7th Pay Commission: Cabinet approves review panel's recommendations on pay, pension

The Union Cabinet on Wednesday cleared modifications in the Seventh Central Pay Commission recommendations on pay and pensionary benefits.

"Cabinet approves modifications in the 7th Central Pay Commission recommendations on pay and pensionary benefits," Finance Minister Arun Jaitley told the media.

The approval will result in additional benefits to over 55 lakh pre-2016 civil and defence pensioners and family pensioners.

In June 2016, the Cabinet cleared implementation of the recommendations with an additional financial cost of Rs 84,933 crore for 2016-17 (including arrears for two months of 2015-16).

The benefits of the proposed modifications will come into effect from January 1, 2016, the date of implementation of 7th Central Pay Commission. Post Cabinet nod, the annual pension bill of the Central Government is likely to be increased to Rs 1,76,071 crore.

Modifications in the recommendations of the 7th CPC relate to the method of revision of pension of pre-2016 pensioners and family pensioners based on suggestions made by the committee chaired by secretary (pensions). 

The Cabinet decision will entail an additional benefit to the pensioners and an additional expenditure of approximately Rs 5,031 crore for 2016-17 over and above the expenditure already incurred in revision of pension as per the second formulation based on fitment factor. 

Recommendations of the committee have also been cleared, which has suggested revision of pension based on information contained in the Pension Payment Order (PPO) issued to every pensioner. 

The revised procedure of fixation of notional pay is more scientific, rational and implementable in all the cases. The Committee reached its findings based on an analysis of hundreds of live pension cases.

The modified formulation will be beneficial to more pensioners than the first formulation recommended by the 7th CPC, which was not found to be feasible to implement on account of non-availability of records in a large number of cases and was also found to be prone to several anomalies.

The approval comes after the Ashok Lavasa Committee on Allowances submitted its report to Finance Minister Arun Jaitley on April 27. The Committee was formed to review the recommendations of the Seventh Pay Commission.

The pay commission had recommended abolition of or subsuming of allowances like acting, assisting cashier, cycle, condiment, flying squad, haircutting, rajbhasha, rajdhani, robe, shoe, shorthand, soap, spectacle, uniform, vigilance and washing.

The Committee was constituted in June last year after the government implemented the recommendations of the Pay Commission.

However, if the  government implements pay commission recommendations on allowances, then as per estimates the cost to the exchequer will be Rs 29,300 crore.