President B.P. Singh Chauhan Chairperson Sujeet Kumar, MP Gen. Secretary S. Rajkumar
AI/2426/comm/14
Dated : 2nd Apr 2025
To Smt. Nirmala Sitharaman Honourable Minister of Finance Government of India, New Delhi
We, the Federation of LIC Class-I Officers’ Associations, represent the majority of officers working in the Life Insurance Corporation of India (LIC). The most distinguishing feature of our union is our unwavering commitment to the interests of the Corporation and the nation, rather than solely pursuing collective benefits. Our members have made significant contributions to the growth of LIC, working tirelessly and prioritizing organizational progress over personal interests.
While we negotiate with the LIC management in a cordial and constructive manner to address our legitimate concerns, certain policy matters affecting officers and employees require approval from the Ministry of Finance. In this regard, we submit the following requests for your kind consideration and approval:
As you are aware, LIC’s pension liabilities are met through a pension fund created by contributions from both the employer and employees. However, the pension structure remains static, with only Dearness Allowance (DA) indexation, which is insufficient to counteract inflation. Senior citizens who retired long ago face severe financial hardship, struggling to maintain even the standard of living they had immediately after retirement. We deeply appreciate your initiative in addressing this issue in the banking sector and request you to direct LIC management to initiate the pension updation process without further delay.
At present, in LIC, the enhanced family pension is given only up to age 65 of the deceased employee where as it is 67 in other financial institutions. We request for parity in this area. The
Central Committee Office: 5th floor, Industrial Assurance Building, Vir Nariman Road, Near Eros Theatre, Churchgate, Mumbai- 400020. Reg. Office: RG210B, Kochulloor, Medical college P.O., Thiruvanthapuram-695011 e-mail :aicl1fed@gmail.comWebsite: www.licclass1federation.in
Federation of LIC Class-I Officers’ Associations
proposal for allowing to draw pension on the basis of last drawn salary or that of last ten months average, which ever is higher is still pending with the Ministry. Recently the honourable Supreme court , under civil appeal no. 2471/2023 has ruled that, increment due should be paid once the required service for granting increment is completed, irrespective of the fact that the employee is in service or not. Our request for implementing this in LIC is also pending with the management of LIC.
Globally, governments and corporations prioritize work-life balance by implementing employee-friendly measures such as a four-day workweek, sabbatical leave, child care leave, and stress management initiatives. Unfortunately, LIC faces a severe manpower shortage due to high attrition rates and the slow pace of technological adoption. This has led to unsustainable workloads for officers.
The introduction of a five-day workweek was intended as a welfare measure but has effectively turned into an additional working day without compensation. Government directives on sabbatical leave and child care leave for all PSUs remain unimplemented in LIC.
Moreover, officers in satellite offices—primarily women—face extreme hardships, as they are solely responsible for cash counters, new business, and policy servicing, often working beyond 8 PM daily. The quarterly and monthly closing work post-listing has further intensified the workload, forcing officers to work on consecutive holidays without any additional benefits. Recently, the officers were asked to keep the offices open on 3 consecutive days, 29/30 and 31st of March. Only officers attended office in most part of the country, even though the instruction was for all.
Despite fulfilling all organizational obligations, our repeated appeals to LIC management for a fair compensation package—akin to those in banks and financial institutions—have gone unanswered. We urge you to instruct LIC management to adopt a human-centric approach, implement a comprehensive personnel policy, and provide adequate compensation for officers. Additionally, we request an urgent assessment of manpower requirements and recruitment across all cadres.
Despite LIC’s status as a publicly listed entity, key decisions regarding personnel policies, compensation structures, and other operational matters still require government approval. This bureaucratic process hampers LIC’s agility in a highly competitive market.
For instance, the recruitment policies for Development Officers—our frontline sales force— require urgent modifications. However, every change necessitates ministry approval, delaying
e-mail :aicl1fed@gmail.com
Federation of LIC Class-I Officers’ Associations
critical decisions. We request necessary amendments to grant LIC’s Board greater autonomy in decision-making, allowing it to respond swiftly to market dynamics.
As the principal association representing LIC officers, it is imperative that a Federationnominated representative be included on the LIC Board. Additionally, we lack representation in the LIC Provident Fund Trust and the IRDAI Advisory Council, which needs immediate rectification.
Health insurance is a priority sector that requires promotion. However, the current 18% GST on health insurance products is excessive and should be reduced to 5% or lower.
Single-premium policies directly compete with bank fixed deposits and should be exempt from GST. Furthermore, income tax at exit should be capped at 5% of net accretion, irrespective of an individual’s tax status, provided the insurance coverage is more than five times the premium. Additionally, annuities up to ₹6 lakh per annum should be exempt from income tax to encourage long-term financial security.
The Insurance Regulatory and Development Authority of India (IRDAI) is increasingly focused on regulation rather than fostering industry growth. Some recent IRDAI directives have negatively impacted insurance penetration.
For instance, allowing surrender values after just one year undermines the insurer’s financial sustainability and places a disproportionate burden on loyal policyholders. Additionally, the proposed open architecture for agency distribution threatens LIC’s well-established agency network of 14+ lakh insurance professionals. We urge you to reconsider these IRDAI decisions from a practical and industry-friendly perspective.
On 18th February 2010, we were compelled to resort to a one-day strike following the unjust arrest of our All India President, who staged a peaceful protest in Hyderabad against delays in wage revision settlements. Historically, such strikes in LIC have resulted only in “dies non” penalties without affecting normal grade increments (NGI). However, this particular instance remains an anomaly, and our repeated representations for reconsideration have been ignored.
Federation of LIC Class-I Officers’ Associations
We are prepared to withdraw our legal challenge if LIC management agrees to restore NGI. We request your intervention to resolve this matter fairly.
Our vision is to see LIC become the world’s leading insurance company in every aspect. Our financial fundamentals remain robust, but we must continuously evolve to meet new challenges. Bureaucratic delays in decision-making—often associated with public sector undertakings—have contributed to a decline in LIC’s market share.
We sincerely urge you to:
- 1.Remove procedural restrictions to facilitate swift decision-making in all operational areas.
- 2.Provide LIC with a level playing field against private insurers.
- 3.Advise LIC management to engage in constructive dialogue with the Federation in the presence of our Chairperson and Hon’ble MP Shri Sujeet Kumar to address officers’ concerns.
We deeply appreciate your time and consideration.
With regards.
S. Rajkumar General Secretary Federation of LIC Class-I Officers’ Associations
Copy to The Director of Financial Services. Govt of India, New Delhi.
S. Rajkumar General Secretary Federation of LIC Class-I Officers’ Associations
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