Cabinet okays 7th Pay Commission proposals; key facts

New Delhi: Heeding to a major demand of armed forces personnel, the government on Wednesday decided to continue with an earlier system of disbursing disability pension and not to go ahead with a new regime recommended by the 7th Pay Commission.

The armed forces have been pressing for reverting to the percentage-based regime for disability pension and were strongly opposed to the slab-based system conceived by the 7th central pay commission (CPC).

The decisions was taken at a meeting of the Union cabinet presided over by Prime Minister Narendra Modi. The government has also agreed in-principle to address three major grievances of the armed forces relating to their salary structure including providing pay protection to those getting promotion from the rank of brigadiers.

The current system has certain anomalies and some of those promoted to higher ranks lose on the military service pay. After a meeting of the Union cabinet, defence minister Arun Jaitley also assured that the government was addressing the demand of extending pay matrix from 24 years to 40 years and carrying out rationalisation of pay Lt Colonels and Colonels.

The government also approved modification in recommendations of the 7th Pay commission relating to the method of revision of pension of pre-2016 pensioners and family pensioners based on recommendations of a high-level panel.

The decision will benefit over 55 lakh pre-2016 civil and defence pensioners and family pensioners.

The modified formulation will entail an additional benefit to the pensioners and an additional expenditure of approximately Rs5,031 crore for 2016-17. The benefit of the proposed modifications will be available with effect from January 1, 2016, the date of implementation of 7th Pay Commission recommendations.

With the increase approved by the Cabinet, the annual pension bill alone of the central government is likely to be Rs1,76,071 crore, the government said.

"The Cabinet also approved the retention of percentage- based regime of disability pension implemented post sixth CPC which the seventh CPC had recommended to be replaced by a slab-based system," the government said in a statement.

It said decision will benefit existing and future pensioners of the armed forces and would entail an additional expenditure of approximately Rs130 crore per annum. The government was under attack from the opposition parties as well as the military establishment over slab-based system following which the matter was referred to the National Anomaly Committee by the Ministry of Defence.

The armed forces felt the new system would result in reduction in the amount of disability pension for existing as well as future retirees compared to percentage-based disability pension.

The military personnel were upset as civilian pensioners were to be paid pension according to the earlier percentage system.

Referring to revision of pension of pre 2016 pensioners, the government said the modifications were brought in to provide the more beneficial option to the pensioners.

The 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, it said.

The revised procedure of fixation of notional pay is more scientific, rational and implementable in all the cases, it said.