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Thursday, September 25, 2014




Dear Mr Sahni,

There is a lot of confusion among  pensioners  about 100% DR neutralisation. According to me 100% DR neutralisation only  happens when the DR per slab of Basic Pay/Basic Pension  is worked out at the same percentage irrespective of the amount.Such a pattern has emerged only after 1/8/1997 when the DR per slab is calculated as a uniform percentage of Basic Pay/ Basic Pension for all employees/pensioners.

There was no 100% DR neutralisation  for employees/pensioners before 1/8/1997 because the DR formula was designed  to calculate % of DR slab  on some tapering slabs.One formula was applied to pre-August 1992 pensioners and another formula  was applied to pre-August 1997 pensioners.Also the DR  formula was  anomalously included in the LIC of India Pension Rules,1995 which  showed reduced slabs( on the 50% of average emoluments as pension)  to   50% of  the slabs  which  were applied to in-service employees.This  resulted in lack of equitable  neutralisation of DR  between pensioners  and in service employees.

For retirees from 1/8/1987 to 31/7/1992, the % DR neutralisation ranges from 100% at the lowest slab(1250)  to 65.1% at   the highest  Basic Pension of ED of 3500.  For in- service employees DR neutralisation  ranged from 100% to 94.9%.

For retirees from 1/8/1932 to 31/7/1997, the % DR neutralisation ranges from 100% at the lowest slab(2400)  to 63.8% at   the highest  Basic Pension of ED of 7000.  For in- service employees DR neutralisation  ranged from 100% to 94.6%.

This was the source of pre-August 1997 DR anomaly in pension.This was  made out as lack of 100% DR neutralisation, whereas there was only a maximum DR neutralisation of    95%  for in -service employees.

LIC  in its  Board Resolution dated 24/11/2001 decided to remedy the situation  and  rationalise the DR  from 1/11/1993 and merge DR with Basic Pension on  1/8/1992 &1/8/1997 and upgrade pension with  weightage of 11.25% as is done for in-service employees.

The Jaipur  single judge Bench order dt 12/1/2010 while allowing the WP  No 654/2007, in effect,had ordered upgradation of pension on substituted scales of pay on 1/8/1997 and also  that  pensions should be  revised  at the time of wage revisions.

But LIC  has conveniently misinterpreted the Board Resolution  to only provide for merger of DR with basic pension  on 1/8/1997  without weightage  on par with in-service employees and  without extending the same principles for upgrading pension on 1/8/2002 & 1/8/2007 just making their exercise an one time affair.
I agree with you that  mere removal of DR anomaly and providing 100% DR neutralisation  on 1/8/1997 will give very little benefit  unless weightage is given for upgradation and it is done in chain at the time of every wage revision.

Kind regards.
C H Mahadevan

Shri Sahni's letter

Dear Shri Mahadevan ji,
I would like to know what is 100% DR neutralization and how 
much it is going to help our pre 8/97 retirees financially.

Please let me know the 100% DR rate per slab.

It is being said that post 8/97 retirees are getting 100% DR neutrilization.
In my opinion this assumption is not true. Every retiree is getting 50% of basic pay as Basic Pension and rate of DR is exactly 50% of rate of DA on Basic Pay before retirement whether the DA formula was on slab basis as it was before 8/1997 or percentage basis as is in post 8/1997. Without pension upgradation with each wage revision, it is of a little financial benefit.

RK Sahni