DRAFT ON PENSION TO BE SUBMITTED TO 7TH CPC

 VI PART:PENSION:

The standing committee of Parliament on social justice and empowerment have recently  stated that at present the life expectancy stands at 76 years now. Therefore, restoration of pension for employees those joined on or after 2004 is not only required but also it is essential to provide more retirement benefits including pension to all the Central Government employees. New Pension Scheme  is required to be withdrawn and newly recruited employees of Central Government on or after 1.1.2004 be covered under Old Pension Scheme.

1.    ‘One Rank, One Pension’:

The Central Excise Department has the same structural features, same command & control elements as in Defence forces. The Central Excise executive officers also serve under similar harsh service conditions as the Army. In spite of the similarities in the duties performed by the Central Excise personnel and Defence personnel, the former ones are deprived of privileges extended to Defence and Police services.  The command, control and also rank structure of Central Excise are similar to the army except that the ranks in Central Excise have different nomenclature (Chairman, Member, Principal Chief Commissioner, Chief Commissioner, Commissioner, Additional Commissioner, Joint Commissioner, Deputy Commissioner, Asst. Commissioner, Superintendent, Inspector, Havildar and Sepoy). In accordance with the NDPS Act and the Central Excise Act, the powers of the Police officers are vested into executive officers of Central Excise.  The personnel of Central Excise and Customs are deployed on the borders (with Pakistan, Bangladesh, Nepal, China, Myanmar etc.), International Airports and International Sea Ports. They are also actively engaged in counter insurgency operations against dreaded smugglers, hard core criminals, white collared criminals and chronic tax evaders etc. within the country. These personnel have suffered heavy casualties while dealing with trans-border crimes and countering with dreaded smugglers. Their duties are akin to the Army and they are responsible not only for guarding the Economics borders of the Country but also for security of the Nation. In fact in J & K and North Eastern states of India, the Central Excise personnel are deployed side by side with the Army, BSF, CRPF and ITBP on the same location. They perform their duties in most adverse conditions coupled with the threat to the lives of them & their families by enemy action, insurgents, dreaded smugglers, hard core criminals and the climatic hazards. The personnel of Central Excise and Customs are deployed on the borders, International Airports and Sea Ports also being actively engaged in counter insurgency operations with smugglers and tax evaders etc. within the country. These personnel have suffered heavy casualties while dealing with trans-border and other hard core criminals. Their duties are akin to the Army and they are also responsible for security of the Nation. They perform their duties in the most adverse conditions coupled with every threat to the person & property along with their families.  The Central Excise executive officers should also be granted all benefits to be extended by 7^th CPC to the Defence personnel. The Central Government has decided to introduce ‘One Rank, One Pension’ for Defence personnel. The executive officers of Central Excise and Customs are uniformed officers having the same structural features, command & control elements and also serving under similar harsh service conditions as the Defence personnel. In spite of the similarities in the duties, the Central Excise executive personnel are deprived of the privileges extended to Defence and Police services.  Under these conditions; if the juniors start getting more pension than the seniors, it violates the hierarchy of command system as is applicable to all Armed Forces. It is a well-established dictum based on the Supreme Court judgement of 1982 and accepted by the Government that, “pension is not a bounty nor a matter of grace depending upon the sweet will of the employer. It is not an ex-gratia payment but a payment for past services rendered”. In another judicial ruling, it has been stated that different criteria for grant of unequal pay/pension for the same rank on the basis of cut-off date of retirement violates Article 14 (equality before law) of the Constitution. All pensioners irrespective of rank are entitled to same pension. In the case of Defence services, the Government has rightfully realized the truth of this fact and given succour to the pre-2006 Defence pensioners to come up to the level of their post-2006 retirees of equivalent rank and status by granting them ‘One Rank, One Pension’. However, the Central Excise and Customs executive personnel having equitable dispositions, command structure, rank system & nature of duties are grossly ignored, discriminated & forced to face the ignominy of less emoluments vis-a-vis their post-2006 retiring juniors. 

Conclusion:

Therefore, we suggest , the Honourable 7^th CPC may kindly be pleased to recommend for  introduction of  the system of ‘One Rank, One Pension’ in the executive cadres of Customs and Central Excise department like Defence employees.

2.    The rate of pension be 75% of the pay last drawn or the average of 10 months emoluments last drawn, whichever is higher.

 The minimum basic pension fixed by VI CPC was Rs.3500/- which was 50% of the minimum pay in the pay band (Rs.5200/-) plus Grade Pay thereon (Rs.1800/-). The consultants for V CPC, Tata Economic Consultancy Services, taking all micro aspects into scientific consideration, had suggested that 67% of last pay drawn should be allowed as minimum pension. Considering the passage of time since then, the quantum of increase in the GDP of the nation and quantum of increase in the per capita income it is reasonable to demand 75% of the last pay plus Grade Pay drawn as minimum pension. The rate of pension fixed by VI CPC was 50% of the pay last drawn. The Hon’ble Supreme Court of India had in the landmark judgement of D.S.Nakara and others Vs. Union of India (AIR 1983, SC 130) clarified that a pension scheme must provide that the 
pensioner would be able to live at a standard equivalent at the pre retirement level.

Conclusion:

We suggest that the Honourable 7^th CPC may kindly be please to recommend to render even a partial compliance to the observation it is necessary that the rate of pension be 75% of the pay last drawn or the average of 10 months emoluments last drawn, whichever is higher.

3.    Family pension.

At present 30% of last pay drawn is allowed as family pension.  We suggest that it is reasonable and justifiable to suggest 45% of last pay drawn as family pension.

4.    Rounding up and notional determination.

 We suggest that the pension amount may be computed rounding to the next multiple of Rs. 10/-.Pay band and grade pay system introduced by VI CPC caused heavy disparities between pre and post 2006 retirees. The concept of modified parity introduced by the 5th CPC as a measure to reduce the financial implication must be replaced with the full parity concept as was made applicable for the personnel retired prior to 1.1.1986. In other words, the pay of every retired person must be re-determined notionally as if he is not retired and then his pension to be computed under the revised rules. This alone will protect the value of pension of a retired person.

5.    Additional pension at the rate of 10% may be granted from 65 years and at the rate of 20% for 95 years and 100 years of age. 

According to the present scheme a consolidated amount reckoned at the commutation value of 8.194 is disbursed to the pensioner at the time of retirement whereas recovery is effected for 15 years i.e, for approximately double the commutation value. As per a Note prepared by Ministry of Personnel, Public Grievances and Pensions, Department of Pension & Pensioners’ Welfare (File F.No.42/8180/2011-P&PW (G)) the rate of interest at which commuted value of pension is fully recovered is 20.7% per annum in the case of employees who retired at the age of 60 yrs after 01-01-2006. This is in fact an enrichment of the exchequer at the expense of the poor pensioner which cannot be justified by any stretch of reasonable argument, particularly in a state where socialism has been declared as the goal. Hence restoration of the commuted portion should be done after 10 years instead of the present 15 years. In the case of pre-2006 retirees the excess recovered may be refunded to the pensioners. Senior citizens, during their advanced age, have to bear additional financial burden due to age related diseases and social and family obligations. So additional pension at the rate of 10% may be granted from 65 years and at the rate of 20% for 95 years and 100 years of age. 

Conclusion:

Accordingly we suggest the following increase in the basic pension:
Age (in yrs)        Increase in pension

65 ………………10%
70 ………………20%
75 ………………30%
80 ………………40%
85 ………………50%
90 ………………60%
95 ………………80%
100 ……………100%

6. MERGER OF DA.

 It was the well considered suggestion of V CPC that whenever DR exceeded 50%, it should be merged with basic Pay/ pension. Now the DR has exceeded 50% from 01-01-2011 and 100% from 01-01-2014. We demand 50% DR be merged with basic Pay/ pension retrospectively from 01-01-2011 and the consequential Dearness Relief arrears may be disbursed to the employees as well as pensioners.

6.    Interim Relief:

 We suggest that Honourable 7^th  Pay Commission may recommend 25% of basic pay/ pension as Interim Relief to all the existing employees as well as  pensioners ,

7.    A rational methodology for computing DA/DR is to be evolved, and the periodicity changed to quarterly from the present half yearly

At present DA/DR is given to the employees / pensioners half yearly taking into account the average consumer price index for 12 months. It is claimed that full neutralization of the cost of living is effected in granting the DA/DR. The claim dose not stands the scrutiny of the contemporary economic stratification. For example, on 01-01-2006, i.e, at the time of implementation of VIth Pay Commission the DA/DR was nil. Now on 01-01-2014 after giving full neutralization the DA/DR has arrived at 100%. The conclusion is that the cost of index based on the present methodology of calculation has only doubled. But the reality is that the cost of essential commodities has spiraled manifold. Hence a rational methodology for computing DA/DR is to be evolved, and the periodicity changed to quarterly from the present half yearly.

8.    Health Schemes

The existing Health Schemes such as CGHS, ECHS, RELHS etc are to be strengthened by providing all facilities, wherever necessary and extended to all the District Head Quarters of  the Country. The pensioner who is not covered by the schemes should be provided with the facility of claiming medical expenses for indoor treatment under CS (MA) Rules, 1944 as recommended by the V CPC. District level nodal offices under each department may be recommended for reimbursement purpose. The existing Fixed Medical Allowance in lieu of outpatient treatment is to be enhanced to Rs. 2500/- per person , and should be linked to increase in Consumer Price Index.

9.    Income Tax Exemption to senior citizens:

At present senior citizens are exempted from income tax up to Rs. 2.5 lakh. This is too inadequate an amount we suggest that senior citizens may be exempted from income tax for an amount upto Rs. 6 lakh.

10. Festival Allowance:

Almost all State Governments grant festival allowance to their pensioners. Actually senior citizens are generally enthusiastic in celebrating important festivals of their region/religion. We request VII CPC to recommend one month’s pension in a year as festival allowance to pensioners. 

11. Travel concession to pensioners:

At present LTC is being granted to working employees. The pensioners’ organizations have been consistently and persistently demanding travel concessions to pensioners under a rational and reasonable scheme. It is requested that a scheme be evolved under which a pensioner along with family members is eligible for reimbursement of the cost of journey with in the country once in 2 years reckoned at actual 
entitlement while the pensioner was in service.

12. Revision of Pension:

The pension of Central Government pensioners undergoes revision only once in 10 years. The pension structure gets seriously dis-aligned during this period as 50% increase in price takes place even in less than 5 years. This results in considerable erosion of the financial position of the pensioner. Dearness Relief does not adequately take care of the inflation at this level. Working employees are getting automatic relief by way of 25% increase in their allowances with every 50% rise in Dearness Allowance. As pensioners do not get any allowance, they feel discriminated. In order to strike a balance, Dearness Relief should be automatically merged with pension whenever it goes to 50%.  Alongwith, 10% upward enhancement in pension/family pension be granted every five years after the age of 60 years & up to 80 years. Thereafter, it should be 10% more than the existing dispensation as, in the present scenario of high inflation, climatic changes, incidence of pesticides & rising pollution, old age disabilities/diseases set in by the time an employee retires and go on manifesting very fast, need additional finances to take care of these disabilities and diseases.

13. Restoration of commuted value of pension after 12 years:

The purchase value of pension gets reduced day by day due to continuously high inflation and steep rise in cost of food items & other requirements making over all steep rise in living cost. Retired persons/senior citizens do not enjoy fully public goods & services provided by Government due to lack of mobility and many other factors. Their ability to pay tax gets reduced from year to year after retirement due to ever-increasing expenditure on food, medicines and other incidentals. Their net worth at year end gets reduced considerably as compared to the beginning of the year. Inflation is much more than any tax for a pensioner. It erodes the major part of the already inadequate pension. To enable pensioners to live in minimum comfort at the far end of their lives and to cater for ever rising cost of living, they should be spared from paying any tax including Income Tax. The commutation value in r/o the employee superannuating at the age of 60 years between 01.01.96 and 31.12.05 commuting a portion of pension within a period of one year would be equal to 9.81 years purchase. After adding thereto a further period of two years for recovery of interest, in terms of observations of Supreme Court in its judgment in Writ Petitions No. 395-61 of 1983 decided in December 1986, it would be reasonable to restore commuted portion of pension in 12 years instead of present 15 years. In case of persons superannuating at the age of 60 years after 31.12.05 seeking commutation within a year, numbers of purchase years have been further reduced to 8.194. Also the mortality rate of 60 plus Indians has considerably reduced ever since Supreme Court judgment in 1986; the life expectancy stands at 76 years now. Therefore, restoration of commuted value of pension after 12 years is fully justified.

14.  Hassle free health care facility to pensioners/family pensioners:

 As far health is concerned, it is not a luxury and it should not be the sole possession of a privileged few. It is not only a welfare measure but also a fundamental right of all present & past employees. To ensure as hassle free health care facility to pensioners/family pensioners, Smart Cards should be issued to all pensioners, family pensioners and their dependents for cashless medical facilities across the country irrespective of department. These smart cards should be valid in all Govt. hospitals, all private & Govt. Multi Super Specialty hospitals, all CGHS, RELHS & ECHS empanelled hospitals across the country. No referral should be insisted for medical treatment or tests. The Doctors/Medical officers working in different Central/State Govt. department dispensaries/health units should also be recognized as Authorized Medical Attendant.  The enjoyment of the highest attainable standard of health is recognized as a fundamental right for all in terms of Article 21 read with Article 39(c), 41, 43, 48A and all related Articles as pronounced by the Supreme Court in Consumer Education and Research Centre & Others vs Union of India (AIR 1995 Supreme Court 922). The Supreme court has held that the right to health to a worker is an integral facet of meaningful right to life to have not only a meaningful existence but also robust health and vigour. Therefore, the right to health and medical aid to protect the health & vigour of a worker while in service or after retirement is a fundamental right to make life of a worker meaningful and purposeful with dignity.  All pensioners, irrespective of pre-retirement class & status, should be treated as same category of citizens in r/o health. There should be no class or category based discrimination and all must be provided health care services at par. To ensure that the hospitals do not avoid providing reasonable care to smart card holders and other poor citizens, a Hospital Regulatory Authority should be created to bring all hospitals and diagnostic labs under its constant monitoring for quality, rates & timely bill payments by Govt. agencies & Insurance companies. CGHS rates should be revised keeping in mind the workability and market conditions.

15. Fixed Medical allowance to Pensioners :

As recorded in Para 5 of the minutes of Committee of Secretaries (COS) held on 15.04.10 {Reference Cabinet Secretariat, Rashtrapati Bhavan No 502/2/3/2010-C.A.V Doc No. CD (C.A.V) 42/2010 Minutes of COS meeting dated 15.4.2010} discussing the enhancement of FMA, CGHS card estimates for serving Personnel, since estimates are not available separately for pensioners, M/O Health & Family Welfare had assessed the total cost per card per annum in 2007-08 to be Rs. 16435/-, i.e., Rs.1369/- per month for OPD. Adding to its inflation, the figure today is well over Rs. 2000/- per month. Ministry of Labour & Employment, Govt. of India vide its letter no. G-25012/2/2011-SSI dated 07.06.13 has already enhanced FMA to Rs 2000/- per month for EPFO beneficiaries. Thus, to help elderly pensioners to look after their health, adequate raise in FMA will encourage a good number of pensioners to opt out of OPD facility which will reduce overcrowding in hospitals. OPD through insurance will cost much more to the Govt. Thus, the proposal for raising Fixed Medical allowance to Pensioners is fully justified and is financially viable. The FMA for all pensioners/family pensioners should be raised to at least Rs. 2000/- per month without any restriction linking it to Dearness Relief for further automatic increase. The FMA should also be exempted from any tax including Income Tax as it is a compensatory allowance to reimburse the medical expenses. The actual expenses made in addition to FMA should be reimbursed in hassle free manner.

16.  CREATION OF A CELL IN EACH AND EVERY OFFICE FOR WELFARE OF RETIRED GOVT EMPLOYEES.

The Ministry of Personnel and Pensions has launched an initiative to route the skill and experience of retired government employees back into socially useful and constructive work. Retired Government employees can soon find employment opportunities back in government departments and other social organisations on a voluntary basis. The Ministry of Personnel and Pensions has launched an initiative to route the skill and experience of retired government employees back into socially useful and constructive work. “There are 50 lakh government employees today. But there are also 53 lakh retired employees, most of whom can still contribute to nation building exercise. Govt. should  tap their skills and experience.

CONCLUSION:

It is suggested that Honourable 7^th CPC  may be pleased to  recommend  for creation of a separate cell for welfare of retired employees in each and every offices and these sections should be managed by willing retired employees only.