He/She then spends the most valuable time of his/her life in the service and ultimately at age of 60 years retires from service because of old age
Pension
takes the form of provision of annuities for the senior population.
Historically, old age pensions, guaranteed by a government to its
employees emerged in France in 19th century,followed by its introduction
in the United Kingdom in 1834 and in Germany in 1873.
The
pension system eventually spread to many countries of Europe and North
America in the first decade of 20th century. In India, pension for older
population was first introduced in 1924, primarily for the government
employees under the British colonial rule.
The Government Pension Package
Government pension is granted to a Government employee on his/her retirement from Government service
on the basis of length of qualifying service rendered and amount of
emoluments last drawn. In the case of appointment in the public service,
government fixes an age limit. In certain cases, this age limit is
relaxed. According to general recruitment rules, a person can enter into Government service from minimum eighteen years’ age provided that the person has requisite qualification for service.
A citizen enters into service at
young age for serving the people and for the welfare of the country.
He/She then spends the most valuable time of his/her life in the service
and ultimately at age of 60 years retires from service because of old
age. Being adjusted in routinized life profile, it is difficult for a
public employee to adjust with the other occupations of the society
after retirement. His/her capability of work gets reduced.
In most cases, he/she is no more in a
position to pursue any other occupation. Besides, many government
officials become handicapped or die because of this. His/her dependent
family members face serious financial setback. There is acute necessity
of social security for the handicapped alive retired Government employee or for the
dependents of the deceased employee.
At this backdrop, the government has introduced a ‘pension package’ that constitute of pension, gratuity, group insurance, provident fund and medical
allowance for the retired government employees and their dependents.
With this system the retired persons or their dependents do not have to
depend on others for their survival.
Types of Pension
According to the existing laws, rules and regulations, public pension can be classified into different types according to the nature of conclusion of service.
Compensation Pension
When a government employee is given
pension after abolition of permanent post held by him/her in the process
of downsizing or abolishing of the government establishment where the
post was positioned, it is called compensation pension.
A government employee can claim
compensation pension for his/her past service. He/She is
either appointed in new post or transferred to other establishments. The
procedure in providing this pension involves preparation of a list of
the officials losing their jobs at a minimum expenditure of the
government. The important point in this case is that in abolishing the
posts the income of the government has to be increased. Again in this
process the income of the government has to be more than the amount of
the compensation pension to be paid.
In this process, if an employee is
discharged from a post after completion of service in terms of fixed
service conditions, he/she cannot claim any pension. For loss of any
special pay, pension or compensation allowance is not allowable.
.
In the case of retrenchment of
permanent employees, if notice, which is necessary, is issued giving a
time period of less than 3 months, in that case proportional
compensation is to be paid for the period falling short of 3 months. If
an employee is re employed and intends to return the compensation,
he/she can do so by intimating the issue to the authority. But a
temporary employee cannot do so.
.
Invalid Pension
If a government employee’s service
concludes due to his/her physical or psychological invalidity he/she
receives invalid pension. According to the Service Rules, if a public
employee applies for invalid pension before attaining 60 years of age,
the head of his/her office of employment will process the sanction for
the pension on the basis of the medical certificate regarding invalidation of the employee.
The employee shall be required to
submit application for invalid pension in prescribed form along with
recommendations of concerned Medical Board and relevant documents. Medical
certificate in prescribed is an essential requirement for invalid
pension. The authority that will grant invalid pension to an employee
shall send a brief statement under sealed cover to the health examining medical officer or to the Board mentioning therein the information as to types of treatment taken by the employee.
When an employee applies for invalid
pension and produces doctor’s certificate, he/she will not be kept in
service and no leave will be granted. Moreover, there is no scope for
re-employment after invalid pension. In some cases invalid pension is
not allowed. For example if an employee is discharged from service for
other reasons, then he/she will not be given the pension
despite providing medical certificate. If an employee becomes invalid
because of bad habit and irregularity, he/she will not be entitled to
the pension on invalid ground.
Superannuation Pension
When a government employee’s service compulsorily concludes due to his/her attaining certain age determined by law for retirement from government service he/she becomes entitled to superannuation pension. The retirement age of employee is 60 according to the rule.
Retiring Pension
According to the law of the country,
the government may, if it considers necessary in the public interest to
do so, retire a public employee from service at any time after he/she
has completed 20years of service without assigning any reason.
But any other appointing authority
is not authorized to exercise this power. If any sub-ordinate appointing
authority desires that an employee employed by it should retire after
20 years of service, that authority shall propose to the concerned
ministry to that effect.
Optional Pension
A government servant has unqualified
right to opt to retire from service at any time after He/she
has completed 25 years of service upon the only condition that she/he
shall have to give a notice in writing to the appointing authority at
least 90 days prior to the date of his/her intended retirement.
In this case, the government is bound
to accept the application and has no legal scope to refuse.But such
option once exercised shall be final and shall not be permitted to be
modified or withdrawn.
Family Pension
When pension is sanctioned to the
family of a pensioner/employee on his/her death, it is called
family pension. In the case of family pension, a government servant
while remaining in service at any time afterwards may nominate one or
more members of his/her family as successor for the whole or part of
his/her family pension.
But in the absence of nomination and
if the wife of the deceased pensioner or any member of the family is not
available, his/her last controlling authority shall decide the
successor for providing family pension and gratuity. However, it is
mentioned that the rules for family pension are different for different
members nominated.
Pension Benefits
Pension
The minimum eligibility period for receipt
of pension is 10 years. A Central Government servant retiring in
accordance with the Pension Rules is entitled to receive superannuation
pension on completion of at least 10 years of qualifying service.
In the case of Family Pension the
widow is eligible to receive pension on death of her spouse after
completion of one year of continuous service or before even completion
of one year if the Government servant had been examined by the
appropriate Medical Authority and declared fit for Government service.
W.e.f 1.1.2006, Pension is calculated
with reference to average emoluments namely, the average of the basic
pay drawn during the last 10 months of the service or last basic pay
drawn whichever is beneficial. Full pension with 10/20 years of
qualifying service is 50% of the average emoluments or last basic pay
drawn whichever is beneficial. Before 1.1.2006, for qualifying service
of less than 33 years, amount of pension was proportionate to the actual
qualifying service broken into completed half-year periods. For
example, if total qualifying service is 30 years and 4 months (i.e. 61
half-year periods), pension will be calculated as under:-
Pension amount = R/2(X)61/66
where R represents average reckonable
emoluments for last 10 months of qualifying service or the last pay
drawn as opted by the govt servant.
Minimum pension presently is
Rs. 3500 per month. Maximum limit on pension is 50% of the highest pay
in the Government of India (presently Rs. 45,000) per month. Pension is
payable up to and including the date of death.
Commutation of Pension
A Central Government servant has an option
to commute a portion of pension, not exceeding 40% of it, into a lump
sum payment with effect from 1.1.1996. No medical examination is
required if the option is exercised within one year of retirement. If
the option is exercised after expiry of one year, he/she will have to
under go medical examination by the specified competent authority.
Lump sum payable is calculated with
reference to the Commutation Table constructed on an actuarial basis.
The monthly pension will stand reduced by the portion commuted and the
commuted portion will be restored on the expiry of 15 years from the
date of receipt of the commuted value of pension. Dearness Relief,
however, will continue to be calculated on the basis of the original
pension (i.e. without reduction of commuted portion).
The formula for arriving for commuted value of Pension (CVP) is
CVP = 40 % (X) Commutation factor* (X)12
* The commutation factor will be with
reference to age next birthday on the date on which commutation becomes
absolute as per the New Table as Annexure to this Deptt’s O.M. No. 38/37/08- P&PW(A) dated 2.9.2008
Death/Retirement Gratuity
Retirement Gratuity
This is payable to the retiring Government
servant. A minimum of 5 years qualifying service and eligibility to
receive service gratuity/pension is essential to get this one time lump
sum benefit. Retirement gratuity is calculated @ 1/4th of a month’s
Basic Pay plus Dearness Allowance drawn before retirement for each
completed six monthly period of qualifying service. There is no minimum
limit for the amount of gratuity. The retirement gratuity payable is 16½
times the Basic Pay, subject to a maximum of Rs. 10 lakhs.
Death Gratuity
This is a one-time lump sum benefit
payable to the widow/widower or the nominee of a permanent or a
quasi-permanent or a temporary Government servant, including CPF
beneficiaries, dying in harness. There is no stipulation in regard to
any minimum length of service rendered by the deceased employee.
Entitlement of death gratuity is regulated as under:
|
Qualifying Service
|
Rate
|
|
Less than one year
|
2 times of basic pay
|
|
One year or more but less than 5 years
|
6 times of basic pay
|
|
5 years or more but less than 20 years
|
12 times of basic pay
|
|
20 years of more
|
Half of emoluments for every completed 6 monthly period of qualifying service subject to a maximum of 33 times of emoluments.
|
Maximum amount of Death Gratuity admissible is Rs. 10 lakhs w.e.f. 1.1.2006
Service Gratuity
A retiring Government servant will be
entitled to receive service gratuity (and not pension) if total
qualifying service is less than 10 years. Admissible amount is half
month’s basic pay last drawn for each completed 6 monthly period of
qualifying service. There is no minimum or maximum monetary limit on the
quantum. This one time lump sum payment is distinct from and is paid
over and above the retirement gratuity.
General Provident Fund and Incentives
As per General Provident Fund (Central Services) Rules, 1960,
all temporary Government servants after a continuous service of one
year, all re-employed pensioners (Other than those eligible for
admission to the Contributory Provident Fund) and all permanent
Government servants are eligible to subscribe to the Fund.
A subscriber, at the time of joining
the fund is required to make a nomination, in the prescribed form,
conferring on one or more persons the right to receive the amount that
may stand to his credit in the fund in the event of his death, before
that amount has become payable or having become payable has not been
paid.
A subscriber shall subscribe monthly to the Fund except during the period when he is under suspension.
Subscriptions to the Provident Fund
are stopped 3 months prior to the date of superannuation. Rates of
subscription shall not be less than 6% of subscriber’s emoluments and
not more than his total emoluments. Rate of interest on GPF
accumulations with effect from 1.4.2009 is 8% compounded annually and
the rate of interest will vary according to notifications of the
Government. The Rules provide for drawal of advances/ withdrawals from
the Fund for specific purposes.
Deposit Linked Insurance Revised Scheme
Under the GPF Rules, on
the death of subscriber, the person entitled to receive the amount
standing to the credit of the subscriber shall be paid an additional
amount equal to the average balance in the account during the 3 years
immediately preceding the death of the subscriber subject to certain
conditions provided in the relevant Rule. The additional amount payable
under that Rule shall not exceed Rs. 60,000/-. To get this benefit, the
subscriber should have put in at least 5 years service at the time of
his/her death.
Leave Encashment
Encashment of leave is a benefit granted under the CCS (Leave)
Rules and not a pensionary benefit. Encashment of Earned Leave/Half Pay
Leave standing at the credit of the retiring Government servant is
admissible on the date of retirement subject to a maximum of 300 days.
There is no provision under the Rule for payment of interest on delayed
payment of Leave Encashment.
Central Government Employees Group Insurance Scheme
A portion of monthly
contributions paid while in service is credited in a Saving Fund, on
which interest accrues. A Government servant while entering service has
to apply in Form No. 4 of the above Scheme to the Head of Office, who
shall issue a sanction for the payment of subscriber’s accumulation in
the Savings Fund segment together with interest and arrange for its
disbursement, soon after retirement. Payments under this Scheme are made
in accordance with the Table of Benefit which takes in to account
interest up to the date of cessation of service. Insurance cover benefit
under this Scheme is available to the family in the event of death of
the subscriber. No interest is payable on account of delayed payments
under this Scheme.
Processing of pension papers
Numerous Paper-works
Although an individual pension has to
be sought through a single pension form, numerous supporting documents
are required at each step of pension processing. These paper works deal
with information on different aspects of a government employee’s
professional life.
In case
of a general retiring or superannuation pension, pension application
package of a gazetted or non-gazetted employee may include upto 11-13
types of supporting documents besides the pension application. The
pension application package of a family pension case, on the other hand,
may include upto 16-18 types of supporting documents.
The exact number of documents depends
on whether the retiring public employee lived in government
accommodation at any point of service life and whether he became a
gazetted employee from non-gazetted employee.
There is further paper-work required
in order to secure each supporting document.For collecting so many
supporting documents, pension seekers have to resort to
different processing offices and deal with various functionaries.
With low level of transparency
and accountability, the application files do not move automatically
without continuous persuasion.
So they have to invest considerable
time and energy that exhaust them both physically and psychologically.
It is more difficult for majority of the pension seekers who are in old
age and/or have travelled long way from home. Their expenditure also
multiplies accordingly in terms of travel, food and accommodation.
Multiplicity of Processing Offices
In each step of pension processing,
pension seekers usually have to go to different offices. Sometimes, even
processing of a single document involves more than one office. In
the backdrop of a pension delivery system that is already complex for
various reasons, more processing offices mean more harassment.
The number of processing formalities
and functionaries increases along number of processing offices. This is a
critical situation for pension seekers.
They might have many documents at
hand to be processed from various processing offices. Delays in
processing of some documents ultimately delay receiving of pension.
Processing offices are generally
located at distance from each other. Sometimes they are situated at
separate towns or districts.
This lead to increased incidental costs that exacerbate financial loss in securing pension.
Procedural Complexity
Scrutinisation mechanism for pension
applications of all kinds constitute of multiple formalities and
file-works. Processing works generally do not go smoothly in horizontal
manner. Rather it often takes a circular path. A file is put through
several rounds of scrutiny that leads to duplication and overlapping of
processing work. It often takes several functionaries to verify one
piece of information. Instead of dual or multiple utilization of a
single document, different supporting documents are sought to verify
different aspects of a pension case.
Salary drawing is a regular financial
transaction between government and employees. Salary record, therefore,
is a critical component of a employee’s service record. Due to its
continuous change over whole service period, salary record has to be
regularly updated. But that doesn’t happen with many employees due to
complexities in related procedures.
Ultimately, their pensions get held
up for incomplete service record.Another manifestation of procedural
complexity is provision of securing a No Demand Certificate (NDC) from
concerned housing, water and electricity authorities.
Lack of Transparency and Accountability
Lack of transparency and
accountability of pension functionaries is a major systemic cause
of pension related harassment. Existing laws, rules and regulations that
guide pension have not sufficiently covered the issues of transparency
and accountability of pension delivery functionaries. It is evident from
the fact that there is no specific mechanism of lodging complaint and
getting remedies for pension seekers when they face harassment
Pension processing is not an
independent function. It is generally tied to developments in
service history as much as to retirement and pension seeking
proceedings. Regular maintenance and updating of certain service related
documents have bearing on pension delivery.
The other required documents have to
be processed prior and during retirement. But in most cases,pension
documents and supporting documents cannot be secured in short time.
Again, when the documents are delivered, they are often found incomplete
or with mistakes that necessitates reprocessing.
Because, the existing pension
delivery service is not based on reward and punishment. It does not
stipulate time-bound performance and target-oriented disposal of
assignments from pension delivery functionaries. There is no fixed date
for file put-up and disposal. There is no monitoring and evaluation of
pension service delivery.
The service books of employees are
maintained and updated by parent office. Each entry into the service
book should be verified by the D.D.O. The verified information may have
to be authenticated from concerned Accounts Office.
All these tasks, maintaining,
updating, verifying and get authenticated are responsibilities of the
concerned functionaries of parent office. But these responsibilities are
not regularly discharged by them. Rather, they often keep the service
books unattended and complete the formalities once in a couple of years.
In this way, many retiring employees
get audit objections or have their pension process slowed because of
incomplete service book/record.
Now question may arise, how salary bills are prepared and sanctioned without service book/record being updated?
They are done through persuasion of
Accounts Office functionaries by employees.. The employees on the other
hand do not bother since their salary payment is uninterrupted. But they
get into trouble during retirement as they duly face audit objection.
Shortfalls regarding Pension Laws, Rules and Regulations
There are shortfalls with pension
related laws, rules and regulations that induce harassment.Loopholes in
rules and regulations that pension often create scopes of rent-seeking
and harassment.
Again, existing regulations are not
always properly implemented. Furthermore,extra-legal development in
one’s service history, that he didn’t have any control over, affects
his pension prospect.
Both gazetted and non-gazetted
employees who work in transferable position, who haven’t worked in
single station but in different stations, face more difficulty in
pension processing due to non-implementation of regulation. Because, as
an employee is transferred from one station to another, his service
record/book, Last Pay Certificate (LPC), leave account etc. are not
often simultaneously sent.
Although that is provided by existing regulation, it is not honoured in most cases.
The original service book of an
employee is opened in the station where he joined service. As he is
transferred, pages from his service record should be copied and sent to
the new station while the original will stay in that station.
But this is sometimes lapsed. May be
only LPC is sent but not service record/book and other documents. The
urgency of sending LPC is more both on the parts of employee and
concerned D.D.O. of parent office as it is immediately required
for getting salary.
Those that are required in the long
run, as in pension processing, service record/book etc. are not often
sent timely or sent at all.
Each government establishment can properly maintain and regularly update two copies of service books for employees.
One copy should be with the employees
and the other copy may be with parent office authority. The service
books should be updated of each year. If they are not updated within
that time, concerned administrative authority should take punitive
measures against the responsible personnel. Backlog in updating service
books is still rampant and no responsible person has so far been hard of
getting punishment.
Each government establishment can
prepare list of subordinate employees who will retire in next calendar
year that may be updated in quarterly basis. The list should be
distributed among concerned controlling officers, accounts officers and
Directorate of Accommodation (in case of the residents of government
accommodation) at least a year prior to retirement. This practice is
still not regular among government establishments.
Poor Record Management
Pension seekers acutely suffer from
poor record management in government establishments.This is common place
from macro level of ministry/division/department/directorate to micro
level of individual subordinate offices.
Some of the key pension related
documents that include, most importantly, service record/book are
maintained by the pensioners’ parent offices or concerned accounts
offices. But these documents are not regularly maintained and updated.
Consequently, during retirement,
pension processing of many employees get obstructed over incomplete or
mistake-laden service record/book. This also creates risk of loss in
pension payments over mistakes in service period, salary increment,
leave balance etc.
Delay in pension processing may be sorted out when paper works and Processing Stages will be reduced.
Ensuring Transparency and
Accountability should be maintained and proper Implementation of Rules
and Regulations of pension is the possible remedy to this problem
against the above factors.
