Friday, May 20, 2016

7th Pay Commission on pay and pension: Pensioners to Gain the Most

Based on the 7th Pay Commission data, already pension payments account for a third of the government’s wage bill. That is going to rise sharply over the next 10 years.

pensioners-pay-gain-7thCPC


7th Pay Commission – Pensioners to Gain the Most – While the 7th Pay Commission pay scale increase of serving employees is 16%, pensioners will see a 23.63% rise.

7th Pay Commission on pay and pension: Once the recommendations of the 7th Pay Commission are implemented, the biggest gainers will be pensioners. While the 7th Pay Commission pay scale increase of serving employees is 16%, pensioners will see a 23.63% rise. However, the big gain per se is in allowances, which rise by as much as 63%. Here is an elaboration of the 7th Pay Commission pension recommendations:

Going by the numbers, pension payments could well be the next time-bomb. Based on the 7th Pay Commission data, already pension payments account for a third of the government’s wage bill. That is going to rise sharply over the next 10 years. It is driven by the fact that 9.48 lakh employees accounting for 29% of the 30.32 lakh employees on the rolls now are in the 50-60-year band. By this time in 10 years, that means the government will need to pay for an additional million pensioners. So, the pension bill will continue to rise – with better health, most people live almost 20 years after retirement.


The Urban Development Ministry will see the sharpest fall (61.3%) followed by the Department of Posts (41.6%). However, the Indian Railways will account for half of the retirees (4.94 lakh). Despite the 37.5% fall in employees, the Indian Railways will still have 9.22 lakh employees if no new ones are hired.

This is also due to the fact that there has been no real move to reduce the government employee base over the years. While there are 33 lakh employees now it was 32.74 lakh in 2006 and 32.31 lakh in 2010. The only relief from the pension bomb will come when those employed after 2004 come to retirement age. These people are covered under the National Pension Scheme where the pensions they receive will depend on the payout they make while being employed. However, these employees will reach the retirement age a good 30 years from now. Check out 7th Pay Commission on pay and pension quick calculator below:

Dept. Employees (in lakh) In 50-60- yr group % share
Railways 13.16 4.94 37.54%
MHA 9.8 0.68 6.94%
Defence (civil) 3.98 1.51 37.94%
Posts 1.9 0.79 41.58%
Urban devp 0.31 0.19 61.29%
Atomic energy 0.32 0.11 34.38%
Health 0.21 0.07 33.33%
Accts & audit 0.48 0.16 33.33%
Revenue 0.96 0.33 34.38%
Others 1.86 0.7 37.63%
Total 32.98 9.48 28.74%

Source: The Financial Express

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