Pension and Related Benefits of Civilian Employees – 7th Pay Commission Report
Terms of Reference of the Commission
10.1.1 The term of reference of the Seventh CPC with regard to pension is as under: “To examine the principles which should govern the structure of pension and other retirement benefits, including revision of pension in the case of employees who have retired prior to the date of effect of these recommendations, keeping in view that retirement benefits of all Central Government employees appointed on and after 01.01.2004 are covered by the National Pension System (NPS).”
Pensions- Constitutional Provisions and Judicial Position
10.1.2 Article 366(17) of the Constitution defines pension as: “Pension means a pension, whether contributory or not, of any kind whatsoever payable to or in respect of any person, and includes retired pay so payable, a gratuity so payable and any sum or sums so payable by way of the return, with or without interest thereon or any other addition thereto, of subscriptions to a Provident Fund.”
10.1.3 Pension has been the subject matter of a number of landmark judgements by the Supreme Court of India in which its nature, obligations of the government thereon and the recognition of distinctiveness in categories of pensions and pensioners has been settled.
10.1.4 In its judgment in D.S. Nakara and others Vs Union of India [AIR 1983 SC 130] the Supreme Court held that a pension scheme consistent with available resources must provide that a pensioner would be able to live free from want, with decency, independence and self respect and standard equivalent at pre-retirement level. It held that pension is not an ex-gratia payment but payment for past services rendered. At the same time in Indian Ex-Services League & Others Vs Union of India & Others [(1991) 2 SSC 104] the Supreme Court held that the decision in the Nakara case has to be read as one of a limited application and its ambit cannot be enlarged to cover all claims made by the pension retirees or a demand for an identical amount of pension to every retiree from the same rank irrespective of the date of retirement, even though the reckonable emoluments for computation of their pension be different. In the judgement in Vasant Gangaramsachandan Vs State of Maharashtra & Others [(1996) 10 SSC 148] Supreme Court reiterated that pension is not a bounty of the State. It is earned by the employee for service rendered to fall back upon after retirement. It is attached to the office and it cannot be arbitrarily denied.
10.1.5 In the case of petitioners who were retired Railway employees, covered by or who opted for the Railway Contribution Fund Pension Scheme, the Supreme Court in Krishna Kumar Vs Union of India and Others [(1990) 4 SSC 207] averred that it was never held that both the pension retirees and PF retirees formed a homogenous class and that any further classification among them (viz., pension retirees and PF retirees) would be violative of Article 14. Under the Pension Scheme, the government’s obligation does not begin until the employee retires but it begins on his/her retirement and then continues till the death of the employee. Thus, on the retirement of an employee, government’s legal obligation under the PF account ends while under the Pension Scheme it begins. The rules governing the PF and its contribution are entirely different from the rules governing pension. An imaginary definition of obligation to include all the government retirees in a class was not decided and could not form the basis for any classification for this case.
Strength of Pensioners as on 01.01.2014
10.1.6 Pensioners can be broadly categorised into Civil and Defence. Within civil pensioners there exist three broad categories: Central Civil, Railways and Post.
10.1.7 As on 01.01.2014, as per data reported to the Commission, the total number of pensioners were 51.96 lakh. The category wise break up is shown in the pie chart below.
Pensioners and Family Pensioners
10.1.8 The break-up of the total 51.96 lakh pensioners as on 01.01.2014 between pensioners and family pensioners, category wise, is as under: