CPSE Pay Revision 2017 – Retirement Benefits

CPSE Pay Revision 2017 – Retirement Benefits

SUPERANNUATION BENEFITS

CPSEs are currently allowed 30% of Basic Pay & Dearness Allowance as superannuation benefits, which includes Provident Fund, Gratuity, Pension and Post-superannuation medical benefits; and the same has to be under a ‘defined contribution scheme’ and not under a ‘defined benefit scheme’. In this respect, the following has been recommended:-

a. The ceiling of gratuity to be enhanced from the existing Rs.10 lakh to Rs.20 lakh from 01.01.2017. The ceiling on gratuity shall increase by 25% whenever IDA rises by 50%.

b. The current limit of 30% of BP + DA of executives/non-unionized supervisors upto which the CPSEs can contribute towards the superannuation benefits shall continue to operate from 1.1.2017 on a defined contribution basis subject to the following proviso:-

i. The superannuation benefits allowed upto 30% of BP + DA shall encompass of Provident Fund, Gratuity, Post-superannuation medical benefits and Pension;

ii. However, the funding / payment towards the additional amount beyond the gratuity of Rs.10 lakhs shall be allowed to be outside the limit of 30% of BP+DA.

In other words, the funding of Gratuity (upto Rs.10 lakhs), alongside Provident Fund, Pension and Post superannuation medical benefits, shall be allowed within the limit of 30% of BP + DA; and the funding of additional / balance Gratuity amount beyond Rs.10 lakhs shall be allowed to be borne by the CPSEs outside the limit of 30% of BP + DA.

c. Further, the Committee recommends that requirement of superannuation and of minimum of 15 years of service in the CPSE shall not be mandated for contributory pension.

d. However, existing Post-Retirement medical benefits shall continue to be linked to the requirement of superannuation and of minimum of 15 years of continuous service for ensuring the loyalty of the executives to the CPSEs.

e. The existing provision of 15 years of service for availing the Post-Retirement medical benefits shall however not apply to Board level executives.

Within the applicable provision / ceiling on superannuation benefits, the Post Retirement medical benefits shall be allowed to Board level executives (without any linkage to provision of 15 years of service) upon completion of their tenure or upon attaining the age of retirement, whichever is earlier.

f. The expenditure on post-retirement medical benefits in respect of all retired employees (i.e. ex-employees who have retired prior to 1.1.2007 as well as the employees retired after 1.1.2007) shall be met out of corpus fund created out of 3% of each financial year’s PBT as per the modalities laid down.

In addition, the if there is an unutilized corpus out of 3% of PBT after accounting for the expenditure on post-retirement medical benefits in respect of retired employees, the Board of Directors, if deemed fit, can consider to introduce a scheme for ex-gratia relief to mitigate extraordinary personal hardship (as specified) if being faced by the retired employees.

CPSE Revised Pay Tables