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Friday, 10 April 2015

Effect of Supreme Court judgment dated 17/3/2015 on Fixation of Pension



10/4/2015
To
Chairman,
L I C of India,
Central Office,
“Yogakshema”,
Jeevan Beema Marg,
Mumbai-400021

Dear Sir,
Re: The effect of the Supreme Court judgment dated 17/3/2015 read with Delhi High Court judgment dated 29/4/2013—Pension cannot be less than 50% of Pay
As per the above Supreme Court judgment, the pension for a retired employee cannot be less than 50% of the minimum of the Pay and Grade Pay in the Pay Band   corresponding to the pre-revised Pay.
Arising out of the above judgment, I happened to make sample calculations taking the case of an Executive Director of LIC who retired on 31/10/2002.Taking into account the method of calculation for fixation of pension outlined in the L I C of India(Employees) Pension Rules, 1995 as amended on 14/5/1999,my calculations revealed that for this Officer, the   Gross Basic Pension fixed as per our Pension Rules worked out to less than 50% of (minimum Basic Pay plus Fixed Personal Allowance) as per wage revision effected from 1/8/2002 .(Fixed Personal Allowance also comes under the definition of “pay” under Rule 2 (o)(iii) to the extent  it does not  exceed the last increment in the scale of pay; if any. This anomaly will be evident from the following:
Gross Basic Pension Fixed as per existing Pension Rules:        Rs  16050

Gross Basic Pension required to be fixed as per the above
 SC judgment:                                                                     Rs 16370

                                                                                         -------------Shortfall:                                                                             Rs    320
                                                                                        --------------
The difference may appear to be small, but it may entail cumulative loss for an officer if his pension is not fixed correctly and hence anomalous. I attach my calculations vide Table A.The calculations may kindly be got verified by the Personnel dept for their accuracy. May be it may not result in shortfall in the case of all pensioners who have retired within 9 months of the effective date of wage revision, but I am sure you will appreciate that all such cases will have to be reviewed and anomalies will have to be rectified wherever shortfall in fixation is found-even if the cases are few- and action taken for refixation of pension and payment of arrears of difference due.
This review may have to be undertaken in respect of all pensioners who would have retired within nine months from 1/8/1997, 1/8/2002 & 1/8/2007 and anomalies found if any may have to be rectified to conform to the principle laid down as per the above Supreme Court judgment. The number of cases falling under this category may not be large and hence will not pose any administrative inconvenience for the Corporation.
In this context, I also attach the following for your ready reference:
1.   Order of the Delhi High Court dated 29/4/2013;
2.   An Office Memorandum dt 5/3/2015 by the Department of Pension and Pensioners Welfare;
3.   Copy of the Supreme Court judgment dated 17/3/2015
4.   Order of the Supreme Court  under SLP© Nos 13280/2013 & 23055/2013
I hope the Corporation will be kind enough to rectify this anomaly at the earliest.
Thanking you,
Yours faithfully,

C H Mahadevan
Executive Director (LIC)(Retd)
Dallas-Texas-USA
Encl: as above
Cc to Smt Usha Sangwan,Managing Director,LIC of India,Mumbai for information and necessary action
Cc to Executive Director (Personnel), LIC of India, Central Office Mumbai for information and necessary action.
Cc to Dr. Hasmukh Adhia, Secretary (Financial Services), Government of India for information and necessary action, if any.
Cc to Shri N. Srinivas Rao, Director (Pension Reforms, Insurance-II), and Government of India for information & necessary action, if any.
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4.  SC ORDER DATED 17TH MARCH, 2015
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5. Last Page Of H C Delhi Order Dated April29, 2013