The Need for Pay & Pension Reforms-A presentation by BPS

 

The Need for Pay & Pension Reforms

1. The 10-Year Cycle & the Squeeze on Real Pay/Pension

Pay Commissions are constituted once every decade, compelling the government to implement significant salary and pension increases because Dearness Allowance (DA) and Dearness Relief (DR) adjustments fail to keep pace with real inflation. Over time, employees and pensioners experience a decline in real income, necessitating a large revision to restore their financial standing.

2. Addressing Systemic Pay and Pension Disparities

2.1 Disparity in Pay Bands Between J.A. and Selection Grade Officers

Background and Issues

The introduction of the Pay Band (PB) system by the 6th Central Pay Commission (CPC) marked a significant structural shift in central government pay scales. However, this change inadvertently created an unjustified pay gap between Selection Grade and J.A. Grade officers. The 7th CPC further institutionalized this disparity through the Pay Matrix system, leading to continued demotivation for J.A. Grade officers despite career advancements. This imbalance requires urgent correction to restore fairness.

Implications

• Interchangeability of Posts: J.A. Grade and Selection Grade officers frequently interchange roles based on functional requirements, yet pay disparities persist, leading to low morale.
• Pay Band Disparity:
• PB-1: ₹5200 – ₹20200 (GP ₹1800/1900/2000/2400/2800)
• PB-2: ₹9300 – ₹34800 (GP ₹4200/4600/4800/5400)
• PB-3: ₹15600 – ₹39100 (GP ₹5400/6600/7600)
• PB-4: ₹37400 – ₹67000 (GP ₹8700/8900/10000)
• HAG: ₹67000 – ₹79000
• HAG+: ₹75000 – ₹80000
• Apex: ₹80000 (Fixed)
• Cabinet Secretary: ₹90000 (Fixed)
• Selection Grade officers received an upgrade to PB-4 without corresponding adjustments for J.A. Grade officers, affecting morale and long-term earnings.

Demand

The Bharat Pensioners Samaj (BPS) urges the 8th CPC to:

• Review and rationalize pay structures to eliminate existing disparities.
• Ensure parity between J.A. and Selection Grade officers.

2.2 Discrimination in Fixation of Notional Pay for Pre-2006 Retirees

Background and Issues

• Before 31.12.2005, pension was calculated based on a 10-month average pay, later revised to last pay drawn.
• Initially, only a partial percentage of DA was included in pension computation, whereas now full DA is considered.
• Pro-rata reduction in pension for service less than 33 years was revised to 20 years, and now 10 years.

Implications

• Financial Loss: Pre-2006 retirees receive lower pensions than post-2006 retirees despite holding similar positions.
• Violation of Constitutional Guarantees: Supreme Court rulings emphasize equal pension treatment, yet disparities persist.
• Administrative Burden: The persistence of anomalies increases litigation costs and financial stress for pensioners.

Demand

The BPS urges the 8th CPC to:

• Revisit the Ready Reckoner methodology to correct anomalies from the 6th CPC.
• Implement a uniform pension formula to prevent segmentation.
• Ensure retrospective implementation without arbitrary cut-off dates.

3. Economic Benefits of Salary & Pension Hikes

• Increased Consumer Spending: Higher disposable incomes stimulate economic growth.
• Higher Tax Revenues: Increased salaries and pensions lead to greater income tax, GST, and corporate tax revenues.
• Enhanced Social Security: Financial stability for pensioners reduces dependency on government welfare schemes.

4. Fiscal Responsibility & Revenue Optimization

Instead of restricting salary and pension hikes, the government must focus on better fiscal management:

• Eliminating Wasteful Expenditures: Reduce excessive administrative costs and unnecessary subsidies.
• Rationalizing VIP Perks: Curtail extravagant allowances for legislators.
• Broadening the Tax Base: Include high-earning sectors and large agriculturists in the tax net to generate additional revenue without burdening the working class.

5. Pension Reforms for Pre-2004 Recruited Retirees

• Pension should be at least 65% of the 8th CPC notional pay, and family pension should be 45% of last pay.
• Additional age-based pension increments should be implemented:
• 65 years: 5%
• 70 years: 10%
• 75 years: 15%
• 80 years: 20%
• 85 years: 30%
• 90 years: 40%
• 95 years: 50%
• 100 years: 100%
• Minimum pension should align with the lowest-rank central government employee salary.

6. Ensuring Pension Parity for BSNL/MTNL Absorbed Pensioners

• Despite being under Central Civil Services (Pension) Rules, BSNL/MTNL pensioners face delays and uncertainty in pension revisions.
• BPS urges the government to include BSNL/MTNL pensioners in Pay Commission recommendations for parity.

7. Pension Disparities in Statutory Bodies & Autonomous Organizations

• Organizations like the Coffee Board, Tea Board, and Coal Board must seek separate administrative approvals for pension adjustments, causing delays.
• BPS requests the abolition of this requirement where Central Pay Commission recommendations are followed.

8. Parity for Para-Military Forces and MES Personnel

• One Rank One Pension (OROP) for Para-Military Forces, classifying them as ex-servicemen.
• MES personnel should receive OROP and ex-servicemen status.

9. Other Essential Benefits

• Fixed Medical Allowance (FMA): Increase to ₹5,000 per month.
• Merger of Dearness Relief (DR): DR should merge with pension once it crosses 25%, as recommended by the 5th CPC.
• Family Pension Enhancement:
• Increase family pension from 30% to 45% of last pay drawn.
• Uniform enhanced family pension for all cases of death (whether in service or post-retirement).
• Eliminate abrupt reductions in spousal pension.

Conclusion

A fair and sustainable pension structure is crucial for ensuring financial security, dignity, and independence for retired government employees. The proposed reforms aim to align pension policies with economic realities, ensuring adequate support for pensioners and their families while upholding the principles of social justice. The Bharat Pensioners Samaj (BPS) trusts that the 8th CPC will consider these issues with urgency and empathy, ensuring justice for all affected employees and pensioners.