7th Pay Commission: Cabinet’s modifications on pay, pension benefits Highlights

New Delhi: The Ministry of Defence has issued the notifications for the new pay regime on implementation of the recommendations of the 7th Central Pay Commission for all ranks.On the otherhand, The Union Cabinet on Wednesday also approved modifications on pay and pension benefits for central government employees based on the 7th Pay Commission.

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The Union cabinet on Wednesday approved modifications on pay and pensioner benefits almost a week after the Ashok Lavasa-led Committee on Allowances submitted its review report on the 7th Pay Commission recommendations.

The benefit of the proposed modifications approved by The Union cabinet will be available with effect from 1 January 2016, i.e., the date of implementation of 7th CPC recommendations. With this increase approved by the Cabinet, the annual pension bill alone of the Central Government is likely to be Rs1,76,071 crore.

Here are the major highlights of the important decisions made by the Cabinet:
  • The modified formulation of pension revision approved by the Cabinet will entail an additional benefit to the pensioners and an additional expenditure of approximately Rs5,031 crore for 2016-17 over and above the expenditure already incurred in revision of pension as per the second formulation based on fitment factor. It will benefit over 55 lakh pre-2016 civil and defence pensioners and family pensioners.
  • The government has decided to continue with an earlier system of disbursing disability pension and not to go ahead with a new regime recommended by the seventh pay commission. The armed forces personnel were demanding status quo on the percentage-based regime for disability pension and were strongly opposed to the slab-based system conceived by the CPC.
  • The decision which will benefit existing and future Defence pensioners would entail an additional expenditure of approximately Rs. 130 crore per annum.
  • The military personnel were upset as civilian pensioners were to be paid pension according to the earlier percentage system.
  • The government has also agreed in-principle to address three major grievances of the armed forces relating to their salary structure including providing pay protection to those getting promotion from the rank of brigadiers. The current system has certain anomalies and some of those promoted to higher ranks lose on the military service pay.
  • After a meeting of the Union Cabinet, defence minister Arun Jaitley also assured that the government was addressing the demand of extending pay matrix from 24 years to 40 years and carrying out rationalisation of pay Lt Colonels and Colonels.
  • The government also approved modification in recommendations of the seventh CPC relating to the method of revision of pension of pre-2016 pensioners and family pensioners based on recommendations of a high-level panel.
  • The benefit of the proposed modifications will be available with effect from January 1, 2016, the date of implementation of 7th CPC recommendations.
  • The armed forces felt the new system would result in reduction in the amount of disability pension for existing as well as future retirees compared to percentage-based disability pension.
  • The Ashok Lavasa Committee was set up in view of significant changes recommended by the Seventh Pay Commission in the allowances structure and a large number of representations received in this regard from various staff associations as well as the apprehensions conveyed by various ministries and departments.
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