DEAR ALL,
Just a short while ago I got access to the Circular dated 1/3/2017 by the General Secretary of the Federation of Retired Class I Officers’ Associations.
Although I am an outsider for the Federation, being a septuagenarian pensioner, I consider that the circular warrants some response to remove some misconceptions reflected in the circular where the members of the pensioner fraternity need to have utmost clarity.
The General Secretary has referred to overplaying of cards by some, leading the Court to become curious to know more of actuarial process. He has stated that the procedure as one for ascertaining the ‘surplus funds’ of LIC available for meeting various heads of ‘expenses’ necessitating clarifications being given in the Court by the ED(Actuarial).
Even a student preparing for the Licentiate Examination of FIII knows that ‘Surplus’ is not ascertained to meet expenses but it is determined only after taking out the various expenses, policy outgoes and other outgoes from the total income of the Corporation in order to distribute dividend to the shareholder and bonus to with-profit policyholders.
Correctness of facts apart, one fails to understand, how it can be termed overplaying of cards when the Court raises pointed questions on the impact of additional obligations of LIC on account of pension upgradation on the bonus to the policyholders. The GS himself has stated that that LIC has indeed attempted to portray itself as a bankrupt organization unable to meet the demands of the octogenarian pensioners. How can such a contention by LIC be countered without stressing on the data under the laid down mechanism? If it is really overplaying of the cards, it is certainly preferable to non-playing of the appropriate cards that may entail possible loss of the pensioners’ case by default..
In such a situation is it not necessary for the petitioners to augment the legal strength of the case with the financial strength especially when published financial data of the Corporation tell a true story? The crux of the matter is the state of preparedness of the petitioners with facts and figures adequate to support our arguments on the financial affordability of the Corporation even if our case stands on a strong footing on points of law.
In para 5, the statutory stipulations do not seem to have been properly portrayed. The general stipulation by IRDAI is that 90% of the valuation surplus should be distributed to the policyholders leaving the balance of 10% to be distributed to the shareholders as dividend. But the Government of India, vide its letter dated 13/11/2013 had approved that LIC may continue with the existing surplus distribution pattern, i.e, 95:5 by allocating 95% to policyholders. Thus the payment of dividend at 5% of the valuation surplus to the Government of India was Rs 2497 cr for 2015-16.
In para 9 , the mere mention of Rs 250 cr as affordable by LIC constituting 0.1% the annual cost ratio, without touching upon the overall financial liability of Rs 3160 cr as admitted arrears payable on account of upgradation to 47000 pensioners by LIC, seems to indicate that the General Secretary is lukewarm to upgradation of pension.
It is heartening to note the mention of selected financial trend of LIC’s performance for the last 3 years in para 12 of the circular
I am sure that pensioners will be able to judge the remarks made in the Federation circular in the proper perspective and draw their conclusions. I am in full agreement with the prescription of the GS that we may now relax till the delivery of the judgment, of course praying for a favourable outcome.
Greetings.
C H Mahadevan
GNS's Circular dated 01.03.2017
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