How have Pay Commissions treated parity in pension for Central Government employees till now?

This is not the first time Central Government employees have raised such a demand. The last five pay commissions have dealt with disparities in pensions among broadly comparable retirees. This article looks back at how these pay panels approached the issue, as per details provided in the 7th Pay Commission’s report.

3rd pay commission

Till the 3rd pay commission, the general view was that past and future pensioners could not be treated at par. It even viewed that serving government employees and pensioners could not be treated at par for granting dearness allowance at the same rate.

4th Pay Commission

The 4th Pay Commission recommended additional relief in terms of a percentage increase in the amount of pension subject to a certain minimum increase. It suggested separate rates for pensioners drawing pensions up to ₹500 per month and those above ₹500 per month.

5th Pay Commission

The 5th Pay Commission held that the process to bridge the gap in pension of past pensioners set by the 4th CPC should continue.

It recommended upgrading the pension of all pre-1986 retirees by a notional fixation of their pay as on January 1, 1986 by adopting the same formula as for serving employees. The 5th CPC is also credited for introducing the principle of modified parity. According to this principle, the pension so arrived at should not be less than 50% of the minimum pension recommended by the 5th CPC.

6th Pay Commission

The 6th Pay Commission felt no further changes in rules were necessary. However, to maintain the trend set by the 5th CPC, it recommended that pre-2006 pensioners should be given the same fitment benefit as recommended by it for existing employees.

Although the 6th CPC followed the norm set by the 5th CPC, the pay bands and grade pays introduced by it led to the bunching of several pre-revised pay scales into a particular Pay Band, which eventually reduced the benefit of the modified parity.

The 6th CPC, however, provided for an additional pension with advancing age.

7th Pay Commission

The 7th Pay Commission dealt with the issue of parity among those in the Old Pension Scheme i.e. employees who joined before 01.01.2004.

Employees joining on or after 01.01.2004 are covered under the New Pension Scheme (NPS), in which it is not the exclusive liability of the government to pay the pension. Under NPS, the employee and the government make equal matching contributions towards their pension.

For those under OPS, the 7th CPC recommended two formulas for deciding revised pension. And, it recommended that pensioners may be given the option of choosing whichever formulation is beneficial to them.

• All the civilian personnel including CAPF who retired prior to 01.01.2016 (expected date of implementation of the Seventh CPC recommendations) shall first be fixed in the Pay Matrix being recommended by this Commission, on the basis of the Pay Band and Grade Pay at which they retired, at the minimum of the corresponding level in the matrix. This amount shall be raised, to arrive at the notional pay of the retiree, by adding the number of increments he/she had earned in that level while in service, at the rate of three percent. Fifty percent of the total amount so arrived at shall be the revised pension.
• The pension fixed at the time of implementation of the 6th CPC recommendations shall be multiplied by 2.57 to arrive at an alternate value for the revised pension.

The 7th CPC noted that the fixation of pension as per first formula may take a little time since the records of each pensioner will have to be checked to ascertain the number of increments earned in the retiring level. It therefore recommended that in the first instance the revised pension may be calculated as per formula 2 and the same may be paid as an interim measure.

Later, if calculation as per formula one yields a higher amount, the difference may be paid subsequently, the 7th CPC said.