Earlier in May, the Union Cabinet, chaired by the Prime Minister Narendra Modi, gave its go ahead for modifications in the recommendations of the Seventh Pay Commission (7th CPC) over method of pension revision of pre-2016 pensioners and family pensioners.
The benefit of the proposed modifications would be available with effect from 1st January, 2016. It will benefit over 55 lakh pre-2016 civil and defence pensioners and family pensioners. However, 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.
While approving the implementation of the 7th CPC recommendations on 29th June, 2016, the Cabinet had approved the changed method of pension revision recommended by the 7th CPC for pre-2016 pensioners, comprising of two alternative formulations.
- Pensions of pre-2016 pensioners were revised as per the second formulation multiplying existing pension by a multiplication factor of 2.57, though the pensioners were to be given the option of choosing the more beneficial of the two formulations according to 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.
Disability Pension for defence pensioners
- The Cabinet also 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 decision will benefit existing and future Defence pensioners would entail an additional expenditure of approximately Rs 130 crore per annum.
Meanwhile, central government employees would have to wait for yet another week to receive any update on the revised allowance structure as recommended by the 7th Central Pay Commission.
The Empowered Committee of Secretaries (E-CoS) is expected to convene next week to ponder on the recommendations before being presented before the Union Cabinet for their nod.
The 7th pay commission had proposed a total of 196 allowances; a Committee of Allowances was formed under the Finance Secretary Ashok Lavasa to screen them.
On April 24 this year, the Committee submitted its report to Finance Minister Arun Jaitley, recommending that 52 allowances suggested by the pay commission be entirely scraped and 36 of them be incorporated with other allowances instead of dealing with them separately.