Recently the notification for the restoration of pension has been issued by the Finance Division on 11^th March 2013. I have received many questions regarding this notification as many of the employees failed the understand the real concept of this notification and I too has not much knowledge about the same. To satisfy the visitors I assigned this work to Mr. Aamir Agha and with his great efforts and hard work he submitted me the whole story and concept of the same notification with its background.

1.         Different queries have been made by some persons regarding the burning issue of “Doubling the pension on reaching 75 years of age”.  Reporting in press has not been to the point and has caused misgivings and misapprehensions to various people.

2.         Aims and objects of this paper are to clarify the factual and legal position.

3.         Gratuity-cum-Pension Scheme 1954 : Under this scheme, pensioners were allowed to surrender 1/4th (25%) of their pension against certain lump amount of gratuity (Rs.160 ?) for each rupee surrendered.  In addition, they were entitled to get another 25% of gross pension commuted.  The commutation value differed according to age of pensioner and medical certificate etc.

4.         The 25% pension surrendered against gratuity, as well as additional 25% commuted, were NOT restorable upto 1.7.1985, and the pensioner (or the family of pensioner) was entitled to receive only 50% of the pension throughout life (or for prescribed number years in case of pensioner’s death before expiry of years after pension).

5.         Initially restoration of the amount of commuted pension was introduced through Finance Division OM No.F.10(8)-Reg.(6)/85 dated 25 June 1985 which specified that the amount of commutation is to be restored to those pensioners who outlive the period of commutation.

6.         Finance Division OM No.F.10(5).Reg.(6)86 dated 1 July 1986 allowed the 25% pension amount surrendered against gratuity also to be restored, by dividing the amount of gratuity over 12 to reach the number of years.  For instance, Rs.160 gratuity received means 160/12 = 13.33 years, rounded off to nearest 13 years.

7.         The gratuity scheme was abolished w.e.f. 1.7.86, and 50% commutation was allowed.  Simultaneously the table of commutation value [indicated by the number of years for which pension was commuted] or in simple words Commutation Table, was revised upwards.  The revised table A is copied on following page.

8.         As per this table, pensioners retiring at the age of 60 were entitled to 15.4649 years’ value , which multiplied by 12 months, works out to Rs.185.5788 for each rupee commuted.  Since the number of years was to be rounded up to 15 years, the pensioners retiring at 60 years of age were entitled to restoration of the commuted part on outliving 15 years, that is on reaching the age of 75.

9.         However, persons retiring at less than 60 years of age, were given commutation value for greater number of years, as apparent from the extract taken from the Commutation Table A below

Commutation Table A

10.       On 28 June 1995, government issued orders under No.F.5(2)Reg.6/95 that the benefit of restoration of surrendered / commuted part of pension was withdrawn with immediate effect.  However, within 3 months, these orders were withdrawn ab initio and the policy of restoration was declared to remain operative.

11.       All index and pension increases before 1.12.2001 were given on the gross amount (without deducting surrendered or commuted part of pension) of pension. Changes through Finance Division O.M.No.F.1(5)/Imp/2001 dated 4.9.2001 curtailed numerous benefits admissible to pensioners, for example :-

(a) All further increases in pension were restricted to net pension being drawn (were discontinued on commuted part of pension).

(b) Restoration of commuted pension was again discontinued

(c) Commutation Table was revised downwards with lower number of years

(d) Commutation option was reduced from 50% to 40% of gross pension. [It was further reduced to 35% from 1.7.2005].

(e) Benefit of extra pension for service of more than 30 years was discontinued.

12.       Restoration of commuted pension was however again allowed under Finance Division O.M. No. F.5 (2)-Reg. 6/2002, dated 2-7-2002, but to those pensioners only who had retired before 1.12.2001.

13.       Effect of downward revision of Commutation Table can be determined by comparing the two tables.  For example, the number of years, and amount for each rupee are compared below for pensioners retiring at ages of 60, 55 and 50 :-

14.       Certain pensioners who did not receive benefit of increase in commuted part of pension, appealed to the Federal Service Tribunal for relief that upon restoration of commuted part, all increases denied till restoration should also be allowed.  If that was not done, then there would be two amounts of the pension, i.e. the non-commuted part would increase to a higher amount, and the restored commuted part would remain at a lower figure.  Federal Service Tribunal upheld the appeal and ordered that increase on commuted part (not given from 1.12.2001 onwards) should also be allowed upon restoration of that commuted part.  No arrears were however allowed, and all the increases were given from the date of restoration.

15.       Other pensioners had also to go to Tribunals / High Courts for similar benefit, as government took the earlier cases as personal to the appellants, and not being applicable to other pensioners. Ultimately Supreme Court also upheld the Tribunal / High Court orders.  Government had lastly to issue O.M. No F.13(13)-Reg.6/2011 dated 11 March 2013 saying that benefit of all increases on commuted part from the restoration date is to be given to all equally placed pensioners.

16.       From the details given above, the following would now be clearer to all affected persons:-

(a)  There is no such formula or rule under which pension of 75 years old pensioners should automatically be doubled.  It is however possible in some rare cases that persons retiring at 60 years of age, and getting 15 years’ commutation value, may get the commuted part restored on reaching 75 years of age.  But that would not doubling the original gross pension.  The original gross pension may be restored along with increases upto date of restoration.

(b) The restoration [of commuted part of pension] benefit is admissible to only those pensioners who retired before 1.12.2001.  Pensioners retiring from that date onward will not get any restoration, nor increases thereon, even if they live beyond 75.

(c) All increases on commuted part not allowed before restoration of commuted part, would be admissible upon actual restoration (from the date of restoration, and with no arrears for period prior to restoration).

17.       Before concluding let me express my personal opinion that public servants who were already in service on 1.12.2001 can challenge the government order of disallowing restoration of commuted part.  They can take up the legal case that revision of rules with adverse effect can be applied to only those persons who join service from 1.12.2001 onwards.  For persons already in service on 1.12.2001 the benefit cannot be withdrawn.  Perhaps some good service lawyer can help the affected person win the case on this, and any other valid, legal ground.

18.       The above explanations and clarifications are based on my personal opinion, and may not necessarily be legally 100% correct or factual.  Any improvement therein would be most welcome.

Agha Amir

[email protected]

Numerous policy changes with adverse effect on pensioners were given effect from 1.12.2001.  These included: