Cumulatively,more than 91% of the officers would have retired by 2032 and from 2033 the proportion of retirement will taper off.
Even among these officers,those who have joined the Corporation after 1/4/2010 would not be drawing pension under LIC Pension Rules,1995,but will only be covered by NPS.
The implication of this trend is that the funded nature of the LIC employees' Pension Scheme is not an impediment for LIC's meeting the Pension obligations to employees including with upgradation of pension .The quantum of additional contribution to the Pension Fund is proportionate to the number of pension optees in service in any year.The increase in cumulative retirements ranges from 6 to 8% per annum upto 2032 and thereafter,it tapers off to less the 4% p.a progressively.This indicates that the burden on LIC to pay additional contribution to the Pension Fund will get reduced progressively from year to year but for the effect of wage revisions and periodical increases in DR.
When majority of employees retire by 2032,the pension fund will roughly be operational latest upto 2060 including for family pensioners and thereafter the fund will extinguish itself.Significantly,as the present group of about 1,50,000 pension beneficiaries ( including the OMOP beneficiaries) is a diminishing group,and with the steadily increasing proportion of family pensioners which presently stands at about 34%,the scale of LIC's pension payment commitments will steadily decrease except for increases arising out of five yearly wage revisions and periodical increases in DR.
So LIC is on a financially sound footing in the matter of its pension funding and may be at some point of time towards the end,if the actuarial valuation of the fund reveals a surplus,LIC may be able to write back the surplus to the revenue account of the Corporation.
C H Mahadevan
1 comment:
The GIC Pension scheme 1995 was drafted with basic Principles of CCS Pension rules 1995 as amended up to 4th central Pay commission. Consequently the formula of fixation of Pension is adopted from the CCS pension rule as amended on the implementation of 4th CPC in 1995.
The Core values taken from the CCS Pension rules as amended up to 1995 are as follows
1) 50 % Pension for 33 years & Pro rata for lesser years.
2) Minimum Pension & Minimum Family Pension as mentioned in 4th CPC.
3) The rate of Commutation of Pension (30%)
The above three core values as amended in CCS Pension Rule 1972 up to 7th CPC are as follows.
1) De linking of 33 years of service for full pension by introduction of 50% Pension for 20 years( VRS) and above, 50 % Pension for 10 years and above in case of Superannuation Pension. The Pro rate Calculation is done away with.
2) Minimum Basic Pension & minimum basic family Pension as per CCS Pension rule as on date is Rs 9000 & The rate Of family pension is 30% flat on last drawn basic pay where as in GIC Pension Scheme the minimum Pension varies from Rs 375 to 3010 only between wage revision carried out so far.
3) The rate of Commutation is 45% against our 33%
Why the need for Pension updation & Is there any provision for Updation in our scheme
The Non Updating of above three core values in GIC pension rules 1995 has made it redundant & static Scheme compared to our Mother Scheme CCS Pension rules 1995.
There is no mention of revision of pension in CCS Pension rules 1972 but still Central Govt Pension is getting updated along with every Wage revision. Consequently the CCS Pension rules 1972 get amended with every Pension revision due to implementation W.E.F. 5th CPC to 7th CPC.
Employees with a a huge amount to their credit as employers contribution to their Provident fund have surrendered & joined the GIC Pension Scheme 1995 relying on the mother CCS Pension Rules 1972 which is getting amended time to time as per Pension revision as envisaged in Para 55 of GIC Pension rule Scheme1995.
The rationale behind every Pay/ pension revision is the erosion of money value due to unforeseen contingencies like inflation & price rise which cannot be compensated by the Dearness allowance which is granted from time to time the purpose.
The family Pensioners are the most affected lot due to this non updating of changes in core value of CCS Pension rules in GIC Pension rule1995.
In order to allow 30% of last drawn pay as family pension Pro rata calculation is to be ceased forth with otherwise the spouse of Late employees retired on superannuation having less than 20 will draw family Pension more than her late retired employee.
In short employee may be preferred to die to allow her spouse to draw more pension than he is drawing presently.
This Problem can be explained as given below.
Last drawn Basic pay of employee= Rs 44000
Basic Pension for 33 years = 22000
Pro rata Pension for employee retiring on
Superannuation having 18 years = 22000x18/33
= 12000 (A)
Family Pension 30% flat on Basic Pay = 44000
Family Pension as per this = 13200 ( B)
Family Pension B is more than the retired employee Pension A.
The RBI Which is also under Department of Financial Services has removed Pro rata Pension Prior to sanction of 30% flat family Pension on last drawn basic Pay.
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