‘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.
C H Mahadevan
*Click 'read more' below.
*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.
ASSISTANT SECRETARY (ER)
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.
(1) &(2) above may be approved.
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.
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)
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.
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.
Managing Director - Chairman may kindly approve the Board note
Please arrange for next board meeting
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.
C H Mahadevan