The Union government has approved the modifications in the 7th Central Pay Commission recommendations on pay and pensionary benefits. Government said that the proposed modifications will be available with effect from 1st January, 2016, which is effective date of implementation of 7th Central Pay Commission recommendations.
Earlier, in June, 2016, the cabinet had approved implementation of the recommendations with an additional financial outgo of ₹84,933 crore for 2016-17 including arrears for 2 months of 2015-16.
According to a statement, the benefit of the proposed modifications will be available with effect from 1st January, 2016, which is effective date of implementation of 7th pay commission recommendations. With the increase approved by the government, the annual pension bill alone of the central government is likely to be ₹1,76,071 crore.
The Cabinet approved modifications in the recommendations of the 7th cCentral Pay Commission relating to the method of revision of pension of pre-2016 pensioners and family pensioners based on suggestions made by the committee.
The modified formulation of pension revision approved by the Cabinet will entail an additional benefit to the pensioners and an additional expenditure of approximately ₹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, said government.
While approving the implementation of the 7th Central Pay Commission recommendations on 29th June, 2016, the cabinet had approved the changed method of pension revision recommended by the 7th Central Pay Commission 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 Central Pay Commission 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 Central Pay Commission, 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 Cabinet also approved the retention of percentage-based regime of disability pension implemented post 6th Central Pay Commission, 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 ₹130 crore per annum.