In a big bonanza to central employees and pensioners, the seventh Pay Commission today recommended a 23.55 per cent increase in salary, allowances and pension along with a virtual one-rank-one-pension for civilians, involving an additional outgo of Rs 1.02 lakh crore a year.

A minimum pay of Rs 18,000 per month and a maximum of Rs 2.5 lakh per month has been recommended by the Commission, headed by Justice A K Mathur, that presented its 900-page report to Finance Minister Arun Jaitley here.

The recommendations, which are to be implemented from January 1, 2016, will benefit 47 lakh central government employees and 52 lakh pensioners.

The impact the recommendations will be Rs 1.02 lakh crore - Rs 73,650 cr on Central Budget and Rs 28,450 cr on Railway Budget.

The award of the pay panel will also benefit staff of autonomous bodies, universities and public sector units, Jaitley said after receiving the report.

“In percentage terms, the overall increase in pay and allowance and pensions over the business-as-usual scenario will be 23.55 per cent,” the report said. Within this, the increase in pay will be 16 per cent, in allowances 63 per cent and in pension would be 24 per cent, it said.

The total salary and pension bill of the central government, which will also include railway employees, will go up from estimated Rs 4.33 lakh crore to Rs 5.35 lakh crore during 2016-17.

The panel has suggested abolition of the pay band and the grade pay, though it retained the annual increment of 3 per cent.

It has also recommended a fitment factor of 2.57 which will be applied uniformally to all employees

Revised pension formulation

Without calling it one-rank-one-pension (OROP), the Pay Commission recommended a revised pension formulation for the central government employees, including para-military personnel as well as for defence staff who have retired before January 1, 2016.

The Chairman and other member Dr Rathin Roy recommended the age of superannuation for all central armed forces personnel to be raised to 60 years from current 58 years, another member Vivek Rae did not agree with it. He endorsed the stand of Home Ministry.

The formulation will bring parity between past pensioners and current retirees for the same length of service in the pay scale at the time of retirement.

Gratuity ceiling enhanced

In a significant recommendation, it enhanced the ceiling of gratuity from the existing Rs 10 lakh to Rs 20 lakh. And the same will be raised by 25 per cent whenever DA be raised by 50 per cent.

Grade Pay

In the new pay structure, the grade pay has been subsumed in the pay matrix and the status of the employee, now determined by grade pay, will now be determined by the level in the matrix.

Health insurance scheme

Introduction of a health insurance scheme for employees and pensioners has been recommended. Meanwhile for the benefit of pensioners outside the CGHS areas, CGHS should empanel those hospitals which are already empanelled under CS(MA)/ECHS for catering to the medical requirement of these pensioners on a cashless basis.

All postal pensioners must be covered under CGHS. All postal dispensaries should be merged with CGHS.

Central government employees group insurance scheme

Under the central government employees group insurance scheme, the rates of contribution as well as insurance coverage have now been enhanced suitably. Monthly deduction has been raised from Rs 120 per month to Rs 5,000 and insurance cover from Rs 1.2 lakh to Rs 50 lakh for senior most level. At the bottom of the matrix, it has been raised from Rs 30 per month to Rs 1,500 and the cover hiked from Rs 30,000 to Rs 15 lakh.

Abolition of non-interest bearing advances

The Commission recommended abolition of all non-interest bearing advances and increased the limit for interest-bearing advances for buying home from Rs 7.5 lakh to Rs 25 lakh.

click here for full text of Seventh Central Pay Panel Report (pdf)

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