Dear Mr Sahni,
There is a lot of confusion among pensioners about 100% DR neutralisation. According to me 100% DR neutralisation only happens when the DR
per slab of Basic Pay/Basic Pension is worked out at the same
percentage irrespective of the amount.Such a pattern has emerged only
after 1/8/1997 when the DR per slab is calculated as a
uniform percentage of Basic Pay/ Basic Pension for all
employees/pensioners.
There was no 100% DR neutralisation for employees/pensioners
before 1/8/1997 because the DR formula was designed to calculate % of
DR slab on some tapering slabs.One formula was applied to pre-August
1992 pensioners and another formula was applied
to pre-August 1997 pensioners.Also the DR formula was anomalously
included in the LIC of India Pension Rules,1995 which showed reduced
slabs( on the 50% of average emoluments as pension) to 50% of the
slabs which were applied to in-service employees.This
resulted in lack of equitable neutralisation of DR between pensioners
and in service employees.
For retirees from 1/8/1987 to 31/7/1992, the % DR neutralisation
ranges from 100% at the lowest slab(1250) to 65.1% at the highest
Basic Pension of ED of 3500. For in- service employees DR
neutralisation ranged from 100% to 94.9%.
For retirees from 1/8/1932 to 31/7/1997, the % DR neutralisation
ranges from 100% at the lowest slab(2400) to 63.8% at the highest
Basic Pension of ED of 7000. For in- service employees DR
neutralisation ranged from 100% to 94.6%.
This was the source of pre-August 1997 DR anomaly in pension.This
was made out as lack of 100% DR neutralisation, whereas there was only a
maximum DR neutralisation of 95% for in -service employees.
LIC in its Board Resolution dated 24/11/2001 decided to remedy
the situation and rationalise the DR from 1/11/1993 and merge DR with
Basic Pension on 1/8/1992 &1/8/1997 and upgrade pension with
weightage of 11.25% as is done for in-service employees.
The Jaipur single judge Bench order dt 12/1/2010 while allowing
the WP No 654/2007, in effect,had ordered upgradation of pension on
substituted scales of pay on 1/8/1997 and also that pensions should be
revised at the time of wage revisions.
But LIC has conveniently misinterpreted the Board Resolution to
only provide for merger of DR with basic pension on 1/8/1997 without
weightage on par with in-service employees and without extending the
same principles for upgrading pension on 1/8/2002
& 1/8/2007 just making their exercise an one time affair.
I agree with you that mere removal of DR anomaly and providing
100% DR neutralisation on 1/8/1997 will give very little benefit
unless weightage is given for upgradation and it is done in chain at
the time of every wage revision.
Kind regards.
C H Mahadevan
Shri Sahni's letter
Dear Shri Mahadevan ji,
I would like to know what is 100% DR neutralization and how
much it is going to help our pre 8/97 retirees financially.
Please let me know the 100% DR rate per slab.
It is being said that post 8/97 retirees are getting 100% DR neutrilization.
In my opinion this assumption is not true. Every retiree is getting 50% of basic pay as Basic Pension and rate of DR is exactly 50% of rate of DA on Basic Pay before retirement whether the DA formula was on slab basis as it was before 8/1997 or percentage basis as is in post 8/1997. Without pension upgradation with each wage revision, it is of a little financial benefit.
RK Sahni