New Guidelines On Calculation Of Pension

SC ruling provides for higher pension to pvt employees-26.03.2017

A supreme court judgment had raised hopes of millions private sector employees who otherwise may have ended up getting very meagre pension.

The court in R C Gupta and others vs Regional Provident Fund Commissioner, ruled that in case contribution towards employees pension scheme (EPS) is made on a salary over and above the upper limit of Rs6,500 then even pension can be received on higher amount. The field offices of employees provident fund organization (EPFO), which also handles pension, have been issued directions to follow the verdict.

The pension payable under EPS has been capped to a salary of Rs15,000 since 2014. Prior to 2014, it was Rs6,500. So under the old salary limit, the pension comes to around Rs3500 and a little over Rs7000 under the new ceiling.

The supreme court order gives scope for an employee to get pension according to a higher salary. In case the employer begins contributing on higher salary from the day the employee's pay surpasses upper limit of Rs6,500, even pension has to be paid as per actual pay.

As 12% of employee's salary is deducted as provident fund, an equal contribution is made by the employer too. Nearly 80% of the employer's share goes towards pension fund. Generally the employers limit there contribution to the upper limit, which was earlier Rs6,500 and is now Rs15,000. There have been many cases where the employers' contributions have been made on actual salary which is beyond the limit.

Retired employees win pension war in SC, but hit government wall-05.01.2017--Times of India

Three decades after their battle began, and despite a victory in the Supreme Court in September, several thousand retired central government employees are yet to get their pension restored.

Unwilling to let the octogenarians celebrate, the Centre filed a review petition in the top court last month and decided to implement the restoration subject to its outcome. The Union ministry of personnel, public grievances and pensions issued an office memorandum on December 21to give former central government employees who had litigated for years, including K Ganesan, a spearheading litigant who died during the process, this bittersweet news.

The issue centres around a pension rule that permitted central government employees to shift en masse from the 1960s to the 1980s to public sector undertakings (PSUs) that needed experienced workers at the time. To aid and promote the move, the Centre allowed the employees to avail of 100% lump sum pension in advance for 15 years. 

The rules had till then permitted a partial onethird commutation. Acomplicated formula is at work for pension calculations.Essentially, such employees who had claimed a lump sum upfront in a particular year, went on to fight for restoration of pension (effectively arrears) as per service years, after accounting for the lump sum payment made earlier. The issue was a fight against effective downgrade of pension slabs.

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Fresh orders for calculating pension of pre-2016 retirees-

Vijay Mohan

Tribune News Service

Chandigarh, May 13

The Centre today issued fresh orders to calculate pension of employees who had retired prior to 2016. The orders could enhance their post-retirement financial benefits. 

The new orders are consequent to the Cabinet decision to accept an improvement over and above the system of pension calculation which was finally effectuated after the Seventh Central Pay Commission (CPC).

The CPC had recommended two formulae for calculation of pension of pre-2016 retirees. While the first formula involved calculation of pension based on a notional basis, the second involved the multiplication of old pension by a factor of 2.57. The orders for the second formula were issued earlier and the first formula was recently accepted with certain modifications by the Cabinet.

“The feasibility of the first option recommended by the seventh CPC has been examined by a committee headed by the Secretary, Department of Pension and Pensioners’ Welfare. Accordingly, it has been decided that the revised pension and family pension with effect from January 1, 2016, in respect of all Central civil pensioners and family pensioners, including Central Armed Police Forces, who retired/died prior to January 1, 2016, may be revised by notionally fixing their pay in the pay matrix recommended by the seventh CPC in the level corresponding to the pay in the pay scale/pay band and grade pay at which they retired/died,” orders issued by the department said.

These orders, however, do not cover retired High Court and Supreme Court judges, constitutional and statutory authorities as well as Armed Forces pensioners, for whom separate orders will be issued by the appropriate authority.

The notional pay fixation will be done under each intervening pay commission based on the formula for revision of pay. It has also been decided that higher of the two formulations, that is, the pension already revised and being disbursed or the revised pension as worked out in accordance with the new orders, shall be granted, the orders said.

The arrears on account of revision of pension would be admissible with effect from January 1, 2016, only and no claims for the period before this would be accepted.

Confusion at Employees provident fund organization over enhancing pension-21.04.2017

Read news Published In Times of India on 21.04.2017