pension

Removal Of Pro Rata Reduction In Pensions

A long and difficult legal struggle seems to have finally ended with issue of orders by Government of India for removing pro-rata reduction affecting pre 01 January 2006 retirees. (I have provided a link after the last line of this blog-post).

I personally do not believe there will be any hitch in issue of similar orders for veterans of the armed forces. But to have a clarity on what the ramifications of this new development could be, some thoughts are summarized as follows:

  • Firstly, considering the queries seen poring in other blogs, there is a need to understand that pro-rata reduction will have no direct effect on OROP pensions effective from July 2014 as published in Circular 555. To be sure, the pensions mentioned in circular 555 may have to be revised for a number of other reasons, but this development on doing away with pro-rata reduction will not be one of them.
  • Removal of pro-rata reduction will affect pensions from 01 January 2006 to 30 June 2014 as laid down in Circular 500 and only for those pre 01 January 2006 retirees whose pensions were affected by pro-rata reduction.
  • Pro-rata reduction affected veterans who retired prior to 01 January 2006 and did not have the full qualifying service of 33 years even with weightages added. The removal of pro rata reduction will affect pensions of veterans in that category.
  • Removal of pro-rata reduction will not affect even those pre 01 January 2006 retirees who already were drawing full pension on the basis of weightages added to their actual QS.

This most welcome development appears to have been hastened as it also affected the huge number of civilian retirees and a great legal challenge was mounted. The basic issue is so simple. If a person retired on 31 Jan 2006, no pro-rata reduction was applied to his pension. But the pension of a person who retired on 31 December 2005 had his pension fixed with pro-rata reduction.

In case those who served the extra number of years that had not been affected by pro-rata reduction are wondering now why they also did not take PMR, there may be some hope for them as a case has been filed {Please Refer Next Blog Post} that seeks to obtain fixation of pensions of pre 2006 retirees from 01 January 2006 (till June 2014) on basis of increments they had earned before retiring and not on basis of minimum pay for rank in pay-band as will now apply to everyone regardless of years of service.

Though for the benefit of pro-rata reduction to be applied to pensions of armed forces veterans a circular will have to be issued by PCDA, here is the link to the Govt order on the subject.

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