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Thursday, October 01, 2015

PROTECTION OF NEGATIVE ARREARS

‘PROTECTION’ FOR NEGATIVE ARREARS FOR A FEW CADRES CANNOT RENDER JUSTICE TO ALL PRE-AUGUST 1997 RETIREES

I *attach a write-up referring to the Office Note prepared by LIC Central Office Personnel Dept on 18/9/2001 with remarks/recommendations/decisions by the Chairman as a precursor to the LIC Board Meeting held on 24/11/2001.
LIC was very much aware that the formula proposed for upgradation  on 1/8/1997 was anomalous as negative values resulted in a few cadres from Record Clerks  down  to the Sweepers .Surprisingly this fact does not  find a mention in the LIC Board Resolution and LIC has merrily  adopted their proposed  formula  right from the time the illustrative chart was submitted to the Board, subsequently  sent to the Joint Secretary (Insurance) on 31/12/2001 and also  in an updated illustrative chart  sent  on 11/8/2003 with calculations  as at 1/8/2003 to Mr G C Chaturvedi,Joint Secretary(Banking & Insurance).

The focus of LIC Management has  all the time been merely  on the 100% DR neutralization without removal of the pre-August 1997 DR anomaly and on  a half-hearted upgradation on 1/8/1997 WITHOUT REMOVAL OF DR ANOMALY FROM 1/11/1993 AND WITHOUT THE WEIGHTAGE DECIDED  UPON BY THE LIC BOARD ON 24/11/2001.

It took Jaipur Bench of Rajasthan High Court to take serious cognizance of the DR anomaly and come out with its judgment on 12/1/2010 to not only remedy this situation, but also allowing upgradation of pension. But LIC has  continued to play its dubious game of selective misinterpretation of the Board Resolution  without explicit reference to the three High Court judgments in favour of pensioners, for which stay was refused by the Apex Court. This has been corroborated by  a few pensioners who have received  unidentified credits to their bank accounts from LIC ostensibly in compliance of the Supreme Courts  orders  dt 7/5/2015 & 7/9/2015 for payment of interim relief to respondent-pensioners.

We have also  known convincingly how there will be negative arrears for every family pensioner of a deceased pre-August 1997 retiree if LIC continues to follow their usual  method of upgradation of pension for pre-August 1997 retirees.

Hopefully the game being played by LIC will get exposed before the watchful eye of the Supreme Court Bench today, and if not today, sooner than later.

Greetings.

C H Mahadevan


*Click 'read more' below.
FLAW IN LIC’s APPROACH ON UPGRADATION AND 100% DR NEUTRALISATION


I was just going through the Office Note of CO Personnel Dept by Assistant Secretary(ER) on 18/9/2001.

Under the second para entitled “Upgrading of basic pension to AICPI 1740 and 100% DA Nneutralisation thereon:-“it has been stated,

…………”At present,there are  3 separate  groups of pensioners,the Dearness Relief  to whom is  paid from different base levels of AICPI and at varying rates.Ther is a need to rationalize the structure to  to reduce the administrative inconvenience  and also to see that different generations of pensioners are protected  by uplifting the pension to a suitable index point.It may be pointed out  that the Central Civle Service Pension Rules(on which our Pension Scheme has been broadly  designed) contains such an upgradation formula corresponding to Wage Revisions effected  for Central Government  employees.As the  cost implication is not much ,it is suggested  that we may accede to the demand  and upgrade the pension payable  in relation to AICPI 600 points and 1148 points  respectively by merging the Dearness Relief payable  upto the level  of 1740 points . On the pension so upgraded,Dearness Relief of 0.23% shall be paid over every  4 points rise  or fall from 1740 points.An illustrative  chart is placed below  showing the method of merging  and the benefit  that would be available  due to the upgradation.The calculations  are based on maximum pension linked  to AICPI 1148 points available  in the respective cadres. It will be seen  from the chart that the upgradation  in case of RCs and below  is giving a negative figure, which will require protection.This suggestion  will affect all Pensioners who have retired  prior to 1/8/1997. The amendments may be made    effective from the date of notification and  we should make it clear  in the Rules  that no commutation value  due to increase  in Pension shall be payable.
If the above proposals are approved,we may seek the approval  of the Boarg.After receiving the Board approval ,the matter shall be  referred to  the Government   for amendment to the LIC(Employees)Pension Rules,1995.
Submitted.
(J .Sen)
ASSISTANT SECRETARY (ER)
18.09.2001”
Chief(P):  (1)The cost  of allowing one more option  appear  to be prohibitive at this juncture.We may wait for  the valuation  of the fund as  on 31/3/2001.
(2)We may consider upgradation of basic pension  to AICPI 1740 and 100% DA  Neutralisation  thereon as has been submitted by AS(ER)at’x’ above.
Initialed
19/9
(1)   &(2) above may be approved.
Initialed  20/9/2001
Executive Director(Pers)  
MD       We may  seek  the approval  of the Board to bring the basic pension  to AllIndiaConsumer Price Index 1740 level and thereafter  pay 100% DA neutralization.The cost implication is not much.We may give effect  to this from the date of notification.
24/9/01
Chairman    1.We had written to Govt which I believe was ..again obtaining Board’s approval .Kindly check up  and put up.
2. As regards  one more option,I agree, ( w.r.t. para no 1 of the Note)
 Recd 5/10
Re-submittedL1) As regards the updation of Pension to AICPI 1740 points of index,Chairman  may kindly recall the discussion with both MDs,ED(Actuarial),ED(P), wherein it  was  decided  to first take  up the matter with our Board and subsequently with the Govt .after Board approval.As regards another option  we have written to Govt .in Dec’99(FlagX)
(2)We have not approached  the Board  or Govt. for this purpose of upgradation of pension earlier.The Board Note placed  below  may kindly be approved.
AS(ER)
11/10
1)      Board  note for upgradation of pension may be approved
2)      We had written to Govt.reg another option in Dec’99.We may evaluate the fund position on 31/3/2001 and then decide in the matter.
Executive Director(P)

11/10/2001

Managing Director - Chairman  may kindly approve  the Board note
                                                                                                13/10/01
Chairman-Approved
                          22/10
Recd 22/10
C(P)
Please arrange for next board meeting
23/10
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Perhaps considering the point raised  by the AS(ER) that the  method of calculations yield a negative value  for RCs,LIC Board in the meeting  had decided in its meeting dated 24/11/2001 that the  Board  had recorded,   ” The Note is in line with the demands made by the Federation, viz., giving effect to the proposal from 1.11.1993 and upgradation by giving weightage of 11.25% as in the case of in service employees. Chairman pointed out that these have been considered before placing the matter to the Board and it was felt that the same would increase the financial burden very substantially and may be unaffordable for the Corporation. Chairman pointed out that the implications of the proposal made have been actuarially determined at Rs.51.37 crores and the annual outlay be in the region of 6 to 8 crores. After some discussion the Board approved the proposal and suggested that it should be implemented prospectively and after
obtaining Government approval.”

Thus reading the LIC Board Resolution in conjunction with the office note submitted by AS(ER) on 18/9/2001,one can clearly conclude that what Board had in mind was upgradation with  11.25% weightage after merger of DR with basic pension.

But again an illustrative chart  was prepared by the CO Personnel  Dept and sent to Shri G C Chaturvedi ,Joint Secretary(Insurance and Banking )under cover of  their letter  dt 11/8/2003, where again negative values were  noticed  for difference of pension of RC,Driver,Peon and Sweeper as at 1/8/2003.

Thus it is clear that the method followed by LIC for calculating ‘dues’ to retiree-pensioners and the corresponding interim relief is flawed and needs rectification.

The so called ‘protection’ to the above  four  cadres cannot be provided in isolation except by the wholesale rectification of the method of upgradation.That will be possible only by;

1)      Removal of DR anomaly  for the period from 1/11/1993 to 31/7/1997 by making the DR formula uniform for in-service and retired employees;
2)      Providing weightage  as in the case of in-service employees after merger of the rectified DR with Basic Pension on 1/8/1997 and revising the pension on 1/8/1997;
3)      Repeating the step 2) on 1/8/2002, 1/8/2007 and all future wage revision dates.

No doubt the Board Resolution arose in the context of anomalies faced by pre-August 1997 retrirees.But once the above  three steps are followed,LIC perforce will have to  follow them for all pensioners-whether pre-August 1997 or post-July 1997.

Let us hope that these facts will be highlighted before the Supreme Court in the final hearing.

Greetings.
C H Mahadevan