R.V.RAMESH
**Comments on LIC’s Written Submission in LIC Pensioners case 7-4-2017
LIC’s WS signed by its Advocate contains some distortions , some factual errors, some ducking of relevant issues and quoting of exaggerated financial implications, all of which amount to an empty and hollow claim to hoodwink the LIC Pensioners and to confuse and confound the Honb’le Judges and to lead them into a blind alley. In fact the WS hides more relevant details than what it reveals.
In page 8 of LIC S ’s WS, LIC states that the Nakara principle is not applicable to LIC Pensioners case, since Nakara was not dealing with Funds , but was only concerned with the Consolidated Fund of India. This is a sweeping generalization and is unacceptable and has to be dismissed as such. The LIC of India ( Employees ) Pension Rules 1995 provided for Index Linked Pension in lieu of pre- existing P F. Scheme w.e.f. 1-11-1993. Employees who retired between 1-1-1996 to 31-3-1993 were also covered under the scheme. The Pension Rules 1995 were notified on 28-6-1995, and LIC Employees who retired between 1-1-1996 and 31-3-1993 as also those who retired after date of Notification form a homogeneous Group as the pension scheme offered was not a new benefit , but only in lieu of Pre- existing P.F. Scheme. Hence the profound pronouncement made in the D.S.Nakara case…….” Pension is neither a bounty nor a matter of grace depending on the sweet will of the employer. It is not an ex-gratia payment, but is a deferred wage for past services rendered by him….. Pension is their statutory , inalienable and legally enforceable right. It has been earned by the sweat of his brow. As such it should be fixed, revised, modified in ways, not entirely dissimilar to the salaries granted to serving employers” is equally valid in this LIC Pensioners case as well. What is more , the earlier retirees as also those who opted for Pension Scheme subsequent to the Notification on 28-6-1995 had all repaid their accumulated P.F with interest and joined the scheme trusting in the fairness of LIC which P.F amounts should have necessarily formed in FY 1995-96 the opening balance of the separate LIC of India( Employee) Pension Fund created under Rule 5(2) of chapter iii of LIC Pension Rules 1995.
Page 9 of LIC’S WS—Financial implications of LIC Pensioners demands: About a year back, Mr A .Singhvi as Goi ‘s Attorney had quoated Pensioner figures as 1 lakh and Rs 9700 Cr as arrears that may become payable to LIC Pensioners. Now Mr P .. as Advocate of LIC in his WS has touted arrears that may become payable as Rs 32000 Cr. (approx.). This omnibus figure included in the WS cannot be left unchallenged. It is not just “ arbitrary”, it is really “ imaginary” . It is a figment of his imagination.
Matters relating to page 9 , 10 of LIC’s WS:
[Financial implications- issued ducked or ignored or hidden in WS-----MOU –If their offer is a fair settlement as claimed by LIC , then why pre-1997 pensioners’ basic pension continues to remain the same as fixed at the time of retirement even after 20 yrs?—Why 7 or 8 steps below cadres get pension more than Seniors far above who retired just earlier? –National Pension Scheme w.e.f 1-5-2010 has made LIC Pension Rules 1995 a close ended scheme( not mentioned at all in WS)]
Life Insurance cover is not compulsory or mandatory in India. Only about 3.5 % of population take Life Insurance policies on their lives . It is only these policy holders whose premiums / monies are managed by LIC , are the real masters /stake holders of LIC . Till 2008 , after every Actuarial valuation was completed, 95 % of the surplus was being earmarked as bonus to LIC’s participating/ with profit policyholders ( and not all policy holders as stated in LIC’s WS) and the balance 5% was being paid to GOI which had contributed a share capital of a mere Rs 5 Cr to LIC. From 1996 to 1997 to 2009-10 ie in just 14 yrs LIC has contributed a whopping Rs 7873 Cr to GOI and many more thousand CR. Of RS till date !But the GOI , by the stroke of the pen in 2009 brought about an amendment to the LIC Act 1956 appropriating for itself another 5% of the surplus thereby reducing the share of bonus addition payable to the with profit policyholders from 95% to 90% . This is a selfish, unfriendly act on the part of GOI to deprive the policy holders of their legitimate share in the bonus violating all canons of natural justice and treating LIC as only a veritable Kamadhenu to meet its own financial needs. ( The Act as it now appears after incorporation of the amendment stated above ) is only shown in the LIC WS. Ultimately UOI retained earlier provision of 95% & 5 % to Govt as dividend .This step incidentally establishes beyond doubt LIC’s Financial might . LIC thus clearly emerges financially not merely as a Navarathna but a Maharathna that can meet all the need of the GOI and also the needs of all LIC Pensioners.
It will be a travesty of justice , if the very Pension Fund created by LIC for the benefit of its Pensioners is used by LIC Mgmt. as an instrument for arbitrarily curtailing the pensionary payments. It should only serve as a wake up call to conduct periodical actuarial valuations of the Pension Fund with a view of purchasing additional annuities as and when if becomes necessary to revise upwards the benefits payable to the pensioners. The only Laxman Reka which is not to be breached is the Renewal Expense Ratio, and the Mgmt. expenses which includes salaries paid to in-service employees and pensions paid to retirees all these long years have been well within the prudential norms in each of these years .
The pre 1997 pensioner should not be doomed to draw the same basic pension fixed for him at the time of retirement unchanged for 20 long years ie till 2017. In the successive Wage Settlements in 1997 , 2002,2007,and 2012, the % age weightage increase allowed over the earlier Wage Bill to in-service employees are 11.25 %, 13.30 %, 17.50 % and 15% respectively. Consistent with the MOU between LIC Mgmt. and in-service employees unions in Jan 1994 in the matter of DR and other matters to pensioners, the LIC Mgmt. should ensure that the same principles of fitment formula in revision /upgradation of scales of pay are made applicable to LIC Pensioners as well, as otherwise their actions will be arbitrary and discriminatory and violate the Fundamental Rights of LIC Pensioners under Articles 14 and 16 of the constitution.
New Pension Scheme (NPS) The introduction of NPS in LIC w.e.f 1-5-2010 is doubly beneficial to LIC Mgmt. in that there is no need for them to make any provision for pension for those recruited wef 1-5-2010, and what is more the pension payments to be made under the LIC Pension Rules 1995 has now become a close—ended-scheme.
Why 7 or 8 steps below cadres get pension more than Seniors far above who retired just earlier ?
The LIC Mgmt. is fully aware that the DA DR Anomaly removal and upgradation of pension with successive Wage Settlements are the only solutions but would not implement the same on their own and want the Courts only to decide in the issue. We wish and pray that the Court now decides in our favour as we have sufficiently convinced them in the last few hearings.
The public profile of LIC is very high with GOI, States, Financial Institutions, Industries and the general public and the policy holders because they are all so much dependent on LIC’s stability and financial might . The private life insurance companies had entered our Indian market as early as in 2001 , but more than 70% of Life Insurance business is still with LIC only and there is no threat whatsoever of any effective competition from them and LIC will continue to hog its monopoly status for many more years. The Life Fund of LIC which stood at Rs 12,83,990 .72 Crs in Jan 2013 is going from strength to strength and will be declaring higher bonuses in future as well. In these circumstances , it is a pitiable and inexplicable that LIC in the WS is writing down and devaluing its own profile only to just delay the LIC Pensioners their rightful pensionary benefits !!.
R.V.RAMESH
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