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Sunday, January 03, 2016

Pre-August 1997 retirees taken for a ride‏


Further to my post on the flawed calculation being adopted by LIC based on their interpretation of the Board Resolution,I happened to work out a sample illustration for an officer who retired on 31/7/1997 to arrive at the gross revised pension as at 1/8/2015 under two scenarios.

The calculations are given below:
1.Existing Pension
Basic Pension : 4700
Existing DR Per slab: 13.57
Total existing DR as at 1/8/2015: 13.57x 1187=16107.59
Total existing Gross pension : 20807.59= 20808

Scenario 1
Method followed by LIC while depositing amounts in the two High Court Registries.
Existing Basic Pension : 4700
DR as at 1/8/1997 : 13.57x148=2008.36
Basic Pension +DR as at 1/8/1997 =6708
Revised Basic Pension from 1/8/1997 = 6708
Revised DR per slab from 1/8/1997 =15.4284
Total revised DR as at 1/8/2015 = 15.4284x1039 =16030.1076
Total revised gross pension as at 1/8/2015 = 22738

Scenario 2
If only DR is neutralized as done for in service employees without revising the basic pension as at 1/8/1997;
Existing Basic Pension = 4700
DR per slab if in service DR formula is applied =4700x0.0035 =16.45
Total DR as at 1/8/2015 =19526.15
Total gross pension as at 1/8/2015(even if basic pension is not revised on 1/8/1997)=24226.15 =24226

Thus, although the method adopted by LIC may boast of "upgrading pension" as on 1/8/1997, in real terms the pre-August 1997 retirees stand to lose if pension is revised as per LIC's method.They would be better off with a mere equitable DR neutralisation on par with in service employees.

In the present example, the officer is subjected to a loss of Rs 1488 p.m as at 1/8/2015.The cumulative loss from the date of retirement till date will run into at least a few lacs of rupees even if full arrears are paid on the basis of the method followed by LIC.

Is it not now crystal clear that the so called interim relief received by the " fortunate" few is in reality an interim deception?
Greetings.

C H Mahadevan