Wednesday, March 02, 2016


The double faux pas by LIC committed 
in calculating the dues (according to them) 
twice has not only exposed the game 
played by LIC by trying to bulldoze its 
way in the Chandigarh HC, but also a 
fresh ammunition for us to push our case 
for upgradation with greater force. 
Firstly, LIC made a fresh calculation for 
pre- August 1992 retirees and secondly 
the difference payable was wrongly 
informed before the High Court as 
interest for the ten petitioners.

In actuality, the recalculation was necessitated for the following reasons:

Reason No 1

The earlier method involved the calculation of DR from the date of retirement upto 1/8/1992 and merging the same with the existing Basic Pension on 1/8/1992.This merged total was taken as a notional revised pension as at 1/8/1992.On this notionally revised Basic Pension on 1/8/1992, DR based on the August 1992-revised DR formula was applied to arrive at DR as at 1/8/1997 and the same was merged with the earlier notionally revised Basic Pension and the merged total was taken as the revised Basic Pension on 1/8/1997.

When revision was effected in this manner, the basic step of removing the DR anomaly which existed in the form of dual DR formula for retirees and in-service employees was not taken. For this reason the revised Basic Pension on merger done straightaway at one stage on 1/8/1997 worked out more than as per their earlier calculations.LIC was compelled to remove this inconsistency by working out a higher revised Basic Pension.

Reason No 2

When, in respect of 10 pre-August 1992 retirees,LIC undertook two stage revision viz on 1/8/1992 (notional), and 1/8/1997,it had per force to convert the notionally revised pension of 1/8/1992 into the actual revised pension on 1/11/1993, which would have had implications of liability to pay difference in commuted portion pension with interest for delayed portion from June 1995 till date of payment. It was in effect an acceptance of the principle of upgradation albeit without weightage As a corollary, LIC cannot escape adopting similar process on 1/8/2002,1/8/2007 & 1/8/2012,Not adopting this principle is already hitting the family pensioners hard with reduction in pension.

LIC decided to play safe by taking the one stage-merger route - of course without removing the DR anomaly and freezing the pension so revised thereby perpetuating the anomalies. If only LIC had adopted a uniform DA/DR formula for in-service employees and retirees as was done after 1/8/1997, even without going through elaborate calculations based on their own erroneous interpretation of the Board Resolution, the existing pension without upgradation would be more.

The LIC Counsel erroneously tried to explain away the difference that arose between the above two calculations as interest payable which also got recorded in the HC Order dated 16/2/2016.Now that the HC has ordered on 1/3/2016 that LIC has to file a reply to our application, the onus is on LIC to do the explaining the difference of Rs 1.29 lks which it has undertaken to deposit in the Court .If truth is admitted LIC will be caught and we have to wait and see what untruth will be invented by LIC to wriggle out of this predicament.Of course they have respite upto 5/5/2016 when the COCP will come up for hearing.But it has to be explored how well we can make use of this on 10th March 2016 in our favour.

One thing that clearly emerges from all the above trial-and-error calculations resorted to by LIC is, if the LIC Board Resolution has to be meaningfully implemented, the following steps have to be necessarily taken by LIC:

1. The DR formulae for retirees from 1/11/1993 to 31/7/1997 will have to be amended on par with DA formula for in-service employees during that period. This is a basic condition that should dictate any effort to remove DR anomaly;

2. Weightage has to be provided for revision of pension on 1/8/1997, 1/8/2002, 1/8/2007, 1/8/2012 and every wage revision date if the DR merger method (with the right DR)is followed on 1/8/1997.

This in effect is OROP. If OROP comes for pre-August 1997 retirees; can upgradation for post-July 1997 retirees be far behind?  

CH Mahadevan