Saturday, January 18, 2014

Main common demands of Bharat Pensioners Samaj

After holding several conventions & conferences in different parts of the country & interacting with a wide range of Pensioners’ Association & stake holders, BPS has identified the following main common Issues/Demands to be presented to 7th CPC for redress:
1. Settle the anomalies of 6th CPC especially adoption of different multiplication factor in arriving at minimum of PB 1-4 & Scales HAG & HAG+:  Pay commissions upto to 5th CPC adopted a multiplication factor of 3.2 to 3.8 to arrive at the new scales compared to earlier scales but VI CPC adopted conversion factor of about 2.6 at the lowest where as it was about 3.6 at the highest scale. By this method Vth CPC’s established ratio 1:10.7 between the lowest scale and highest scale was disturbed by the VI CPC. Moreover going against the recommendations of 6th CPC Govt. pulled out S30, 31 & 32 from PB 4 and gave them higher scales of HAG & HAG+ which, caused serious disparity within the homogenous class of pensioners, wherein pre 2006 pensioners corresponding to pre revised scales of S30, 31, 32 could get full parity with post 2006 pensioners. But pensioners corresponding to lower scales were deprived of full parity, resulting in violation of Article 14 of the constitution. 7th CPC while recommending new pension revision formula should take care to rectify this disparity & inequality by restoring full parity for all pensioners
2. Amount of Pension: 
Honourable Supreme Court, in its landmark 5 judge Constitutional Bench judgment dated 17.12.1982 in the case D.S.Nakara v/s UOI, ruled:
“A pension scheme consistent with available resources must provide that the Pensioner would be able to live:
(I)                free from  want, with decency, independence and self respect and
(II)             At a standard equivalent at pre retirement level”.
As laid down in Para 127.9 of 5th CPC, the study done by Consultants to 5th CPC, TECS (Tata Economic Consultancy Services) recommended Pension to be 65% of the last drawn.
Bharat Pensioners Samaj demand 65% of the last drawn emoluments or 65% of last 10 months average emoluments, whichever is more beneficial, as pension & 40% as Family Pension subject to the condition that minimum pension shall not be less than 3500X3= 10500/- as there is three times increase in actual prices calculated by the 6th CPC and the current prices or Rs 3500 + DR as on 31.12.2015 + interim relief, if any + 50 percent fitment benefit. Or 65 % of the 7th CPC revised minimum Basic Salary of Central Govt. employees whichever is more beneficial.

3. Minimum fitment benefit for PB 1 to PB 4 @ 50% :  In Para 5.1.47 of their recommendations, the 6th CPC said, “ it will be necessary to allow the same fitment benefit as is being recommended for the existing Government employees”. The fitment benefit to exiting govt. employees was given through Grade pay which is  more than 40% of pre revised basic pay e.g. PB2 GP 4200 for S9, PB3 GP 5400 for S16 & S17 and GP 6600 for S18 whereas in case of pensioners it is 40% of basic Pension. Thus 50% fitment benefit in case of Pensioners is fully justified.

5. Merger of DR with pension whenever it goes above 50%:- The Pension of Central Govt. Pensioners undergo revision only once in 10 years during which period the pension structure gets seriously dis-aligned, 50% increase in price takes place even in less than 5 years. This results in considerable damage to the financial position of the pensioner with otherwise inadequate Pension. As admitted by Shri Montek Singh Ahluwalia, Deputy Chairman, Planning Commission in his statement to PTI on 27.2.2008, DA does not adequately take care of inflation. 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 allowances, they feel discriminated against. In order to strike a balance, DR may be merged with Pension whenever it goes beyond 50% as recommended by 5th CPC.
6. Restoration of commuted portion of pension in 12 years:
Restoration of commuted value of pension in 12 years: Commutation value in respect of employee superannuating at the age of 60 years between 1.1.1996 & 31.12.2005 and 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 observation of Supreme Court in their 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 Person superannuating at the age of 60 years after 31.12.2005 and 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. And the life expectancy stands at 69 years now.

Refund Excess Recovery of Commuted Pension by the Govt


As per extant rules, commuted pension is restored after 15 years after the Govt makes full recovery of the commuted amount with interest. This period of 15 years is arbitrary, hypothetical and without any mathematical basis. Calculations show that the recovery exceeds much more than the dues.

Retirees between 1986 and 1995

The age of retirement during that period was 58 years. This category of retirees have all completed the prescribed period of 15 years for restoration of pension. Since 1.3.1971 and until 31.12.2005, the Commutation Factor (CF) was 10.46 for the 59 year old (age next birth day) retirees and the officially prescribed rate of interest was 4.75% p.a. Commutation allowed was 1/3rd of the basic pay. The basic pension of Secretaries who superannuated between 1.1.86 and 31.12.95 at the top of their pay scale (Rs. 8,000) was fixed at Rs.4,000 and the commuted portion of their pension was Rs.1,67,318 with a deduction of Rs.1,333 per month. The principal amount of Rs. 1,67,318 was fully recovered in 10.46 years [10.46 x 12 x 1333 = 1,67,318].
·         If we consider the prescribed interest rate of 4.75% p.a. as simple interest, the total interest works out to Rs.36,250. This is recoverable in 2.27 years [36250/1333 = 27.2 months or 2.27 years]. Thus, total recovery period of the commuted amount works out to 10.46 + 2.27 = 12.73 years. Even after full recovery, the pensioner kept on paying for 15 – 12.73 = 2.27 years. Thus, excess recovery = 2.27 x 12 x 1333 = Rs.36,311.
·         If we consider the prescribed interest rate of 4.75% p.a. as compound interest, the total interest works out to Rs.54,750. This is recoverable in 3.42 years [54750/1333 = 41.07 months or 3.42 years]. Thus, total recovery period of the commuted amount is = 10.46 + 3.42 = 13.88 years. Even after full recovery, the pensioner kept on paying for 15 – 13.88 = 1.12 years. Thus, excess recovery = 1.12 x 12 x 1333 = Rs.17,916.

Retirees between 1996 and 2005

The age of retirement was raised to 60 years after the 5th Central Pay Commission (CPC). Permissible commutation was also raised to 40% of the basic pay. Those who retired between 1996 and 1998 have already completed the prescribed period of 15 years for restoration of pension. Since 1.3.1971 and until 31.12.2005, the Commutation Factor (CF) was 9.81 for the 61 year old (age next birth day) retirees and the officially prescribed rate of interest was 4.75% p.a. Secretaries  who superannuated between 1.1.96 and 31.12.05 at the top of their pay scale (Rs.26,000), were sanctioned commuted pension amount of Rs.9,18,216 with a deduction of Rs.7,800 per month. The principal amount of Rs.9,18,216 is fully recovered in 9.81 years [9.81 x 12 x 7800 = 9,18,216].
·         If we consider the prescribed interest rate of 4.75% p.a. as simple interest, the total interest works out to Rs.2,12,114. This is recoverable in 2.27 years [212114/7800 = 27.2 months or 2.27 years]. Thus, total recovery period of the commuted amount works out to 9.81 + 2.27 = 12.08 years. Even after full recovery, the pensioner keeps on paying for 15 – 12.08 = 2.92 years. Thus, excess recovery = 2.92 x 12 x 7800 = Rs.2,73,312.
·         If we consider the prescribed interest rate of 4.75% p.a. as compound interest, the total interest works out to Rs.3,20,367. This is recoverable in 3.42 years [320367/7800 = 41.07 months or 3.42 years]. Thus, total recovery period of the commuted amount is = 9.81 + 3.42 = 13.23 years. Even after full recovery, the pensioner keeps on paying for 15 – 13.23 = 1.77 years. Thus, excess recovery = 1.77 x 12 x 7800 = Rs.1,65,672.

Retirees from 2006 Onwards

The age of retirement continues to be 60 years. After the 6th CPC, since 1.1.06, the Commutation Factor (CF) has been downgraded from 9.81 to 8.194 for the 61 year old (age next birth day) retirees, thereby reducing the commuted amount by a whopping 16.5% !!! On top of that, the prescribed rate of interest has been enhanced from 4.75% to 8% p.a. which is an astronomical jump of 68% even in this low interest regime!!! The basic pension of Secretaries who superannuated on or after 1.1.06 at the top of their pay scale (Rs.80,000) was fixed at Rs.40,000. Their commuted pension amount is Rs.15,73,248 with a deduction of Rs.16,000 per month. As per the old CF of 9.81, they would have been entitled to a commuted sum of Rs.18,83,520. Thus, there is a huge drop of Rs.3,10,272 !!! The currently sanctioned principal amount of Rs.15,73,248 is fully recovered in 8.194 years [8.194 x 12 x 16000 = 15,73,248].
·         If we consider the prescribed interest rate of 8% p.a. as simple interest, the total interest works out to Rs.5,10,417. This is recoverable in 2.66 years [510417/16000 = 31.9 months or 2.66 years]. Thus, total recovery period of the commuted amount is = 8.194 + 2.66 = 10.85 years. Even after full recovery, the pensioner keeps on paying for 15 – 10.85 = 4.15 years. Thus, excess recovery = 4.15 x 12 x 16000 = Rs.7,96,800.
·         If we consider the prescribed interest rate of 8% p.a. as compound interest, the total interest works out to Rs.9,93,007. This is recoverable in 5.17 years [993007/16000 = 62.06 months or 5.17 years]. Thus, total recovery period of the commuted amount is = 8.194 + 5.17 = 13.37 years. Even after full recovery, the pensioner keeps on paying for 15 – 13.37 = 1.63 years. Thus, excess recovery = 1.63 x 12 x 16000 = Rs.3,12,960.

The above calculations are only illustrative, applicable to retired Secretary rank officers who retired on or after 1.1.86 at the top of their pay scale and their pension was fixed at the maximum. Calculations can be made similarly for other cases and the results would tally.

We may point out that the interest charged on various Govt. advances like House Building Advance, Car Advance, Festival Advance, Marriage Advance etc. is simple interest and not compound. Applying the same policy, the commuted amount of pension was fully recovered with interest in 12.73 years in case of 1st category of retirees (who retired between 1986 and 1995), in 12.08 years in case of 2nd category of retirees (who retired between 1996 and 2005) and in 10.85 years in case of 3rd category of retirees who retired in 2006 or after. There is no justification for the Govt. to recover anything more than what it has advanced to the retirees.

Logical Recovery Period

The Govt. should be moved to rectify this wrong and modify the period of restoration of commuted pension as under:-

  1. 1st category of retirees (who retired between 1986 and 1995): They have already repaid the entire amount with interest. The excess amount recovered should be refunded to them with the same rate of interest as was charged from them for recovery (i.e. 4.75% p.a.).
·         The same policy should be adopted towards those who retired before 1986. Similar calculations can be done in their case.
  1. 2nd category of retirees (who retired between 1996 and 2005): Those who retired 15 years ago have already repaid the entire amount with interest. The excess amount recovered should be refunded to them with the same rate of interest, i.e. 4.75% p.a. For others, the recovery should be stopped and full pension should be restored after completion of 12.08 years.
  2. 3rd category of retirees who retired in 2006 or after: The recovery should be stopped and full pension should be restored after completion of 10.85 years.

7. Enhancement of FMA: As is recorded in Para 5 of the minutes of Committee of Secretaries (COS) held on 15.04.2010 (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) which discussed 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 p.a. in 2007-2008 =Rs 16435 i.e. Rs.1369 per month for OPD. Adding to its inflation the figure today is well over Rs 2000/-PM. Ministry of Labour & Employment, Govt. of India vide its letter no. G-25012/2/2011-SSI dated 07.06.2013 has already enhanced FMA to Rs 2000/-PM for EPFO beneficiaries. Thus, to help elderly pensioners to look after their health, FMA for all C.G. Pensioners be raised to at least Rs 2000/- PM without any distance restriction linking it to Dearness Relief for automatic further increase. 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. As such the proposal for raising Fixed Medical allowance to Pensioners is fully justified and is financially viable.

EXEMPT FMA FROM INCOME TAX: Fixed Medical Allowance (FMA) is a compensatory allowance to reimburse the medical expenses. As Medical Reimbursement is not taxable, FMA should also be exempted from Income Tax.

8. Age related additional pension: In their Para 5.1.32, the 6th CPC  agreed that older pensioners require a better deal because their needs, especially those relating to health, increase with age. Accordingly, the Commission recommended that quantum of pension available to the old pensioners should be increased as follows:-
On attaining age of Additional quantum of pension
80 years - 20% of basic pension
85 years - 30% of basic pension
90 years - 40% of basic pension
95 years - 50% of basic pension
100 years - 100% of basic pension
In the present scenario of climatic changes, presence of pesticide & rising pollution old age disabilities/diseases set in by the time an employee retires and go on manifesting very fast, needing additional finances to take care of these disabilities & diseases especially as the cost of health care has gone very high compared to 01.01.2006. It is, therefore, demanded that 5% upward enhancement in pension be granted every five years’ after the age of 60 years.
9. Pension to be net of Income Tax:  Purchase value of pension gets reduced day by day due to continuously high inflation and steep rise in cost of food items and medical facilities. Retired persons/Sr. citizens do not enjoy fully public goods and services provided by Government for citizens 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 and medicines and other incidentals. Their net worth at year end gets reduced considerably as compared to the beginning of the year. Inflation, for a pensioner is much more than any tax. It erodes the major part of the already inadequate pension. To enable pensioners, at the far end of their lives, to live in minimum comfort and to cater for ever rising cost of living, they may be spared from paying Income Tax. We, therefore demand that pension should be net of income tax as recommended by 5th CPC, vide their Para 167.11

10.Medical facilities : To ensure hassle free health care facility to Pensioners/family pensioners, Smart Cards be issued irrespective of departments to all Pensioners & their Dependents  for cashless medical facilities across the country. These smart cards should be valid in
i)                    all Govt. hospitals
ii)                  all NABH accredited Multi Super Specialty hospitals across the country which have been allotted land at concessional rate or given any aid or concession by the Central or the State govt.
iii)                 all CGHS, RELHS & ECHS empanelled hospitals across the country.
No referral should be insisted in case of medical emergencies. For the purpose of reference for hospitalization & reimbursement of expenditure thereon in other than emergency cases Doctors/Medical officers working in different Central/State Govt. department dispensaries/health units should be recognized as Authorized Medical attendants. Reimbursement bill for treatment both for hospitalization & OPD can be made by respective departments.
The enjoyment of the highest attainable standard of health is recognized as a fundamental right of all workers 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 & vigour. Therefore right to health, medical aid to protect the health & vigour of a worker while in service or post retirement is a fundamental right-to make life of a worker meaningful and purposeful with dignity of person. Thus health care is not only a welfare measure but is a Fundamental Right. As all the pensioners, irrespective of pre-retiral class and status, belong to same category of citizens & the same homogenous group. There should be no class or category based discrimination and must be provided Health care services at par with IAS & ex Ministers.
To ensure that the hospitals do not avoid providing reasonable care to smart card holders & other poor citizens, a Hospital Regulatory Authority should be created to bring all NABH   accredited hospitals & NABL accredited diagnostic Labs under its constant monitoring of quality, rates for different procedures & timely bill payments by Govt. agencies and Insurance companies. CGHS rates be revised keeping in mind the workability & market conditions. 
Er. S.C.Maheshwari
Secy Genl. Bharat Pensioners Samaj



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