Policy

Freeze on dearness allowance likely to hit retirees and pensioners hard

Mamuni Das New Delhi | Updated on April 30, 2020 Published on May 01, 2020

Govt staff retiring in the next one-and-half years may end up losing ₹4-10 lakh in ‘upfront payment’

Will Covid-19 burn a hole in the pockets of those who are set to retire between January 1, 2020, and June 2021 as well as pensioners?

With the government freezing dearness allowance and dearness relief, people retiring in this period stand to lose about ₹2 lakh to ₹10 lakh in upfront payment, according to union leaders. Pensioners too stand to lose.

M Raghavaiah, Leader-Staff side, Joint Consultative Mechanism and General Secretary, National Federation of Indian Railwaymen’s (NFIR), said the decision to freeze dearness allowance and relief (which insulates government employees and pensioners against inflation) would deprive those retiring of a substantial amount in gratuity and leave salary encashment.

Covid-19 is particularly harsh on the elderly people and people with co-morbidities such as blood pressure, diabetes, cancer, among others, show initial data on fatalities. Raghavaiah has requested the Prime Minister to reverse the decision, which was taken without consulting the union (staff side), which represents employees of Defence, Railways, Posts, Income Tax and all others, at the earliest.

“Those who retire get a lump sum amount upfront, including 10 years advance pension, gratuity (equal to about 16 months’ salary) and leave adjustment for (at least 300 days). There will also be a four per cent difference in this amount. All of this put together comes to a fairly large sum. Those who retire stand to lose ₹2 lakh to even ₹10 lakh (officers),” SN Malik, president, President, Uttariya Railway Mazdoor Union, told BusinessLine.

Earlier, the All India Railwaymen’s Federation (AIRF) had taken up the issue with the Cabinet Secretary in a strongly-worded letter.

Shiva Gopal Mishra, General Secretary, All India Railwaymen Federation and the Joint Consultative Committee (Staff), added that those who retire and those in the Group-C staff will have to bear the maximum brunt and instead of these harsh steps, the government should consider imposing a Covid-19 tax or cess.

Mishra, who hoped that the government would initiate a dialogue, said that he supported the revenue officers association’s suggestion to tax the super-rich.

Like the government did in 1971, the AIRF said the Dearness Allowance and Relief shouldn’t be frozen but could be paid with a delay.

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Published on May 01, 2020
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