The Hindu Business Line : Lost in translation

“For man proposes but God disposes" . In the case of the implementation of the Sixth Pay Commission by the Centre, this, perhaps, can mean, somewhat irreverently, what the cabinet giveth, the mandarins taketh away. By deft strokes of their miserly pens, the Department of Pensions has struck at the roots of parity between new and old retirees in the matter of pension.

A decade ago, after the Fifth Central Pay Commission, the Government had rightly recognised and treated the people who retired before the pay commission as equal to the new retirees. It wanted to grant full parity with the new retirees by locating the exact equivalent of the last pay drawn in the new scale from which the old persons retired, but thought it was cumbersome. It, therefore, stopped short and settled for 50 per cent of the minimum of the new pay scale for the old retirees and 50 per cent of the ten months average pay on the day of retirement for the new ones.

Under the “defined benefits” pension scheme of the governments in most part of the world, a percentage — even up to cent per cent of the last pay drawn — is given out as pension. A World Bank study in May 2006 on “Civil Service Pension Scheme Around the World” by Robert Palacios and Edward Whitehouse, observed critically that the Indian scheme suffers on account of ‘unpredictable income stream for old retirees and large differences between cohorts depending on the year they retire”.

Linked to pay bands

Therefore, minimum expectations were that the status quo would not be disturbed as confirmed by the Sixth Pay Commission in March this year which endorsed the continuance of parity. The Cabinet too, in its resolution, blessed the notion in its resolution in August. But when it was forged into executive orders, sadly, the benefits of parity enjoyed by the older pensioners till now were taken away at one fell swoop. This was done by clubbing as many as five to nine scales into each of the four long pay bands from Rs 5,200 to 67,000.

Pay bands are a useful HR concept to avoid over ranking and under paying by frequent cadre reviews to get higher posts. But by misinterpreting “minimum of the pay in the pay band” and linking the old retirees’ pension to the 50 per cent minimum of pay band at Rs 5,200, Rs 9,300, Rs 15,600 and Rs 37,400, as the case may be, smacks of arbitrariness but also annulment of all the advancement achieved by the old retirees in their career through stages of selection and promotion.

Dismay among old retirees

For example, a pensioner who retired as a Joint Secretary at Rs 18,400 would have normally received Rs 27350 as per the revised basic pay of his cohort under the old scheme but now will get only Rs 23,700 because of linkage to minimum of the pay band. Likewise, an individual retired at Rs 7,500 will get only Rs 7,050 under the new formula as against Rs 9,375.

This act of prestidigitation by the personnel ministry has caused a sense of deep dismay among all old retirees except those in the top rung. It so happens that vast majority of the latter are from the All-India services who can write rules and formulae to place themselves beyond the pale of the pay bands.

(The author is former Member, Ordnance Factories. blfeedback@thehindu.co.in)

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