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The history of Indian pension system dates back to British colonial period. Pension benefits to government employees were first awarded in the early eighties of nineteenth century. Further provisions were made in the pension system by the British government in the early part of twentieth century. After Indian independence, the pension system was made mandatory to all government employees of central and state governments. Now, the retirement schemes in India include provident fund, gratuity and pension schemes. The first two schemes provide lump sum payment at the time of retirement while the last one makes payment on monthly basis.

Eligibility of the employees for pension was questioned several times in court of law. The right of the employees for pension was legally protected by the Supreme Court of India in 1982 in the famous D.S.Nakara case. In the Judgment of this case, the apex court observed that pension is a right and the payment of it does not depend on the discretion of the Government. It is governed by the rules and a Government servant coming within those rules is entitled to claim pension.

Some people in the state, with vested interests, have recently come out, with false propaganda against the present pension system. They claim that a major portion of state’s revenue is utilized for paying pension there by impairing the developmental activities of the state government.  This claim is absolutely baseless and the state budgets for the last few years show that only sixteen to seventeen percent of state revenue is accounted as expenditure for pension. The One India One Pension Movement, a recently formed organization, is also making strong propaganda against the current pension system of the government employees. They demand equal pension for all citizens, irrespective of being service pensioners or not, who completed 60 years of age.

The first pension revision in the state was materialized in 1978 and there was no dearness allowance apart from basic pension. Dearness allowance was later introduced at a reduced rate as compared to serving employees. Fifty percent of the last ten months average basic pay is treated as basic pension as per the existing system of computation of pension. Full basic pension is admissible for 30 years of qualifying service, proportionate basic pension for less than 30 years of service and minimum pension is admissible for 10 years of service. Dearness relief (allowance) is also admissible at the rate applicable to serving employees. The normal rate of basic family pension is thirty percent of the last basic pay drawn, irrespective of the number of years of service put in by the employee. Family pension at higher rate is admissible to the family of a deceased employee for a period of 7 years from the date of retirement or death whichever is earlier. Family pension at higher rate is twice the family pension at normal rates, limited to the basic pension sanctioned to the employee.

The present rate of commutation of pension is forty percent of basic pension and the period of restoration of commuted value of pension is 12 years. The total commuted amount of pension is worked out by multiplying forty percent of basic pension with the commutation factor and the number 12. For employees retiring at the age of 56, the commutation factor, at present, is 11.1. The amount of death cum retirement gratuity will be fifty percent of total emoluments at the time of retirement of an employee, for each completed year of service subject to a maximum of sixteen and a half times the total emoluments. The maximum amount of gratuity is also limited from time to time.

The central government pay scales under UGC scheme were introduced from first January 1986, for teachers in colleges and Universities in the state. The central government pay scales are also applicable to teachers governed by AICTE and Medical Education schemes. The revision of pay and pension of employees of the state government is carried out once in every five years, while the central government revise the pay and pension of their employees once in every ten years . Consequently, the pension of teachers in the state, coming under central pay scales, is revised only once in every 10 years. The policy of the state government is that, though the teachers in colleges and Universities are enjoying central pay scales, their basic pension is determined or revised from time to time, applying rules applicable to state government employees and pensioners. Death cum retirement gratuity, commutation of pension, maximum and minimum pension, family pension and medical allowance are also admissible from time to time at the rate applicable to state government employees. However, dearness relief (allowance) is admissible at central government rates when it is sanctioned by the state government.

The concept of one rank one pension was introduced in the state in 2004 on the recommendation of eight state pay revision commission. This concept was not introduced in its totality in the state, but this scheme ensures a minimum pension based on the revised pay scale of the post from which the pensioner retired. Of course, the scheme of one rank one pension is applicable to pensioners retired form UGC/AICTE/Medical Education schemes also. Under this scheme, while revising the pension of a teacher, the new basic pension must be at least fifty percent of the minimum of the revised pay scale of the post from which the teacher retired. The revised basic family pension must be at least thirty percent of the minimum of the revised pay scale. There will be proportionate reduction in basic pension / family pension if the qualifying service is less than 30 years.

(To be continued)


Convener, State Service cell