Government likely to introduce new pension plan worth Rs 5000 crore; millions of central employees to be benefitted

The Union cabinet is likely to approve a new Rs 5,000-crore pension formula next week. It is expected to benefit more than five million central government employees.

A total of 5 million central government employees will benefit from the new pension plan

New Delhi, Apr 22: The Union cabinet is likely to approve a new Rs 5,000-crore pension formula next week. It is expected to benefit more than five million central government employees. Under the new pension formula, if a person retires as a director under the 6th pay commission, ten years later his pension would be fixed (based on) the salary of a director in the 7th pay commission.

According to a report in Hindustan Times, a senior government official said that the new pension scheme will be put up to cabinet for approval next week. The new method was fixed by an empowered committee of secretaries (Ecos) headed by secretary (pensions). The government has approved the recommendations of the 7th Pay Commission in July last year.

Meanwhile, a report in NDTV claimed that the Ashok Lavasa committee examining 7th pay recommendations on allowances will soon complete the process of preparing its report. The committee is likely to be submit to the government soon, a top employee union official was quoted as saying. The government had earlier said that the decision on allowances will be taken after the committee on 7th pay commission recommendations submits its report. Earlier, another union official had attributed the delay in submission of the report to non-availability of allowance panel members.

What does 7th Pay Commission suggests?.

As per the recommendation of the seventh pay commission, pension could be calculated by two methods:.

- One, pension would be 50 per cent of the last salary and multiplied by 2.57.

- Second, through an incremental method where pension was fixed at the last salary drawn with adjustments of increments drawn in that particular pay band.

However, it was found that the incremental method may have lacunae as 20 per cent of records were found to be missing in various government departments. The report says that this made the officials believed that such a thing could lead to litigation in future. Hence, the fixation method was discovered which would help in the avoidance of the hurdles..