7th Pay Commission: Cabinet approves recommendations on pensionary benefits

The Union Cabinet on Wednesday approved the modifications under the 7th Pay Commission recommendations on pay and pensionary benefits in the course of their implementation. 

The Cabinet which was chaired by Prime Minister Narendra Modi, informed that the benefit of the proposed modifications will be available with effect from January 1, 2016, which is the date of implementation of 7th Pay Commission recommendations. 

The government approved the retention of percentage-based regime of disability pension implemented post 6th CPC, which the 7th CPC had recommended to be replaced by a slab-based system.

The issue was temporarily suspended after the Army, Navy and IAF last year strongly demanded that their persisting salary anomalies had not been rectified by the panel.

Now, the approved decision will benefit existing and future Defence pensioners will entail an additional expenditure of approximately Rs 130 crore per annum, the Cabinet said. 

Last year in June, the Cabinet had approved implementation of the recommendations with an additional financial outgo of Rs 84,933 crore for 2016-17, which included arrears for two months of 2015-16. 

With the increase approved by the Cabinet, the annual pension bill alone of the Central Government is likely to be Rs 1,76,071 crore.

Apart from this, the Cabinet also approved modifications in the recommendations of the 7th CPC relating to the method of revision of pension of pre-2016 pensioners and family pensioners based on suggestions made by the Committee chaired by Secretary (Pensions) constituted with the approval by us.

"The modified formulation of pension revision will entail an additional benefit to the pensioners and an additional expenditure of approximately Rs 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," Cabinet added.

As per the Cabinet, it will benefit over 55 lakh pre-2016 civil and defence pensioners and family pensioners.

While approving the implementation of the 7th CPC recommendations on June 29, 2016, the Cabinet had given nod to changed method of pension revision recommended by the 7th CPC 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 CPC 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," it said.  

The modified formulation will be beneficial to more pensioners than the first formulation recommended by the 7th CPC, 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.