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Thursday, 3 March 2016

7th Pay Commission expressed its regret about transition from OPS to NPS

Indian Military Veterans



7th Pay Commission expressed its regret about transition from Old Pension Scheme to New Pension Scheme in its report.

2004-2011 Entrants : Government employees who have joined service between 2004 and 2011 have suffered due to delay in finalizing the structure of the NPS and the issue of detailed instructions. Although they have made regular contributions, in many cases, this money and/or counterpart contributions were not deployed in the market. In the case of AIS officers, some states are yet  to release counterpart contributions or pay interest on delayed contributions. This has led to a situation where the accumulated corpus even after 11 years of service could be meagre. It is necessary that this situation which arose during the transition from OPS to NPS be addressed.

The Commission therefore recommends that Central Governments and State Governments should, in a time bound manner, ensure that all the due contribution along with compounded interest, where contributions have been delayed, be deposited in the accounts of the beneficiaries. Advisories should be issued to the State Governments to deposit amounts, if not already done, in respect of NPS beneficiaries belonging to All India Services.

Many Association have pointed out that unlike the facility under GPF, it is not possible to make withdrawals under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere.

The Commission notes that under the NPS Tier-I account, a subscriber is permitted to make partial withdrawal of twenty five percent of the contributions made to his/her individual pension account for certain specified purposes. Such withdrawals are permitted a maximum of three times during the entire tenure of subscription and a period of at least five years should have elapsed between two such withdrawals.

The Commission further notes that there exists a voluntary Tier-II account. Under this account, a subscriber can, at any time, withdraw the accumulated wealth either in full or part and there is no limit on such withdrawals provided the account has sufficient balance of accumulated pension wealth to cover the amount being withdrawn. However, the Tier-II account is yet to be made operational. The Commission therefore recommends that PFRDA should take steps to make the Tier-II accounts operational as early as possible to enable the NPS subscribers the facility of withdrawals from their accounts in case of requirement.

Transparency under NPS : Many associations and individuals have complained that the information relating to the NPS is inadequate, resulting in high degree of uncertainty in the minds of contributors about post-retirement benefits. The Commission noted that PFRDA sends a communication to every participant each month with the current pension wealth and the latest contribution that has been credited. The Commission recommends that focused efforts be made to capture email addresses and mobile numbers of subscribers so that seamless communication is ensured for all subscribers. The Commission recommends that consultation with stakeholders should also be held periodically in different parts of the country.

The Commission notes that no department of Government of India is taking ownership of the NPS. The Commission recommends that a Committee consisting of Secretary, Department of Financial Services, Secretary, Department of Pensions and Pensioners Welfare and Secretary, Department of Administrative Reforms and Public Grievances may be constituted to review the progress of implementation of NPS. The Commission also recommends that steps should be taken for establishment of an Ombudsman for redressing individual grievances relating to NPS.

Tax Treatment under the NPS : NPS is under the Exempt–Exempt – Tax (EET) regime while the General Provident Fund under the OPS is under Exempt–Exempt–Exempt (EEE) dispensation. Under the NPS, while the contributions and the accumulations are tax-exempt, withdrawals are taxable. As such, this is an inferior tax treatment when compared to other pension programmes such as General Provident Fund, Contributory Provident Fund, Employees Provident Fund and Public Provident Fund wherein contributions, accumulations and withdrawals are tax-exempt.

The Commission feels that tax neutrality should be ensured across various avenues for long term savings for post retirement incomes so that the employees covered by NPS are not at a disadvantage. The Commission therefore recommends that withdrawals under the NPS should be tax-exempt to place NPS at par with other pension schemes. The Commission also recommends that the service tax levied at the time of annuity purchase by NPS subscribers should be exempted.

Recovery of wrongful and excess payments made to Government servants – Dopt orders on 2.3.2016

Indian Military Veterans



F.No.18/03/2015-Estt. (Pay-I)
Government of India
Ministry of Personnel, Public Grievances & Pensions
Department of Personnel & Training

New Delhi, the 2nd March, 2016

OFFICE MEMORANDUM

Sub: Recovery of wrongful / excess payments made to Government servants.

The undersigned is directed to refer to this Department’s OM No.18/26/2011-Estt (Pay-I) dated 6th February, 2014 wherein certain instructions have been issued to deal with the issue of recovery of wrongful / excess payments made to Government servants in view of the law declared by Courts, particularly, in the case of Chandi Prasad Uniyal And Ors. vs. State of Uttarakhand And Ors., 2012 AIR SCW 4742, (2012) 8 SCC 417. Para 3(iv) of the OM inter-alia provides that recovery should be made in all cases of overpayment barring few exceptions of extreme hardships.

2. The issue has subsequently come up for consideration before the Hon’ble Supreme Court in the case of State of Punjab & Ors vs Rafiq Masih (White Washer) etc in CA No.11527 of 2014 (Arising out of SLP(C) No.11684 of 2012) wherein Hon’ble Court on 18.12.2014 decided a bunch of cases in which monetary benefits were given to employees in excess of their entitlement due to unintentional mistakes committed by the concerned competent authorities, in determining the emoluments payable to them, and the employees were not guilty of furnishing any incorrect information / misrepresentation / fraud, which had led the concerned competent authorities to commit the mistake of making the higher payment to the employees. The employees were as innocent as their employers in the wrongful determination of their inflated emoluments. The Hon’ble Supreme Court in its judgment dated 18 th December, 2014 ibid has, inter-alia, observed as under:

“7. Having examined a number of judgments rendered by this Court, we are of the view, that orders passed by the employer seeking recovery of monetary benefits wrongly extended to employees, can only be interfered with, in cases where such recovery would result in a hardship of a nature, which would far outweigh, the equitable balance of the employer’s right to recover. In other words, interference would be called for, only in such cases where, it would be iniquitous to recover the payment made. In order to ascertain the parameters of the above consideration, and the test to be applied, reference needs to be made to situations when this Court exempted employees from such recovery, even in exercise of its jurisdiction under Article 142 of the Constitution of India. Repeated exercise of such power, “for doing complete justice in any cause” would establish that the recovery being effected was iniquitous, and therefore, arbitrary. And accordingly, the interference at the hands of this Court.”

“10. In view of the afore-stated constitutional mandate, equity and good conscience, in the matter of livelihood of the people of this country, has to be the basis of all governmental actions. An action of the State, ordering a recovery from an employee, would be in order, so long as it is not rendered iniquitous to the extent, that the action of recovery would be more unfair, more wrongful,
more improper, and more unwarranted, than the corresponding right of the employer, to recover the amount. Or in other words, till such time as the recovery would have a harsh and arbitrary effect on the employee, it would be permissible in law. Orders passed in given situations repeatedly, even in exercise of the power vested in this Court under Article 142 of the Constitution of India, will disclose the parameters of the realm of an action of recovery (of an excess amount paid to an employee) which would breach the obligations of the State, to citizens of this country, and render the action arbitrary, and therefore, violative of the mandate contained in Article 14 of the Constitution of India.”

3. The issue that was required to be adjudicated by the Hon’ble Supreme Court was whether all the private respondents, against whom an order-of recovery (of the excess amount) has been made, should be exempted in law, from the reimbursement of the same to the employer. For the applicability of the instant order, and the conclusions recorded by them thereinafter, the ingredients depicted in paras 2&3 of the judgment are essentially indispensable.

4. The Hon’ble Supreme Court while observing that it is not possible to postulate all situations of hardship which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement has summarized the following few situations, wherein recoveries by the employers would be impermissible in law:-
(i) Recovery from employees belonging to Class-III and Class-IV service (or Group ‘C’ and Group ‘D’ service).(ii) Recovery from retired employees, or employees who are due to retire within one year, of the order of recovery.(iii) Recovery from employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.(iv) Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.(v) In any other case, where the Court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer’s right to recover.
5. The matter has, consequently, been examined in consultation with the Department of Expenditure and the Department of Legal Affairs. The Ministries / Departments are advised to deal with the issue of wrongful / excess payments made to Government servants in accordance with above decision of the Hon’ble Supreme Court in CA No.11527 of 2014 (arising out of SLP (C) No.11684 of 2012) in State of Punjab and others etc vs Rafiq Masih (White Washer) etc. However, wherever the waiver of recovery in the above-mentioned situations is considered, the same may be allowed with the express approval of Department of Expenditure in terms of this Department’s OM No.18/26/2011-Estt (Pay-I) dated 6th February, 2014.

6. In so far as persons serving in the Indian Audit and Accounts Department are concerned, these orders are issued with the concurrence of the Comptroller and Auditor General of India.

7. Hindi version will follow.

sd/-
(A.K.Jain)
Deputy Secretary to the Government of India

Authority :www.persmin.gov.in

File photo. Economic affairs secretary Shaktikanta Das said the number cannot be quantified and it has been built up in budget of various ministries. Photo: PTI File photo. Economic affairs secretary Shaktikanta Das said the number cannot be quantified and it has been built up in budget of various ministries. Photo: PTI New Delhi: With absence of an explicit overall provision for the 7th Pay Commission in budget raising questions, government on Wednesday said the once-in-a-decade pay hike has been built in as interim allocation for different ministries and budget numbers were credible. The voluminous budget documents state that “the implementation of the Seventh Pay Commission due from January 1, 2016 is to be implemented during the financial year 2016-17 as also the revised One Rank One Pension scheme for Defence services.” “The government has made provisions for the additional liabilities on these count,” it said, without giving the amount allocated for implementation. Economic affairs secretary Shaktikanta Das said the number cannot be quantified and it has been built up in budget of various ministries. “We cannot really quantify how much we require in 2016-17. Because the Committee of Secretaries have to first give its recommendations, then govt will take a decision and then only we will know what is the requirement in FY17,” he said in New Delhi. Implementation of the pay commission report is to cost the government Rs.1.02 trillion. “We have the Pay Commission recommendations with us, we have analysed the likely requirement and it has been built into the Budget of various ministries. Some suitable interim provisions have been made,” he said without elaborating. “Hence the expenditure and revenue numbers are credible.” Das said finance minister Arun Jaitley in his budget speech stated that interim provisions have been made. “And these provisions are there in the Demands for Grants for individual departments and ministries. It is built into and subsumed into those allocations.” “The Budget reaffirmed the commitment of the government to continue with the process of fiscal consolidation as projected in the Medium Term Fiscal Policy Statement of 2015-16 despite a tough external environment,” the budget documents said. Accordingly, fiscal deficit has been projected at 3.5% of the GDP in 2016-17. “In accordance with the amended FRBM targets, the fiscal deficit of 3 per cent is projected to be achieved in 2017-18 onwards.” “Keeping in view the challenge of reduction of fiscal deficit by 0.4 per cent of GDP in a difficult year in 2016-17 with substantial additional liabilities on pay revision etc, the government is quite optimistic of fully achieving the fiscal deficit target of 3 per cent or below by March 2018,” the documents said. PTI TOPICS: 7TH

Indian Military Veterans
File photo. Economic affairs secretary Shaktikanta Das said the number cannot be quantified and it has been built up in budget of various ministries. Photo: PTI
File photo. Economic affairs secretary Shaktikanta Das said the number cannot be quantified and it has been built up in budget of various ministries. Photo: PTI
New Delhi: With absence of an explicit overall provision for the 7th Pay Commission in budget raising questions, government on Wednesday said the once-in-a-decade pay hike has been built in as interim allocation for different ministries and budget numbers were credible.
The voluminous budget documents state that “the implementation of the Seventh Pay Commission due from January 1, 2016 is to be implemented during the financial year 2016-17 as also the revised One Rank One Pension scheme for Defence services.” “The government has made provisions for the additional liabilities on these count,” it said, without giving the amount allocated for implementation.

Govt of India issues guidelines on recovery of excess amount from employee

Indian Military Veterans
The issue of recovery of excess amount from pensioners and employees has remained quite vexed since the past many years. The problem was compounded with the Supreme Court taking a varied view in various decisions.

Going into great detail of the subject, the Supreme Court in December 2014 however laid down the law quite clearly inStateof Punjab Vs Rafiq Masih wherein certain guidelines were postulated for such cases.

To the credit of the Central Government, the Department of Personnel and Training (DoPT) has today issued a universal circular implementing the guidelines laid down by the Supreme Court in the ibid case.

The circular is significant since it is probably for the first time that a department has floated a universally applicable pro-employee circular in this regard. Though departments are quick in circulating decisions of High Courts and Supreme Court rendered against employees, it is rarely that a similar exercise is conducted when law is laid down in favour of employees or retirees.


The said Office Memorandum issued today, detailing the cases where recovery is impermissible, can be accessed and downloaded by clicking here.

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