Union Cabinet approved the implementation of 7th CPC on pay and pensionary benefits
The Union Cabinet chaired by Prime Minister Narendra Modi approved the implementation of recommendations of 7th Central Pay Commission (CPC) on pay and pensionary benefits which came into effect from 1st January 2016. The commission examined a total of 196 existing allowances and by way of rationalisation, recommended the abolition of 51 allowances and subsuming of 37 allowances to benefit over 1 crore employees. This included over 47 lakh Central government employees and 53 lakh pensioners of which 14 lakh employees and 18 lakh pensioners are from the defence forces.
In the past, the employees had to wait for 19 months for the implementation of the Commissions recommendations at the time of fifth CPC, and for 32 months at the time of implementation of sixth CPC. However, this time, seventh CPC recommendations were implemented within six months from the due date.
As estimated by the 7th CPC, the additional financial impact on account of implementation of all its recommendations in 2016-17 is Rs 1,02,100 crore. There is an additional implication of Rs 12, 133 crores on account of payments of arrears of pay and pension for two months on 2015-16.
Here are the highlights:
1) The present system of Pay Bands and Grade Pay has been dispensed with and a new Pay Matrix as recommended by the Commission has been approved. The status of the employee will now be determined by the level in the Pay Matrix. Separate Pay Matrix has been drawn up for Civilians, Defence personnel, and Military Nursing Service.
2) All existing levels have been subsumed in the new structure while no new levels have been introduced nor have any level has been dispensed with.
3) The minimum pay has been increased from Rs 7,000 to 18,000 per month starting salary of a newly recruited employee at the lowest level will now be Rs 18,000.
4) For a freshly recruited Class 1 officer, it will be Rs 56, 100.
5) For the purpose of revision of pay and pension, a fitment factor of 2.57 will be applied across all levels in the Pay Matrices.
6) Rate of increment retained at 3%. This will benefit the employees in future on account of higher basic pay as the annual increments that they earn in future will be 2.57 times than at present.
7) The Cabinet approved further improvements in the Defence Pay Matrics by enhancing Index of Rationalisation for Level 13 A (Brigadier) and providing for additional stages in Level 12 A (Lieutenant Colonel), 13 (Colonel) and 13 A (Brigadier) in order to bring parity with Central Armed Police forces (CAPF) counterparts at the maximum of respective Levels.
8) Some other decisions impacting the employees including the Defence and CAPF include:
– Gratuity ceiling enhanced from Rs 10 to Rs 20 lakh. The ceiling on gratuity will increase by 25% whenever DA rises by 50%.
– A common regime for payment of ex-gratia lump sum compensation for civil and defence forces personnel payable to next of kin with the existing rates enhanced from Rs 10-20 lakh to 25-45 lakh for different categories.
– Rates of Military Service Pay revised from Rs 1,000, Rs 2,000, Rs 4,200 and Rs 6,000 to Rs 3,600, Rs 5, 200, Rs 10, 800 and Rs 15,500, respectively.
– Terminal Gratuity equivalent of 10.5 months of reckonable emoluments for Short Service Commission (SSC) officers who will be allowed to exit Armed Forces ant time between 7 and 10 years of service.
– Hospital Leave, Special Disability Leave and Sick Leave subsumed into a composite new Leave named ‘Work Related Illness and Injury Leave’ (WRILL). Full pay and allowances will be granted to all employees during the entire period of hospitalisation on account of WRILL.
9) The Cabinet has also approved the recommendation of the Commission to enhance the ceiling of House Building Advance from Rs 7.50 lakh to Rs 25 lakh. Four interest-free advances namely Advances for Medical
Treatment, TA on tour/ transfer, TA for the family of deceased employees and LTC have been retained. All other interest-free advances have been abolished.
10) The Cabinet decided to constitute a Committee headed by Finance Secretary to further examination of the recommendation of 7th CPC allowances.
11) The Cabinet approved the recommendations on pension and related benefits. It agreed to revise pension based on fitment factor 2.57.
12) The Cabinet rejected the 7th Central Pay Commission’s recommendation of steep hike in monthly contribution towards Central Government Employees Group Insurance Scheme (CGEGIS). The existing rates of monthly contribution will continue. This will increase the take-home salary of the employee at lower levels by Rs 1,470.