Pay element on 30% on dearness Pay merged of running staff

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To,

the secretary,

All India Loco running Staff,

Sub: Calculating of pension with 30% pay element on 50% Dearness Pay merged on 01/04/04 of running staff retired between 01/04/04 to 31/12/05 as has been allowed to the serving employees while fixing their Pay under the SCPC recommendation vide RBE letter dated 12/09/2008.

While fixing Pay of running staff in SCPC  S NO.PC VI/5 RBE letter No..109/2008. PC-VI/2008/1 dated 12.09.2008 for fixation of PAY of Running Staff has fixed the Pay considering 30 Pay element on DP and thus the fixation has been taken on a assumed pre- revised Basic Pay of 5000/- as follow

a) Basic Pay 5000/-

b) Dearness Pay 3250/- (added 30 % pay element of 5000/-)

c) DA 2340/-

d) Grade pay 4200/-

Thus the assumed pre-revised Basic of 5000/- is fixed as 14790/- i.e. Total of (a to d above) vide RBE letter dated 12/09/2008. The fixing of pay will boost the emoluments for pension and other retrial benefits like pension/gratuity/commutation etc of those retiring on and from 01/01/2006. It has brought anomaly among the pensioners and amount of monthly pension drawn as highest by pre 01/04/04 running staff pensioner having the same assumed basic pay last drawn, and then the pensioners retiring on and from 01/01/2006  will draw highest Gratuity and commutation. The pensioners retired between 01/04/04 to 31/12/05 are only at loss in calculation of pension as well as commutation value they received.

The running staff of Indian Railway who retired under fifth CPC represented to revise pensions of those running staff who retired between 01/04/2004 and 31/12/2005 who were deprived of 30% Pay element on DP of 50 % DA which was merged in Pay from 01/04/2004 which ultimately affected in short calculation and payment of pension.

The pension on a assumed basic Pay of Rs. 5000/- was calculated as follow for retirement between 01/04/04 to 31/12/05.

a) Basic Pay : 5000/-

b) Dearness Pay : 2500/-. (50 % of Basic pay)

A + b = 7500/-

c) Component of Pay Element of 55 % on 7500/- = 4125/-

a + b +c = 11625/-

50% of 11625/- = 5812/-

BY rounding off, 5810/- will be the basic pension as per the above method.

As per the Sixth CPC formula the Revised Basic Pension on 01/01/06 will be 8758/- on above pre revised pension of 5810/-.

Where as the pension for those retired between 01/04/04 to 31/12/05 should have been calculated as follow by adding 30% of pay element as has been allowed while fixing emoluments vide RBE letter dated 12/09/2008.

a) Basic Pay: 5000/-.

b) Dearness Pay: 3250/-. (50 % of DA which actually drawn as Dearness Pay in the salary actually drawn immediately before retirement)

A + b = 8250/-

c) Component of Pay Element of 55 % on 8250/- = 4538/-

a + b +c = 12788/-

50% of 12788/- = 6394/-

6390/- will be the basic pension as against 5810/-

As per the SCPC formula the revised basic pension on 01/01/06 will be 9628/- on above pre revised pension of 6390/-.

6390 – 5810 = 580/- is the amount being paid short every month up to 31/12/05

9628 – 8758 = 870/- is the amount will be paid short every month from 01/01/06.

The ministry of finance here has applied thump rule in fixing the formula of merging of DA in basic pay as DP and interpreted as “DA equal to 50 % of basic pay” and not 50 % of DA. 50 % of DA which was the ultimate idea of Fifth CPC quoted in Para 105.11 of their report and decided by the President, the Ministry of Finance in their letter No. 42/2/2004P&PW dated 01/03/2004 in their para 2 used 50% DA equal to basic pay which has brought anomaly particularly to the running staff of railway which formed two deferent figures as well as meanings. For example on a basic pay of Rs. 5000/- the DA equal to 50% on 01/04/04 goes to 2500/- and the same 50 % of DA was paid to running staff was 3250/-. The ministry of Finance Letter is reproduced below. 

                                                 No.42/2/2004-P&PW (G)

F.No.105/1/2004-IC
Government of India
Ministry of Finance
Department of Expenditure                               New Delhi, the 1st March, 2004

OFFICE MEMORANDUM

Subject: Merger of 50% Dearness Allowance/Dearness Relief with basic pay/pension to Central Government employees/pensioners w.e.f. 1.4.2004.

          The Fifth CPC in para 105.11 of their Report had recommended that `DA should be converted into Dearness Pay each time the CPI increases by 50% over the base index used by the last Pay Commission’.  

2.         This recommendation of Fifth CPC has been considered and the President is pleased to decide that, with effect from 1.4.2004, DA equal to 50% of the existing basic pay shall be merged with the basic pay and shown distinctly as Dearness Pay (DP) which would be counted for purposes like payment of allowances, transfer grant, retirement benefits, contribution to GPF, License Fee, monthly contribution for CGHS, various advances etc. The entitlements for LTC, TA/DA while on tour and transfer and government accommodation shall, however, continue to be governed on the basis of the basic pay alone without taking into account Dearness Pay. In case of existing pensioners, Dearness Relief equal to 50% of the present pension will, w.e.f. 1.4.2004, be merged with pension and shown distinctly as Dearness Pension. Dearness Allowance/Dearness Relief converted into Dearness Pay/Dearness Pension respectively would be deducted from the existing rate of Dearness Allowance/Dearness Relief.

3.         To ensure that pensioners retiring between 1.4.2004 to 31.1.2005 do not face any loss in fixation of pension, as a special dispensation in their case, DA equal to 50% of the basic pay would be treated as basic pay for purposes of computation of pension in respect of basic pay received by them prior to 1.4.2004. Consequently, element of dearness pension will exist only for pensioners retired/retiring from Government of India up to 31.3.2004.

            Insofar as the persons serving in the Indian Audit & Accounts Department are concerned, these orders issue after consultation with the Comptroller & Auditor General of India.

Sd/-
(SUSHAMA NATH)
Joint Secretary to the Government of India

To: All Ministries/Departments of the Government of India as per standard distribution list. Copy (with usual number of spare copies) to C&AG, UPSC, etc. as per standard endorsement list.

Though it was clear from the various rules and VCPC recommendation which are reproduced below for further redressal to higher authorities of Railway Board and if required in CAT for the sake of justification. Few IREM and RB’s references are given below for further guide line.

IRE Manual Vol. I (revised edition 1989) Rule 924.

Reckoning or running allowance as pay ( i) 30% of the basic pay of running staff shall be reckoned as pay for the following purpose.

(c) While determining the emoluments of running staff for the purpose of calculation  of retirement benefits, Dearness Pay as admissible from time to time shall be calculated on bases of pay plus 30% thereof in the case of running staff retired / retiring on or after 01/08/1981.

1303. F. R. 9(21) a( i ) Pay means the amount drawn monthly by a government servant as to which he is entitled by reason of his position in cadre; and (iii) any other emoluments which may be specified specially classified as Pay by the President.

Railway Pension Rules 1993.  Rule 49 & 50: Emoluments and Average Emoluments: Any increase in the pay which is not drawn shall not form part of emoluments (i.e. if drawn shall form part of emoluments.)

Fifth CPC recommendations 133.35 in Para VI:

INCLUSION OF ALLOWANCE IN EMOLUMENTS: Long term benefits like pension should be related only to the basic pay of a employee as has been held by the Forth CPC. There are no circumstances which might warrant a review of this principal. Dearness allowance would, however form part of the emoluments in in the normal course however it is merged, either fully or partially in the pay for the purpose of pensionary benefits” 

In Fifth CPC recommendation in Part III “The emoluments for the purpose of calculating pension shall mean Pay as defined in rule 1303 (i) R II [FR-9(21) a (i) which the railway servant receiving immediately before his retirement or on the date of his death”

IRM code 1417 Dearness Pay: Such portion of the dearness allowance as is decided by the Govt to be treated as dearness pay shall be formed as dearness pay. The Dearness Pay is so designed, shall be reckoned as Pay for such purposes as are specified by the Govt from time to time and are for no other purpose.

Therefore, it is duty of pensioner’s welfare association, and Pensioners’ Welfare Ministry, the Loco Traffic wings of running Staff of Indian Railway men associations to take the matters to the Railway Board as the method applied in these three deferent cases of retirees from 1996 to 01/01/06 results in huge recurring loss of monthly pension.  The 6^th CPC has also suggested that a dispensation was required to be taken by the Government in respect of post 1/4/2004 retirees. Therefore, the Pensioners’ Welfare Ministry may kindly reconsider and view this case sympathetically and ensure upward revision of Revised Consolidated Pension nullifying the deduction of 1/3 portion of the Basic Pension all through being drawn by the post 1-4-2004 retirees and render justice to the category of running staff which is the back bone of Indian Railways as well as other pensioners of the post 01/04/04 retirees.

                                                                                    Retired Assist  Loco Pilot /PUNE

About the Author

 Retired Assistant Loco Pilot Pune

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