7th Pay Commission suggests OROP-type pension for civilian govt employees

New Delhi: The 7th Pay Commission on Thursday recommended a pension structure on the lines of one-rank, one-pension ( OROP) for civilian government employees, but steered clear of referring to it by that name as it continues to remain a hot button issue with retired military personnel.

The long-pending OROP scheme for ex-servicemen was notified by the government on 7 November, but protests continue as the intended beneficiaries rejected it on the ground that their key demands remain unfulfilled.

The commission, headed by retired justice A.K. Mathur, has revised the pension structure of central government employees who will retire before 1 January 2016—the date on which its recommendations, if accepted by the government, take effect. The same recommendations have also been made for paramilitary and defence personnel.

The commission has suggested abolishing pay bands and grade pay, retaining annual increments at 3%, and recommended a fitment factor or a multiple of 2.57, applicable uniformly to all employees.

As per the new formulation, there will be parity between pensioners—past and present—with the same length of service and pay scale at the time of retirement.

Within civil pensioners, there are three categories—central civil, railways and post. There were a total of 2.781 million pensioners, including family pensioners, in this category as on 1 January 2014 who are expected to benefit.

Finance minister Arun Jaitely said the award of the pay panel will also benefit staff of autonomous bodies, universities and public sector undertakings.

Under the new pay structure, grade pay has been subsumed in the pay matrix and the status of an employee, till now determined by grade pay, will hinge on his level in the matrix. His pay as per the matrix will be raised to arrive at the notional pay by incorporating the number of increments he received at that level while in service. Then, 50% of the amount arrived at will be his pension. Besides, 2.57 times his current pension under the old dispensation will also be looked at. The higher of the two amounts will be paid as the new pension.

The finance minister said that while the last pay commission’s recommendations took five-and-a-half months to implement, the government will try to roll out the 7th Pay Commission’s recommendations in a shorter period. He, however, did not mention a time frame.

The minister also said that the government will take a close look at the reasons for dissent among members of the commission and take a balanced decision.

Among its recommendations, the panel also suggested introducing a health insurance scheme for employees and pensioners. It recommended raising the monthly deduction towards the Central Government Health Scheme from ₹ 120 a month to ₹ 5,000 and increasing the insurance cover from ₹ 1.2 lakh to ₹ 50 lakh at the senior-most level. For lower-level employees, it called for deductions to be raised from ₹ 30 per month to ₹ 1,500 and the cover from ₹ 30,000 to ₹ 15 lakh.

PTI contributed to this story.