No Pension Commutation for Cental Public Sector Employees – DPE Clarification

No Pension Commutation for Cental Public Sector Employees – DPE Clarification to its earlier Office Memorandum dated 21.05.2014 containing clarifications on Pension Scheme and Post Superannuation Medical Benefits to Employees of CPSEs

F. No. W-02/0017/2014-DPE-(WC) – GL- IX/15

Government of India
Ministry of Heavy Industries & Public Enterprises

Department of Public Enterprises

Public Enterprises Bhawan
Block No.l4, CGO Complex,

Lodi Road
New Delhi,

24th June, 2015

OFFICE MEMORANDUM

Subject:- Clarifications regarding Introduction of Pension Scheme and Post Superannuation Medical Benefits in CPSEs.
The undersigned is directed to refer to this Department OM of even number dated 21.05.2014 on the above subject and to state that para (xix) in the said OM may be read as under:

“In case of Pension Scheme, ideally there should be no provision of ‘commutation’ since the provision of pension in 2007 pay revision guidelines was introduced so that employees have social security and get substantial monthly pension after superannuation”.

All other provisions of the said OM remain same.

(Samsul Haque)
Under Secretary

Download Office Memorandum F. No. W-02/0017/2014-DPE-(WC) – GL- IX/15 dated 24.06.2015

Text of Office Memorandum dated 21.05.2014 issued by DPE for clarifications on CPSE Pension Scheme

F. No. W-02/0017/2014-DPE-(WC) – GL- IX/15

Government of India

Ministry of Heavy Industries & Public Enterprises

Department of Public Enterprises

Public Enterprises Bhawan Block No.14, CGO Complex,

Lodi Road New Delhi,

the 21st May, 2014

 

OFFICE MEMORANDUM

 

Subject:-   Clarifications    regarding   Introduction   of   Pension   Scheme   and   Post Superannuation Medical Benefits in CPSEs

The undersigned  is directed to refer to this Department OM No. 2(70)/08-DPE  (WC) dated 26.11.2008 and 2(70)/08-DPE (WC) dated 2.4.2009 regarding pay revision of executives and non-unionized  supervisors  of CPSEs w.e.f.  1.1.2007 which inter-alia provides  guidelines regarding Superannuation benefits including Pension and Post Superannuation Medical Benefit Scheme of the CPSEs.   DPE has been receiving certain queries in this regard. The following clarifications may be kept in mind while finalizing the Pension and Post Superannuation Medical Benefit Scheme of the CPSEs:-

i)         The condition of 30% of Basic Pay + DA for superannuation benefits as prescribed in DPE O.Ms. dated 26.11.2008 and 02.04.2009 and as amended from time to time, are to be followed strictly.

ii)        These schemes (pension and post-superannuation medical benefits) would be subject to the factors like affordability, capacity to pay and sustainability of the CPSE.

iii)       Government budgetary support would not be provided to operate these Schemes.

iv)       It is to be ensured that by implementing the 2007 pay revision, which would include these two schemes, the dip in Profit Before Tax (PBT) for the year 2007-08 should not exceed 20% in respect of executives & non-unionized supervisors of CPSE.

v)        Since the  effective  date  of  2007 pay  revision in CPSE  is 01.01.2007, the  proposed scheme(s) may  be  introduced  w.e.f. 01.01.2007 or a subsequent  date for the regular employees who were on the rolls of CPSE as on that date and for the employees recruited thereafter.   If a regular employee does not want to contribute to the proposed scheme, he/she should have an option.

vi)                  Contribution of CPSE to these schemes is limited to such extent that the contribution to the total superannuation benefits which include PF and Gratuity also is limited to 30% of Basic            pay    plus    DA.       This   may   be   reviewed   every    year    based   on   the profitability/affordability  of the CPSE. Contribution every year by  CPSE should not be guaranteed for these two schemes.

vii)       An employee should have put in a minimum of 15 years service rendered in continuity in CPSE(s) at the time of superannuation, and benefits would be allowed by a CPSE from where the incumbent has superannuated.

viii)     The services rendered in the Government prior to joining CPSE would not count for the purpose of computation of total service in a CPSE required for availing the benefits of this scheme.

ix)       As regards Board level executives, who are contractual appointees, they too can enjoy the  benefits  under  these  schemes provided their  total period  of  service  rendered in continuity in CPSE( s) including the period at Board level in a CPSE is not less than 15 years, at the time of superannuation.

x)        In the event of any employee resigning from the services of CPSE and joining another CPSE having  broadly  similar schemes, the entire amount of employer’s and employee’s contribution  along  with  interest  accrued thereon  can  be  transferred  to  such  CPSE. However, employees who resign from CPSE to join another CPSE, not having similar schemes, or any organization not being a CPSE (irrespective of whether such scheme exists in that organization), shall not be allowed the benefit of transferring their accumulated  fund  under  these schemes. However, the  employee’s  contribution  along with accrued interests shall be refundable to the employee.

xi)       Benefits of the schemes should not be extended to employees posted on deputation to
CPSE from Central/State Government.

xii)      In  case  a  regular  member  of  the  scheme  dieslbecomes  permanently  disabled  & incapacitated, leading to cessation of hislher service, before putting in 15 years of service in a CPSE prior to superannuation, he/she may be given the benefits as admissible under these schemes.

xiii)     Cases of VRSNSS  for which specific scheme have been framed would be examined in terms of such specific schemes of VRSNSS  of the Government applicable in respect of employees  of  CPSEs.  Benefits  under these  schemes would not  accrue to  VRSNSS optees automatically.

xiv)     At the time  of  superannuation,  an employee may opt for Annuities  from any of the designated Annuity Saving Service Providers to provide the pension and/or post retiral medical benefits.

xv)     The  admissibility  of  benefits  under these  schemes to  the  employees  against  whom disciplinary proceedings are pending at the time of superannuation is to be regulated as per the Conduct, Discipline & Appeal Rules of the CPSE.

xvi)     In cases of resignation (excluding resignation covered under ‘technical formality clasue’) and compulsory retirement, removal, dismissal because of disciplinary proceedings, the annuity would be based only on member’s  contributions, if any, and interest thereon.

xvii)     DPE  O.Ms.  dated  08.07.2009   and  20.07.2011   relate  to the  creation   of a Corpus  for the CPSE   employees   who  retired  before  01.01.2007.  There  is, thus,  no link between  pension and  post-superannuation     medical   benefit  schemes   and  the  corpus   mentioned   in  O.Ms. dated  08.07.2009   and 20.07.2011.

xviii)    These  schemes   will  be under  a “defined  contribution   scheme”   and  not  under  a “defined benefit  scheme”.     Subject  to  the  contribution   made  by the  CPSE  within  the  prescribed ceiling,   and  based   on  affordability,    the  benefit   to  the  individual    executive   would  be determined   based  on the accumulated   amount.

xix)      There  should  be no provision   of ‘commutation’,    since provision   of pension  in  2007 pay revision  guidelines   was  introduced   so that  employees   have  a social  security  and  would get a substantial   monthly  pension  after superannuation.

 

 (Samsul Haque)

Under Secretary

Download Office Memorandum F. No. W-02/0017/2014-DPE-(WC) – GL- IX/15 dated 21.05.2014