NewDelhi: In a memorandum to the 8th Central Pay Commission, the NC-JCM Staff Side has proposed the restoration of commuted pension of central government pensioners after 11 years instead of the present 15 years. The Staff Side argues that in view of the interest rates, life expectancy, mortality rates, death rates and actuarial risk factors, the restoration of commuted pensions should be allowed after 11 years.
8th Pay Commission: Why the demand for restoration of commuted pension after 11 years
The Staff Side proposed the restoration of the commuted pension of central government pensioners after 11 years arguing the fact that the rules regarding the restoration of the commutation of pension were framed 39 years ago but a lot of changes have taken place since then. The Staff Side said, “In accordance with Rule 10 A of the CCS (Commutation of Pension) Rules 1981 Restoration of Commutation Pension is after 15 years. These Rules were framed nearly 39 years ago based on the Financial and Actuarial Parameters prevailing at that time. However, lot of changes have taken place in this 39 years which includes interest rates, life expectancy, mortality rates, death rates, and actuarial risk factors which necessitate a fresh values of the restoration period,” the Staff Side said.
8th Pay Commission: What is the issue of commuted pension?
When a government employee retires, he or she starts receiving a pension. But if the employee wants, he can take a part of the pension as a lump sum which is known as a commuted pension. In return, the monthly pension of the employee is reduced for a few years. At present, this deduction continues for 15 years and after that their full pension is restored. Pensioners and employee unions are of the view that the 15-year recovery period now seems unjust in view of interest rates, life expectancy, mortality rates, death rates and actuarial risk factors.
8th Pay Commission: Excess recovery from pensioners
The Staff Side shared a calculation which showed that the entire commuted value is recovered within about 10 years and recovery beyond this period results in excess recovery from pensioners. Therefore, restoration of commuted pension after 11 years would be reasonable, the Staff Side maintained.
8th Pay Commission: Recovery of Commuted Value
Description: Value
Illustratively for a pensioner aged: 61 years (Next Birthday)
Commutation Factor: 8.194
Amount Commuted: Rs.100
Commuted Value Received: Rs.9833
Amount Recovered in 10 years: Rs.12,000
Amount recovered in 15 years: Rs.18,000
8th Pay Commission: Experts body recommended commuted pension restoration in shorter period
The Staff Side said that although commutation is optional but the government as a Model Employer considers this matter from a welfare perspective of the senior citizens who have served the country rather than a revenue perspective. The Staff Side said that many expert bodies have also recommended the restoration of commuted pension in a shorter period. It said that many state governments have also reduced the period varying from 12 to 13 years. The 5th CPC recommended 12 years restoration. The 2nd National Judicial Commission recommended 12 years restoration, the Staff Side said. “Therefore, we propose to the 8th CPC to recommend for restoration of Pension after 11 years or at the age of 71 years whichever is earlier” the Staff Side said.
When will 8th Pay Commission be formed?
The 8th Pay Commission is currently accepting memorandums from various stakeholders, including central government employee unions, pensioners’ associations and various ministries to address issues related to pay revision, salaries, pension and fitment factors. The commission is expected to move towards drafting its report after completing stakeholder interaction. The report is expected to be submitted approximately 18 months after the Commission’s constitution.
Bureau Report
Leave a Reply