The Press Note On 7 CPC Pension Re-Fixation

With the release of a press note by the Ministry of Finance on Modifications in the 7th CPC recommendations on pay and pensionary benefits approved by the Cabinet on 3rd May, 2017“, linked there to the actual document on MOF web-site, all previous ideas on revision of pension re-fixation under 7 CPC now need a review. There is also a need to wait for issue of precise instructions on the new way accepted by the Government for re-calculating 7 CPC pensions.

In the mean time, the relevant sections of the Press Note give a general picture. Part of para 1 of the Press Note reads as follows:

  • While approving the implementation of the 7th CPC recommendations on 29th June, 2016, the Cabinet had approved the changed method of pension revision recommended by the 7th CPC for pre-2016 pensioners, comprising of two alternative formulations, subject to the feasibility of the first formulation which was to be examined by the Committee.
  • In terms of the Cabinet decision, pensions of pre-2016 pensioners were revised as per the second formulation multiplying existing pension by a fitment factor of 2.57, though the pensioners were to be given the option of choosing the more beneficial of the two formulations as per the 7th CPC recommendations.
  • In order to provide the more beneficial option to the pensioners, Cabinet has accepted the recommendations of the Committee, which has suggested revision of pension based on information contained in the Pension Payment Order (PPO) issued to every pensioner. The revised procedure of fixation of notional pay is more scientific, rational and implementable in all the cases. The Committee reached its findings based on an analysis of hundreds of live pension cases. The modified formulation will be beneficial to more pensioners than the first formulation recommended by the 7th CPC, which was not found to be feasible to implement on account of non-availability of records in a large number of cases and was also found to be prone to several anomalies.

This gives rise to some distinct inferences that can be summarized as follows :

  • The Method 1/ Option 2 of fixing pensions as recommended by 7 CPC has now been replaced by a “modified formulation” as mentioned in the Press Note. This effectively calls for a review of all past speculative analysis of pension re-fixation and parities as in this blog-post.
  • The pension is to be revised “based on information contained in the Pension Payment Order (PPO)”. The Press Note further adds, “The revised procedure of fixation of notional pay is more scientific, rational and implementable in all the cases”.  There is an impression here of PPO information being used to arrive at a “notional pay” that would form the basis for re-fixing the 7 CPC pension.
  • What can this PPO information be? It could be the qualifying service, last pay drawn, the pay-scale and rank in which a veteran had retired. As to how “notional pay” would be worked out was probably spelt out in recommendations of the Committee that were submitted to the Union Cabinet but the Press Note does not elaborate on that. All affected veterans would have to wait for detailed instructions when a Government letter is issued for implementing the Cabinet decision.

The Press Note also specifies modifications to the 7 CPC pay matrix at para 2 (of the Press Note). If the “notional pay” of past retirees is to be based on PPO information in conjunction with the revised matrix, then it is all the more important that before forming any conclusions, all aspects of 7 CPC pension re-fixation be studied when the implementation letters are issued.

But some ideas need to be kept in mind how notional progress for older veterans needs to be governed keeping in view the qualifying service, the time-bound rank and pay-stage to which currently serving personnel progress automatically. Though the actual figures in tables may now change due to modification of the matrix, the principle of progression for arriving at a “notional pay”, and hence pension, of older pensioners would still hold as submitted in this blog post.




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