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Friday, November 13, 2015

Anomaly in Sri K Vijaya Prasad's Pension‏


I have been following the posts of Mr K Vijaya Prasad ,Mr S.N and Mr K Madan Maohan Rao on the pension anomaly in respect of retirees within 9 months of wage revision illustrated in the case of Mr K Vijaya Prasad.


My view is that there is anomaly only to the extent that the gross pension got reduced on wage revision from 1/9/2012 which tapers off over a period of time by reducing difference. This is because while scales of pay have been revised after merger of DA on 1/8/2012 and providing weightage, the pre-August 2012 component of average emoluments does not carry weightage beyond merger of DA. This can be remedied only by LIC amending the Pension Rules by applying the formula as in the case of Central Govt pensioners which is more advantageous to the pensioners.

But the loss calculated on pension net of commutation is exaggerated, as the calculations completely ignore the fact that Mr Vijaya Prasad receives a total amount of Rs 12.64 lks by way of commuted pension including the amount received already on the existing pension. When the interest is assumed on investment of this amount at 8% p.a. on the total commutation value,it works out to Rs 8427/- p.m. This is a virtual addition to his monthly net pension.In other words Mr Vijaya Prasad gets a total pension of Rs 39470/- including a notional portion of Rs 8427/-

So there is no loss for Mr Vijaya Prasad in net pension. He also stands to have the commuted pension of Rs 10738/- restored on 1/9/2027.

Greetings.
C H Mahadevan