7th Pay Commission fitment factor: This is what panel recommended on Quantum of Minimum Pension and know here what Centre accepted
7th Pay Commission fitment factor: Even as minimum pay of central government employees was increased, the Quantum of Minimum Pension was increased 2.57 times to this new amount.
7th Pay Commission: Needless to say, Central government employees and those who were drawing pensions received a great news when the panel's recommendations were accepted. Some demands of government employees, of course, were not cleared and among these was the hike in fitment factor that would have pushed minimum pay up to 26,000 per month. Nevertheless, the hike in pay was substantial enough and the government also had to look at the total expenditure on the salaries. However, staff is still demanding a hike in fitment factor, which is currently fixed at 2.57 times. Notably, the same system now applies to pensions too.
So what were the terms of reference for 7th Pay Commission panel? “To examine the principles which should govern the structure of pension and other retirement benefits, including revision of pension in the case of employees who have retired prior to the date of effect of these recommendations, keeping in view that retirement benefits of all Central Government employees appointed on and after 01.01.2004 are covered by the New Pension Scheme (NPS).”
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What did the Centre accept? When 7th Pay Commission report was passed by Centre it also led to increase in the Quantum of Minimum Pension. So, even as minimum pay of central government employees from Rs 7,000 to Rs 18,000 - after applying the 2.57 times fitment factor, an employee who retires from his or her services will get a minimum pension of Rs 9,000 instead of existing Rs 3,500.
Para 10.1.27 of the 7th Pay Commission Report reads, "The recommendations of the Commission in relation to pay of personnel will lead to a significant increase in the minimum from the existing Rs 7,000 per month to Rs 18,000 per month. This, based on the computation of pension, will raise minimum pension from the existing Rs 3500 to Rs 9,000. The minimum pension based on the recommendations of the Commission will increase by 2.57 times over the existing level."
However, various central government employees and other unions have raised eyebrows over the 7th Pay Commission's recommendations in regard to the minimum pay band. In fact, it has become a hot topic even in Railways, where 7th Pay commission is applicable. The NRMU (Northern Railway Men's Union) has put forth its demand to increase the minimum pay from Rs 18,000 as recommended by the 7th Pay Commission to Rs 26,000. In fact, it has become a major issue in the Indian Railways various unions poll scheduled on August 27th and August 28th this year.