of Govt. Employees.

In view of above it is again requested that commuted pension may please be restored in 12 years instead of 15 years to rationalize the system in view of low rates of interest and increased life expectancy.

(Harchandan Singh)
General Secretary/RSCWS

The post Restoration of Commuted pension after 12 years instead of 15 years (Anomalies) appeared first on CENTRAL GOVERNMENT EMPLOYEES NEWS.

GOVERNMENT OF INDIA
MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS
(DEPARTMENT OF PENSION & PENSIONERS’ WELFARE)

RAJYA SABHA UNSTARRED QUESTION NO. 430
(TO BE ANSWERED ON 22.07.2021)

CALCULATION OF COMMUTED PENSION
430 SHRI NEERAJ DANGI:

Will the PRIME MINISTER be pleased to state:

(a) the formula for calculating the commuted pension for employees of Union Government while deciding the recovery period of commuted pension for employees;

(b) the rate of interest for FD, when 14 year was decided as the recovery period for commuted pension of employees;

(c) whether this recovery period is justified in the present scenario when the rate of interest for FD is 5-6 per cent only, if so, the details thereof; and

(d) whether Government is willing to revise this period of recovery of commuted pension, if so, by when and if not, the reasons therefor?

ANSWER

MINISTER OF STATE IN THE MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS AND MINISTER OF STATE IN THE PRIME MINISTER’S OFFICE (DR. JITENDRA SINGH)

(a) to (d): The lump sum commuted value of pension payable to a pensioner, who applies for such commutation, is calculated in accordance with the Table of the values appended to the Central Civil Services (Commutation of Pension) Rules, 1981. A copy of the Table, presently applicable for calculating the commuted value of pension, is at Annexure. The commuted amount of pension is restored on completion of 15 years from the date the reduction of pension becomes operative.

The existing Table of the values for calculation of lump sum commuted value of pension was incorporated in the Central Civil Services (Commutation of Pension) Rules, 1981 in implementation of the recommendations of the Sixth Central Pay Commission vide Department of Pension & Pensioners’ Welfare O.M. No. 38/37/08-P&PW(A) dated 2nd September, 2008 . This Table is based on LIC (94-96) Ultimate Tables and rate of interest of 8%. While recommending the aforesaid Table, the Sixth Central Pay Commission did not recommend any change in the period of 15 years for restoration of commuted pension. The Seventh Central Pay Commission also did not recommend any change in the said period for restoration of commuted pension.

Hon’ble High Court of Delhi, vide order dated 17.01.2019, dismissed a Writ Petition No. 1222/2015 seeking reduction in the period for restoration of commuted pension. An SLP(C) No. 8852/2019 filed against the said order of Hon’ble High Court of Delhi was also dismissed by Hon’ble Supreme Court on 15th April 2019.

At present, in view of the above, there is no proposal to revise the period of restoration of commuted pension.

ANNEXURE REFERED TO IN PARA 1 OF ANSWER TO RAJYA SABHA UNSTARRED QUESTION NO 430 DATED 22.07.2021

COMMUTATION VALUE FOR A PENSION OF Re.1 PER ANNUM

 [Basis: LIC (94-96) Ultimate Tables and 8.00% interest]

The post Formula for calculating the commuted pension for employees – Revise the Period of Restoration of Commuted Pension appeared first on CENTRAL GOVERNMENT EMPLOYEES NEWS.

No.4/30/2010-P&PW (D)
Government of India
MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS
(DEPARTMENT OF PENSION & PENSIONERS’ WELFARE)

3Rd Floor, Lok Nayak Bhawan
New Delhi – 110003.
Dated the 11th July, 2013

OFFICE MEMORANDUM

Sub:- Revision of 1/3rd commuted portion of pension in respect of Government servants who had drawn lump sum payment on absorption in Central Public Sector Undertakings/Central Autonomous Bodies —implementation of Government’s decision on the recommendations of the Sixth Central Pay Commission.

The undersigned is directed to say that orders were issued vide this Departments OM No.4/30/2008-P&PW(D) dted 15.9.08 for revision of 1/3rd restorable pension w.e.f. 1.1.2006 of Government servants who had drawn lump sum payment in respect of prorata pension on absorption in a PSU/Autonomous Body. The implementation of these orders in some cases resulted in drop in the total amount of 1/3rd restored pension plus DR in comparison to total amount of 1/3rd restored pension plus admissible DP and DR as drawn by pensioners before issue of these orders. It was, therefore decided vide Department of Pension and Pensioners’ Welfare OM. No.4/38/2008 P&PW(D) dated 27.05.2009 that wherever the restored amount of the revised pension plus DR of such absorbees, in terms of instructions contained in OM dated 15.9.2008, becomes less than 1/3rd pre revised restored pension plus admissible DP & DR as already drawn, the absorbed employees would be allowed to draw the pensionary benefits admissible to them till such time the restored amount of the revised pension in terms of instructions contained in OM dated 15.09.2008 plus admissible DR works out to be more than the pre-revised 1/3rd restored pension plus admissible DP & DR as on 01.09.2008.

2. The Central Administrative Tribunal, in its order dated 27.9.2011 in OA No.710/2010 read with order dated 22.4.2013 in CP 26/2012 held that tne OM dated 15.9.2008 was legally sustainable. However, Hon’ble CAT has directed to pass an order so as to equalize the amount of 1/3rd restored pension with the pension of other Central Government pensioners.

3. The matter has been examined. On the recommendations of  6th Central Pay Commission, the pension of pre-2006 Central Government pensioners has been revised vide this Departments OM No.38/37/08-P&PW(A) dated 1.9.2008. In terms of para 4.1 of that OM, the revised pension of pre-2006 pensioners works out to 2.26 times of the pre-revised basic pension (without DP). Keeping in view the direction of Hon’ble CAT, Hyderabad Bench, It has been decided that 1/3rd restored pension of those Government servants who had drawn lump-sum payment on absorption in PSU/AB and whose 1/3rd pension was restored from a date before 1.1.2006, the pre-revised 1/3rd restored pension will be revised w.e.f. 1.1.2006 by multiplying the same by a factor of 2.26, if It is more beneficial than the amount of revised restored 1/3rd pension arrived at in terms of this Departments OM dated 15.9.2008. In the case of those absorbee pensioners in whose case the restoration of 1/3rd pension became due on or after 1.1.2006, the above formulation would apply with reference to notional 1/3rd restorable pension as on 31.12.2005.

4. These instructions are being issued as a special case in compliance of the orders of Hon’ble CAT, Hyderabad Bench in CP No.26/2012 in OA 710/2010. At the time of revision of 1/3rd pension on the basis of recommendations of next Pay Commission, the increase in 1/3rd restored pension on account of these instructions would not be considered and the 1/3rd restored pension of absorbees would be revised as per the usual procedure without taking into account the aforesaid dispensation.

5. Payment of DR and additional pension to old pensioners (of the age of 80 years and above) shall continue to be on full pension as per the instructions issued from time to time.

6. The benefit of revision of restored amount of 1/3rd commuted portion of pension shall be admissible w.e.f. 1.1.2006 or from the date the commuted portion of pension is restored, whichever is later.

7. This issues with the concurrence of Ministry of Finance (Department of Expenditure) vide their ID No.561/E.V/2013 dated 21.6.2013.

8. In their application to the persons belonging to Indian Audit and Accounts Department these orders issue in consultation with the Comptroller and Auditor General of India.

9. Hindi version will follow.

sd/-
(Harjit Singh)
Dy. Secretary to the Government of India

Source: www.pensionersportal.gov.in
[http://ccis.nic.in/WriteReadData/CircularPortal/D3/D03ppw/PSU_110713.pdf]

The post DPPW Orders : Revision of 1/3rd commuted portion of pension in respect of Government servants who had drawn lump sum payment on absorption in Central Public Sector Undertakings / Central Autonomous Bodies appeared first on CENTRAL GOVERNMENT EMPLOYEES NEWS.