7th Pay Commission Pension Fixation Examples
When it comes to calculating pension and retirement benefits for 7th CPC pensioners who retired after January 1, 2016, there are no issues. It is also simple to calculate basic pension and family pension for pensioners who retired in the 6th CPC regime. However, the process of calculating the revision of pension for 4th and 5th CPC pensioners is somewhat complex. This is because their basic pension has already been calculated and revised based on previous pay commission recommendations. To address this, a notional pay calculation is required.
What is Notional Pay in Pension?
Notional pay is nothing but, it is ‘Proposed Pay’. If we could not find the exact Pay of any pensioner, find the notional pay and calculate the current pension. The notional Pay Fixation method was adopted only for 4th and 5th CPC pensioners.
7th Pay Commission Pension Calculation
The calculation of pensions under the 7th Pay Commission has been implemented by the government, as per the recommendations of the commission. The Department of Pension & Pensioners’ Welfare has released orders under the O.M. No. 38/37/16-P&PW(A) (i) dated 04.08.2016 to revise the regulations governing gratuity, commutation of pension, family pension, disability pension, ex-gratia lump-sum compensation, and other related benefits for employees who have retired on or after 01.01.2016.
How to Calculate Pension as per 7th Pay Commission
To calculate the pension of pre-2016 civil pensioners, the 7th Pay Commission proposed two formulations. The first formulation suggests fixing the notional pay of employees who retired prior to 01.01.2016 in the Pay Matrix by adding the number of increments they earned at that level while in service to the minimum of the corresponding level in the matrix based on their Pay Band and Grade Pay at retirement. Fifty percent of the total amount obtained will be the revised pension. Alternatively, under the second formulation, the pension as fixed at the implementation of the 6th CPC recommendations may be multiplied by 2.57 to obtain a revised pension value. The 7th CPC recommended that pensioners be allowed to choose the more advantageous formulation. The Department of Pension & Pensioners’ Welfare O.M. No. 38/37/16-P&PW(A) (ii) dated 04.08.2016 issued orders for revising pensions according to Formulation (ii). Pension disbursing authorities were advised to make payments of revised pensions without waiting for the revised pension payment authority.
Pension Calculation Revision Committee
The Pension Calculation Revision Committee was established under the leadership of the Secretary, Department of Pension & Pensioners’ Welfare. The primary purpose of the committee was to evaluate the possibility of implementing Formulation (i) recommended by the 7th CPC. The committee discovered that this formulation could cause anomalies and prove difficult to implement in a significant number of cases. In response, the Department of Pension & Pensioners’ Welfare issued orders on May 12th, 2017 through O.M. No. 38/37/16-P&PW(A) outlining the implementation of the recommendations made by the committee.
The revised pension/family pension for all Central civil pensioners/family pensioners has been set as of January 1st, 2016, by notionally fixing their pay in the pay matrix recommended by the 7th CPC in the level corresponding to the pay in the pay scale/pay band and grade pay at which they retired/died by notional pay fixation under each intervening Pay Commission based on the Formula for revision of pay. According to the orders, 50% of the notional pay as of January 1st, 2016, will be the revised pension, and 30% of this notional pay will be the revised family pension as of the same date.
The revised pension/family pension as worked out by notional pay fixation method or the pension/family pension already revised in accordance with this Department’s OM dated August 4th, 2016, whichever is higher, will be the revised pension/family pension as of January 1st, 2016. It is worth noting that approximately 55.51 lakh pensioners/family pensioners (including defence pensioners/family pensioners) were recorded as of March 31st, 2016. All Pension Sanctioning Authorities have been instructed to prioritize the revision of pensions and promptly release an updated Pension Payment Authority in accordance with the above guidelines. Finally, it is important to state that there are no plans to create any other organization for pension-related issues.
CG Pension Fixation Examples
4th CPC Pension Revision (1984)
The following are examples of CG pension fixation under the 4th CPC Pension Revision, which took place in 1984. The first case involves an individual who retired on December 31st, 1984. At the time of retirement, their scale of pay was 975-1660 (4th CPC Scale). Their pay on retirement was 1210. Prior to revision, their pension as of January 1st, 2016 was 4191 and their family pension as of the same date was 3500.
| Description | 1st case |
| 1. Date of Retirement | 31.12.1984 |
| 2. Scale of pay (or Pay Band & G.P.) at the time of retirement (OR) Notional pay scale as on 1.1.1986 for those retired before 1.1.1986 | 975-1660 (4thCPC Scale) |
| 3. Pay on retirement (OR) Notional pay as of 1.1.1986 for those Retired before 1.1.1986 | 1210 |
| 4. Pension as of 01.01.2016 before revision | 4191 |
| 5. Family pension as on 01.01.2016 | 3500 |
| 6. Family pension at an enhanced rate as of 01.01.2016 before revision (if applicable) | NA |
| 7. Revised pension by multiplying pre-revised pension by 2.57 | 10771 |
| 8. Revised family pension by multiplying pre-revised family pension by 2.57 | 9000 |
| 9. Revised family pension at the enhanced rate by multiplying pre-revised enhanced family pension by 2.57 | NA |
| 10. Pay fixed on a notional basis on 1.1.1996 | 3710 (3200-4900) |
| 11. Pay fixed on a notional basis on 1.1.2006 | 8910 (PB-1, GP 2000) |
| 12. Pay fixed on a notional basis on 1.1.2016 | 23100 (Level -3) |
| 13. Revised pension w.e.f. 1.1.2016 as per the first formulation | 11550 |
| 14. Revised family pension w.e.f. 1.1.2016 as per the first formulation | 9000 |
| 15. Revised family pension at enhanced rate w.e.f. 1.1.2016 as per the first formulation | NA |
| 16. Revised pension payable (Higher of S.No. 7 and 13) | 11550 |
| 17. Revised family pension payable (Higher of S.No. 8 and 14) | 9000 |
| 18. Revised family pension at the enhanced rate payable (Higher of S.No. 9 and 15) | NA |
4th CPC Pension Revision (1989)
The following are examples of CG Pension Fixation, particularly the 4th CPC Pension Revision in 1989. The second case shows the details as follows: (1) Date of Retirement on January 31, 1989; (2) Scale of pay or Pay Band & G.P. at the time of retirement or Notional pay scale as of January 1, 1986 for those retired before January 1, 1986 which is at 3000-4500 (4th CPC Scale); (3) Pay on retirement or Notional pay as of January 1, 1986 for those retired before January 1, 1986 which is at 4000; (4) Pension as of January 1, 2016 before revision amounted to 12600; and (5) Family pension as of January 1, 2016 was at 7560.
| Description | 2nd case |
| 1. Date of Retirement | 31.01.1989 |
| 2. Scale of pay (or Pay Band & G.P.) at the time of retirement (OR) Notional pay scale as on 1.1.1986 for those retired before 1.1.1986 | 3000-4500(4thCPC Scale) |
| 3. Pay on retirement (OR) Notional pay as of 1.1.1986 for those Retired before 1.1.1986 | 4000 |
| 4. Pension as of 01.01.2016 before revision | 12600 |
| 5. Family pension as on 01.01.2016 | 7560 |
| 6. Family pension at an enhanced rate as of 01.01.2016 before revision (if applicable) | N.A |
| 7. Revised pension by multiplying pre-revised pension by 2.57 | 32382 |
| 8. Revised family pension by multiplying pre-revised family pension by 2.57 | 19430 |
| 9. Revised family pension at the enhanced rate by multiplying pre-revised enhanced family pension by 2.57 | NA |
| 10. Pay fixed on a notional basis on 1.1.1996 | 11300(10000-15200) |
| 11. Pay fixed on a notional basis on 1.1.2006 | 27620 (PB-3, GP 6600) |
| 12. Pay fixed on a notional basis on 1.1.2016 | 71800 (Level -11) |
| 13. Revised pension w.e.f. 1.1.2016 as per the first formulation | 35900 |
| 14. Revised family pension w.e.f. 1.1.2016 as per the first formulation | 21540 |
| 15. Revised family pension at enhanced rate w.e.f. 1.1.2016 as per the first formulation | N.A. |
| 16. Revised pension payable (Higher of S.No. 7 and 13) | 35900 |
| 17. Revised family pension payable (Higher of S.No. 8 and 14) | 21540 |
| 18. Revised family pension at the enhanced rate payable (Higher of S.No. 9 and 15) | N.A. |
5th CPC Pension Revision
The following are examples of CG pension fixation under the 5th CPC pension revision. The third case involves an individual who retired on June 30, 1999, with a pay scale of 4000-6000 (5th CPC Scale). Their pay on retirement was 4800, and their pension prior to revision on January 1, 2016, was 5424, with a family pension of 3500 on the same date. Additionally, it should be noted that the notional pay as of January 1, 1986, applies to those who retired before that date.
| Description | 3rd case |
| 1. Date of Retirement | 30.06.1999 |
| 2. Scale of pay (or Pay Band & G.P.) at the time of retirement (OR) Notional pay scale as on 1.1.1986 for those retired before 1.1.1986 | 4000-6000 (5thCPC Scale) |
| 3. Pay on retirement (OR) Notional pay as of 1.1.1986 for those Retired before 1.1.1986 | 4800 |
| 4. Pension as of 01.01.2016 before revision | 5424 |
| 5. Family pension as on 01.01.2016 | 3500 |
| 6. Family pension at an enhanced rate as of 01.01.2016 before revision (if applicable) | NA |
| 7. Revised pension by multiplying pre-revised pension by 2.57 | 13940 |
| 8. Revised family pension by multiplying pre-revised family pension by 2.57 | 9000 |
| 9. Revised family pension at the enhanced rate by multiplying pre-revised enhanced family pension by 2.57 | N.A |
| 10. Pay fixed on a notional basis on 1.1.1996 | N.A |
| 11. Pay fixed on a notional basis on 1.1.2006 | 11330 (PB-1, GP-2400) |
| 12. Pay fixed on a notional basis on 1.1.2016 | 29600 (Level-4) |
| 13. Revised pension w.e.f. 1.1.2016 as per the first formulation | 14800 |
| 14. Revised family pension w.e.f. 1.1.2016 as per the first formulation | 9000 |
| 15. Revised family pension at enhanced rate w.e.f. 1.1.2016 as per the first formulation | N.A |
| 16. Revised pension payable (Higher of S.No. 7 and 13) | 14800 |
| 17. Revised family pension payable (Higher of S.No. 8 and 14) | 9000 |
| 18. Revised family pension at the enhanced rate payable (Higher of S.No. 9 and 15) | N.A |
6th CPC Pension Revision (Pre-2016)
The following are examples of CG Pension Fixation, specifically for the 6th CPC Pension Revision (Pre-2016). The first detail required is the date of retirement, followed by the scale of pay or pay band and G.P. at the time of retirement. Alternatively, for those who retired before 1.1.1986, their notional pay scale as of that date is needed. The next information needed is the pay or notional pay as of 1.1.1986 for those who retired before that date. The pension amount as of 01.01.2016 before revision is also required, as well as the family pension amount as of the same date.
| 1. Date of Retirement | 31.05.2015 |
| 2. Scale of pay (or Pay Band & G.P.) at the time of retirement (OR) Notional pay scale as on 1.1.1986 for those retired before 1.1.1986 | 67000-79000 (6thCPC Scale) |
| 3. Pay on retirement (OR) Notional pay as of 1.1.1986 for those Retired before 1.1.1986 | 79000 |
| 4. Pension as of 01.01.2016 before revision | 39500 |
| 5. Family pension as on 01.01.2016 | 23700 |
| 6. Family pension at an enhanced rate as of 01.01.2016 before revision (if applicable) | 39500 |
| 7. Revised pension by multiplying pre-revised pension by 2.57 | 101515 |
| 8. Revised family pension by multiplying pre-revised family pension by 2.57 | 60909 |
| 9. Revised family pension at the enhanced rate by multiplying pre-revised enhanced family pension by 2.57 | 101515 |
| 10. Pay fixed on a notional basis on 1.1.1996 | NA |
| 11. Pay fixed on a notional basis on 1.1.2006 | NA |
| 12. Pay fixed on a notional basis on 1.1.2016 | 205100 (Level- 15) |
| 13. Revised pension w.e.f. 1.1.2016 as per the first formulation | 102550 |
| 14. Revised family pension w.e.f. 1.1.2016 as per the first formulation | 61530 |
| 15. Revised family pension at enhanced rate w.e.f. 1.1.2016 as per the first formulation | 102550 |
| 16. Revised pension payable (Higher of S.No.7 and 13) | 102550 |
| 17. Revised family pension payable (Higher of S.No. 8 and 14) | 61530 |
| 18. Revised family pension at the enhanced rate payable (Higher of S.No. 9 and 15) | 102550 |
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