100% DR neutralisation for pre-August 1997 retirees

There is a demand for 100% DR neutralisation  for pre-August 1997 retirees as seen from the post of Mr Uttam Bandyopadhyay published in the blog .No doubt the demand is quite valid and justified.But at this juncture when after 1/8/1997   five wage revisions have taken place and the issue of upgradation of pension with every wage revision has become more important due to the huge disparities in pension not only between similarly placed retirees in the same cadre, but also between retirees in the higher cadres retired in earlier periods and retirees in the lower cadres several steps below in the later periods of retirement. 

For example, an Executive Director retired before 1/4/1993 draws much less gross pension  as on date than a Driver retired after 1/8/2022.Interestingly even family pensioners of deceased retirees of the retirement period after  1/8/2012 onwards are getting more gross pension than retirees in higher cadres retired in periods upto 31/7/2007 .

When we talk about 100%  DR neutralisation,  we have necessarily to relate it to Board Resolution  dated 24/11/2001 which clearly recommended merger of DR with Basic pension as at 1/8/1997  and revision of  the Basic Pension w e f 1/8/1997  and applying  the rate of DR at 0.23% on such revised Basic Pension.LIC had even sent illustrative chart of calculations  to that effect to the MInistry of Finance as early as August 2003.However , the Central Government had not approved LIC's proposal resulting in litigation. 

So what the Board Resolution in effect means is that Basic Pension is to be revised for pre- August 1997 retirees and the DR rate of 0.23%  on such revised Basic Pension.As on the date of the  Board Resolution, no wage revision beyond that as at 1st August 1997 had been notified.

Thus the corollary of the decision as per the Board Resolution is that for pre-August 1997 retirees,  as on date not only the basic pension should  be revised on 1/8/1997 , but also on 1/8/2002 and so on  upto 1/8/2022 successively.

The further corollary of the Board Resolution is that post August 1997 retirees should  also get revision in pension similarly from 1/8/2002 onwards upto 1/8/2022

.The pre-August 1997 retirees could get some partial relief-albeit in an arbitrary manner-by a modification of the DR formula by the Delhi High Court judgment dated 27/4/2017.But the judgment by the Supreme Court on  the  pending Civil Appeals may  necessarily result in  the revised DR formula getting overruled once/if upgradation of pension  is granted by the Supreme Court.

So now, considering the issue from a holistic perspective, 100% DR neutralisation  for pre-August 1997 retirees cannot be isolated from simultaneous revision of pension.The right demand will be that for pre-August 1997 retirees, the DR should be  first neutralised 100%  and then merged with the Basic Pension as at 1/8/1997 and similar upgradation should be done from 1/8/2002 onwards.For post August 1997 retirees, pension should be revised by following similar methodology from the next wage revision date after retirement upto 1/8/2002.

But , considering Rule 56 of LIC Pension Rules 1995,the pension revision may need to be done following the methodology followed for Central Government employees  either by modified parity or OROP depending on the verdict in the Supreme Court.

So let us not  linger  separately on  100% DR neutralisation,  but rather focus in a composite manner so that once upgradation of pension is ordered, 100% DR neutralisation will  automatically  be taken care of  and all eligible employees retired upto 31/7/2022 obtain revision in pension.

There will be also a  collateral benefit of pension upgradation  accruing to pension optees in service on future wage revisions if we succeed in the Supreme Court.

C H Mahadevan