Confederation urges govt for commuted pension restoration in 12 years

The central government has received a new proposal to reduce the timeframe for the restoration of commuted portion of pension from 15 years to 12 years.

The Confederation of Central Government Employees and Workers, which represents about 7 lakh staff across various central departments, last week shot off a letter to Union Cabinet Secretary TV Somanathan requesting him to have a relook at the pension commutation rules, which were framed 38 years ago by amending the Rule 10A of Central Civil Services (Commutation of Pension) Rules, 1981.

Confederation Secretary S B Yadav in his letter said that in comparison to the parameters prevailing earlier in the year 1986, the current parameters have undergone a drastic change especially, the interest rate, life expectancy, mortality rate, death rate, actual values and risk factor which is at just 2%.

The letter also highlighted the 5th Pay Commission report and various expert bodies’ recommendations that suggested bringing down the timeframe for restoration of commuted pension to 12 years from 15 years.

The Confederation also attached a detailed note, explaining why the Supreme court judgement in Common Cause (supra) of 1986 needs a fresh look into the matter as many parameters have changed in the last 38 years.

The letter said that parameters like commutation factor, rate of interest, life expectancy, mortality rate and death rate have undergone significant changes over the last four decades.

“Now that 38 years have lapsed, a fresh look into the matter is required and request your good self to re-examine the whole issue of 1986 orders,” the letter said on the Supreme Court’s 1986 order.

“Though the commutation is optional, the government being a ‘Model Employer’, should view this as a welfare and not as a profit-making measure. The pensioner avails the commutation for their financial commitments only. The policy of the government towards its employees who have served for the nation building for more than 30 years of service should be sympathetic towards its employees, particularly, pensioners. As a model employer, the concept of profit making for central government on this issue should not be the criteria for fixing the commutation factor and restoration of commuted value of pension,” the note said.

Expert bodies recommendations
Some state governments restore employees’ commuted pension after 12 years following recommendations from expert bodies.

Kerala has adopted 12 years restoration and very recently after studying all these aspects, the Gujarat State Government has issued 13 years restoration.

5th Central Pay commission report
The 5th Central Pay Commission had recommended for 12 years restoration of commutation after an in-depth study. The central government has neither accepted this report nor rejected it, with an intimation of reasons of rejection, hence it has acquired a legal status, the note said.

Addressing financial inequities
The Confederation’s letter also pointed out inconsistencies in the interest rates applied to commutation calculations. While central government employees are charged an 8% interest rate, pensioners from LIC and other financial institutions face a lower rate of 6.1%.

The Confederation has urged the central government to initiate amendments to the Central Civil Services (Commutation of Pension) Rules, 1981, and implement a revised commutation table. “A 12-year restoration period reflects current realities and would bring much-needed relief to pensioners,” the letter concluded.