MY SUPPLEMENTARY RESPONSE TO MR SN’s POST ON ‘APPLICABILITY OF CCS PENSION RULES’

Mr SN, sometime ago, has more or less penned his thoughts on the same wave length of mine. However, I thought I can supplement his views by conveying my thoughts based on my understanding of the issues in the context of the case before the Supreme Court. I could not respond immediately because of some other urgent pre-occupations.

THE DHC JUDGMENT

The DHC judgment although disappointing to pensioners as a whole, provided some partial relief to pre-August 1997 retirees in the form of an improved DR formula, non-refund of 40 % interim relief paid by LIC and upgradation in minimum pension. Basically,the Bench rejected the prayers of the six petitioners for upgradation of the pensionagainst which SLPs have been filed before the Supreme Court for adjudication.

Although pre-August 1997 retirees have got some benefit by some improvement in the DR formula ordered by DHC,an anomaly has been created in regard to the principle followed for modification of the DR rate followed in the wage revisions effective from 1/8/1992 where the DR  rate fixation for each tapering slab had followed a pattern  depending on the change in AICPI which has been unsettled by the DHC judgment. The only anomaly that had to be rectified was the disparity between the DR formula for retirees and the DA formula for in-service employees for the same period, which the DHC failed to do.100% DR neutralisation  happened after 1/8/1997 and so what is of crucial relevance for pre-August 1997 retirees is equitable neutralisation of DR with that of  in-service employees for the period upto 31/7/1997.What is of importance from 1/8/1997 is the need  for  upgradation of pension for all generations of pensioners,past,present and future.

The relief provided by the DHC by way of upgradation of minimum pension although intended to remove violation of Article 21 has in its wake created another discrimination in the sense that borderlineregular and family pensioners who are drawing just a few rupees above the minimum pension are not fortunate enough to get the relief but instead have to draw less gross pension than the ‘minimum pensioners’ besides being deprived of arrears. This effectively means that Article 21 continues to be violated because right to life extends beyond sustenance to ‘right to living with dignity’ which is denied to the pensioners who are on upper borderline to ‘minimum pensioners’. While the number of minimum pension cases may be confined to a small number of regular pensioners in the lower cadres with substantially lower period than that of the required qualifying service of 33 years, the number affected among family pensioners may be much more because of the dismally low rate provided by the family pension formula which-like everything else- remains static in our Pension Rules. Interestingly, the fixation of minimum pension for post July 2012 retirees has been done in such a manner that the retirees of the period 1/8/2007 to 31/7/2012 are better off without upgradation in minimum pension.

The distinction drawn between ‘Pay as you go’ approach and ‘Actuarial and Annuity Method’ makes very little legal sense considering that both are different approaches to fulfil the same object, viz, that of fulfilling a legal obligation of payment of pension to employees, be it the Central Government or LIC.

Much is made of the so called “self-funded’ scheme.Let us be clear that LIC Employees’ Pension Scheme is not a self funded scheme, but an additionally funded scheme as is evident from additional contributions made to the Pension Fund every year as a result of the annual actuarial valuation. Being a funded scheme is not an impediment for upgradation; if it is so, it also makes the existing pension payment unsustainable. The basic question is whether upgradation of pension is warranted or not in terms of Article 14 and 21 of the Constitution. If this question is answered in the affirmative, then whether it is a funded scheme or any other kind of scheme makes no difference. 

The Rule 55B seems to have been kept hidden from the public domain until it was discovered by the pensioners themselves after the Jaipur Bench judgment. Even though the Notification 05/09/2005 regarding wage revision w.e.f. 1/8/2002 is appearing as a footnote in the LIC Pension Rules 1995 which is in public domain, Rule 55 B which was inserted by a Notification dated 13/8/2001, the section is conspicuous by its absence in the copy displayed in the LIC web-site. Thiswas brought into public notice only in the Writ Petitions filed before the Delhi High Court. This is the rule that is very crucial forus in conjunction with Rule 5(3), Rule 11, and Rule 13(b) for our current fight in the SC.

If CCS Pension Rules are applied to LIC Pension Rules under Rule 56, the following incidental benefits beyond upgradation should also accrue to LIC pensioners:

1.    Improvement in the formula for computing average emoluments;

2.    Full pension after completing 20 years of service;

3.    Increase in the family pension rate of 30% of last pay;

4.    Increased pension after completion of 80 years of age.

It is settled law that pension is deferred wage in recognition of past service rendered and is not a bounty, but a right. So, it carries with it all the properties of ‘salary’. When there is a revision of salary periodically, there has to be a revision of pension as well.

Mere index- linking to pension does not compensate for the loss of capital value of the basic pension. The quarterly or half-yearly revision of DR based on AICPI is just to give relief to employees/pensioners against the increase in the cost of living faced by them in the short to medium term. But inflation erodes the capital value of the salary/basic pension which constitutes a financial asset. For salaries ofLIC employees five-yearly wage revision off-sets the effect of inflation. In case of Central Government employees ten- yearly revisions of salaries as well as pension are provided for the same purpose. It defies reason and logic that upgradation of pension has been denied to LIC Pensioners despite Rule 56 which is crystal clear.

Let us hope that these issues are adequately argued before the Apex Court and justice secured for LIC pensioners.

Greetings.

C H Mahadevan