View Full Version : The rationale for Pension Parity

16-08-2009, 09:02 AM
The rationale for Pension Parity
Pension is a deferred wage, paid in consideration of past service which an employee rendered sacrificing the prime of his youth for the sake of the Government & the quantum of such pension should be such that he is able to lead a dignified life in his twilight years maintaining as far as possible the standard of living he was used to during his service life! It is in view of this basic principle that the apex court of the country has repeatedly ruled that any classification of pensioners at any time will have to answer the test of article 14 of the Constitution and further concluded that pensioners for the purpose of pensionary benefits form a homogeneous class and such a homogeneous class could not be arbitrarily divided on the basis of dates of retirement whenever the pension undergoes an upward revision and hence the fixation, at any time, of any cut off date for any new benefit is arbitrary. Any act which seeks to classify or divide pensioners into two or more classes is not based on any rational principle, and hence it would constitute a violation of article 14 of the Constitution. Thus, parity of pension as between one who retires with a certain pay and a certain rank on a particular date and another one who draws the same pay and with the same rank but retires on a subsequent date is thus a constitutional right guaranteed under article 14 of the Constitution and sanctified by the apex court and many High Courts in their landmark judgments. The demand for one-rank-one pension for all Defence personnel or pension equal to 50% of the pay as notionally revised in the new pay structure corresponding to the scales from which the employee retired is therefore a just one, which the government should readily accept .The argument of huge financial burden on the national exchequer and the danger of the economy being thrown out of gear to reject this just demand is just a bogey and indeed this has never been accepted by the apex court and many High Courts. . If the arbitrary and frequent increase in the remuneration of Members of legislatures without any public discussion and generally by voice vote, and of Ministers & top bureaucrats (read IAS) or those in the higher echelons of administration, the huge expenditure on the security of politicians, which is generally more of a status symbol than any genuine security cover, the circulation of fake Currency, the absence of any effort to rein in the parallel grey market economy, the gobbling of resources earmarked for social welfare schemes by politicians and vested intermediaries etc. are not going to involve a huge drain on the national exchequer and thereby derail the Indian economy, then how can the just demand of those who actually spared no effort and bore on their shoulders during the prime period of their lives the brunt of running the administration to meet the loud articulations of the rising hopes and aspirations of the common man in the newly emerging independent India, can be thrown out on the ground that it would cause a serious financial imbalance and throw the Indian economy out of gear? Why is only the poor pensioner being made to suffer for no fault of his? He is suffering perhaps because he has so far not realized his own power i.e. the power of vote. It need hardly be pointed out that generally one retired person has in his hands the power of 6 votes i.e of himself, his spouse, his son, his daughter-in-law, his grand daughter & grand son. There are almost two crores of such pensioners (i.e from the Centre, the States, the Defence establishments, the Railways, the PSUs, Banks, the Education department etc.) and they would thus constitute a vote bank of about 12 crores. So the clarion call to all the pensioners is: “Stop crying, wake up and realize the enormous power in your hands. The Governments & the politicians seem to understand only the language and power of the Vote Bank. You cannot fight your battle individually, nor do you generally have the wherewithal to do so. So, join the larger community of senior citizens and consolidate your own Vote Bank. Once you do so, the politicians will come running to you & you will get what you want. Let not any further time be lost in consolidating the vote bank. So, hasten, lend your helping hand and strengthen the hands of the organizations that have dedicated themselves to improving the lot and welfare of the pensioners”.

18-08-2009, 10:14 PM
With Reference to TOI 16/08 /09 Mumbai & Online edition –Article
1.Babus now get more pension than last salary,

At the outset, the Reporter (of The Times of India) deserves thanks from the Pensioners’ Community for providing an opportunity through Media, to bring out the (f)actual position, that is missing from the ill-conceived propaganda against the cause of Pensioners’ Community.

The Pensioner of date, has traversed at least three Central Pay Commissions Period, which means more than 3 decades. The induction level pay package and the succeeding revisions that took place till date, apart from the career progression that had to be ensured ultimately through Assured Career Progression and that too in 1998 speak of itself. The VCPC had to come to the rescue of pre-1986 pensioners after a deep analysis to bring on par with post-1996 pensioners in the year 1998, and in addition, advised the present Government to maintain parity among pensioners with post-2006 pensioners. Even among post-2006 pensioners, those who retired from service prior to 2.9.2008 will get their pension calculated with a base period of 33 years service requirement for full pension, whereas for post-2.9.2008 pensioners, a 20 years service is enough to get full pension. Which means, a person who joined service in the year 1975 and retired from service on 31.8.2008 and a person who joined in the year 1988 and retired on 30.9.2008 – both will get the same pension, subject to same pay at the time of retirement.

The VI CPC before recommending pay revision from 1.1.2006 has thoroughly taken into account the pay structure prevailing in PSU, Banks, Private Sectors, etc. The revision of pay recommended is not without due application of mind and appropriate justification that has been enumerated in their Report, which the said Reporter might not have studied at all before reporting on revision of pension. It is well settled by various Court Judgments that 50% of bottom of the pre-revised scale on revision shall be the minimum pension payable to a pensioner. When even that minimum (to be) assured/guaranteed pension does not get paid ultimately in line with the accepted recommendations, the pensioners have been struggling hard to bring in justice to their grievances.

The public may not be aware of the fact that even the Department of Pension and Pensioners’ Welfare has already brought on record that not only pensioners’ direct representations, but also the representations forwarded by the President’s Secretariat, PMO, Cabinet Secretariat, Railway Board, CGDA, MPs, etc. are an indication of the discontent/resentment among the pensioners in this respect and hence taken up with the Department of Expenditure for removal of core anomaly. The need for setting up of an independent National Anomaly Committee itself will speak volumes of the truth that at the stage of implementation, anomalies do arise owing to misinterpreted/overriding clarificatory directives to the Pay/Pension Disbursing Authorities.

A fair pension or minimum pension or living pension is assured (as has been in the case of fair wage, minimum wage and living wage as per the Minimum Wages Act, 1948) particularly when the pension is paid as a monthly benefit for past satisfactory service rendered while the employee was physically and mentally alert and in expectation that he would be looked after in the fall of life. It is all the more necessary to ensure the pension required for the normal needs of an average retiree as a human being living in a civilized community. It can scarcely be disputed that securing of living pension to pensioners, which ensures not only bare, physical subsistence but also maintenance of a standard health and comfort with decency/ of himself and his dependents, is conducive to the general interest of the public. Such a living pension should enable the retiree to provide for himself and his family not merely the bare essentials of food, clothing and shelter but a measure of frugal comfort including protection against ill-health, requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age. While the case is so, what is being witnessed in today's scenario is misinterpretation of accepted resolution, overriding clarificatory OMs, introducing a cut off date to classify different groups of pensioners so as to reduce the revised benefit intended, etc.

A progressive realisation of an ideal living pension by suitably enhancing in gradual stages duly taking into account the corresponding pay package benefit in the revised structure of a similarly placed serving employee by successive Pay Commissions to cover all the previous pensioners to maintain parity with their successors in all respects, is yet to take place.

The Pension is a Return on Investment for a retiree, the investment being the qualifying service and basic pay component earned during such service apart from the PF contribution retained by the Employer, viz., Government. Such a Return on Investment being a fixed element for a tenure of minimum 10 years for a successive Pay Commission to revise, the pension formulae shall necessarily get delinked from the revised pay structure of the serving employees as long as the parity at only minimum level is maintained. In case, parity at corresponding level by notional refixation of last pay drawn in the revised structure is maintained, at least we can say that pension formula is on par with that of pay formula of serving employees in accordance with 6CPC recommendation. While the revised structure of a serving employee has attached advantages, the pensioner is left with what is arrived at Minimum Guaranteed Revised Pension or the Revised Pension corresponding to his pre-revised pension, which had seen limited revisions during the previous period. In such an event, it is all the more necessary to ensure that the pensioner's fixation formulae is an independent one with the fitment weightage commensurate with the total pay package of the serving employee, which component had been arrived at by comparing with similar packages available in India (PSUs, Private Organisations, etc.). The pensioner is thereby deprived of matching phase with that of such pay package. When the revised pension does not involve this comparison which is not possible also, because pension is paid to only Govt. Employees on retirement, there being no reference point available beyond maintaining minimum parity and not corresponding parity,
the need to review the entire fixation of pension in the revised structure is all the more essential.

In an environment of `Performance Related Incentive' in addition to the pay package, Modified Assured Progression Scheme, reduction in qualifying service for full pension, last pay drawn element to determine the pension, child care leave, air travel for LTC, etc. for the serving employees today, it is to be kept in mind that the retirees of yester years too had been performing for their entire service period equally with utmost responsibility but without any such motivation factor to perform the assigned duties. Even the Assured Career Progression (like the Minimum Guaranteed Revised Pension, although it is not actually so) was introduced only in 1998, but the same could not help the retirees at the tail end of their service

Therefore, everyone must be aware that the Pension of a retired employee is a deferred wage, paid in consideration of past service which an employee rendered, sacrificing the prime of his youth for the sake of the Government & the quantum of such pension should be such that he is able to lead a dignified life in his twilight years maintaining as far as possible the standard of living he missed during his service life that was not his fault! The pay revisions too are supposed to get related with what the serving employees are entitled to, to the extent of Basic Pay, but of course restricted to 50% at the minimum level so far, and when even this minimum parity is not getting maintained today, anomalies did arise and so was the formation of the Anomaly Committees to consider the same.

As a responsible fourth pillar, it is wise for any Reporter of National Newspapers to at least desist from any damaging mechanism being inflicted, if not able to take pensioner's plea with a better understanding, before going to the Public for painting a `crorepathi /millionaire' image on pensioners.

Secretary (Railway)