Double Pension for Pensioners – Reality, Age for Double Pension

I am writing here the details regarding the Double Pension for Pensioners. You will read here the details at what age the pension is double, what is double pension and how much the pension increases after a specific period of time after retirement. Here are the full details.

Reality and Admissibility of Double Pension for Pensioners

1. The concept of “double pension” is still not clear to many friends. I keep on receiving questions like Q1 to Q3 listed below.  And the pensioners expect me not only to give a brief answer, yes or no, but also to explain the reasons for such an answer.

Q1.  Does the pension become double upon restoration of the commuted part?

Q2.  When Pension is Doubled? Is doubling the pension at the age of 75?

Q3.  Does direction by the High Court [upheld by the Supreme Court] override pension rules?

Commutation History

2. Commutation of pension was regulated by the Civil Pensions (Commutation) Rules 1925.  Rule 3 entitled the Government servants to commute a portion [not exceeding one-half] of the pension against a lump payment.   Rule 6(2) prescribed that the commutation was final and absolute.  The title of the government servant to receive the commuted part ceased forever, and only the un-commuted part remained receivable.  This was also commonly known as “selling” half the pension for good.

3. Pension increases, however, continued to be allowed on Gross Pension up to and including the 1999 increase. Para 2 of the 1999 increase orders specified that:

            “For the admissibility of the increase in pension sanctioned in this O.M., the term

‘Pension’ means:

              pension before commutation and or surrender of ¼ for gratuity;

                                                           plus

Dearness/ad hoc increases/indexation in pension sanctioned from time to time.

4. Termination of commuted pension against lump grant was reversed in 1985 after the government issued orders that the commuted portion would be restored upon expiry of the number of years for which commutation value had been received. If a pensioner had got 50% pension commuted on 1.7.1970 and received 15 years’ commutation value, the commuted part stood restored from 1.7.1985.  And if a pensioner retired on 1.7.1984, the commuted part was restorable from 1.7.1999.   For all these years, the increases continued to be allowed on “Gross Pension plus previous increases”.  This practice was changed in 2001.

2001 Payscales-cum-Pension Scheme

6. Two major “reforms” were introduced in pension from 1.12.2001- (A) The benefit of restoration of commuted part was withdrawn under Para 16 (e) of the orders; and (B) increases in pension from 2001 onward were reduced to Net Pension [instead of Gross Pension] under para 16 (f). The second reform simply meant that increases from 2001 onward were no longer admissible on the 50% commuted part.
7. Those pensioners who had retired before 2001 payscales were getting increases on both parts [(A) Un-commuted and (B) Commuted] up to and including the 1999 increase. To illustrate this, consider the case of a pensioner who retired in pay scale 16 on 1.1.1991 with a gross pension of Rs.2,000, out of which 50% (Rs.1,000) had been commuted. The 1991, 1995, 1997 and 1999 all increases are equal on both un-commuted and commuted parts, as per rows 3 and 8 of Table A given at the end.  However, two figures are given for the 2001 increase, (i) if it was on Gross, and (ii) the actual given on Net.  The actual increase in Net Pension is Rs. 100 lesser as shown in rows 8 and 11 than what would have been on Gross.

7. Para 16 (e) of the 2001 Orders [through which restoration of the commuted part of the pension was discontinued] was soon reversed in respect of persons who had already retired before 2001 Orders. One such pensioner took up the legal stand that upon restoration, both halves [un-commuted as well as commuted] of pension, plus all increases, should be equal.  Otherwise, the restoration would be erroneous.  For this purpose, the increases (not actually given on the commuted part from 2001 onward) should be given, at least on a notional basis, upon restoration of that part from the date of restoration.  This is illustrated in respect of a government servant whose period of commutation expired on 31 Dec 2005, and restoration fell due on 1 Jan 2006, in Table B at the end.

8. This petition was accepted by the Court with the observation that restoration means bringing back into original condition. If both parts were equal to begin with, then both parts, along with all increases, should be equal upon restoration too.   Otherwise, the restoration would be imperfect.  Directions by court included that on restoration, the amount of commuted part should be increased notionally to bring it equal to the un-commuted higher part, thus making the two halves equal, and the total equal to double the higher amount.  In other words, the total pension upon restoration should be double the amount of un-commuted pension, along with increases on the restoration date.

9. This doubling formula is based on the factors listed below. If any factor varies, the formula may not be applicable.  For example, if the commutation was only 25%, the doubling formula will not apply.

• Exact 50% of the gross pension was commuted. [Pensioners have the option of getting less than 50% commuted].
• Pensioners retired at the age of 60. [In certain cases, a pensioner may seek premature retirement, or retire on medical grounds, at a younger age.
• The commutation value was received for 15.4649 [15 rounded off] years, on expiry of which period, restoration fell due. [The number of years may be higher for persons retiring at a younger age than 60].

10. The Court further directed that the increased pension would be admissible from the date of restoration, and no arrears for the period before restoration would be admissible.

Notional increase

11. There are two methods to determine how much notional increase would make the two halves equal upon restoration. The one generally practised by Accounts Offices is to calculate on a notional basis all increases on Gross Pension, and then pay the difference from the date of restoration.

12. The second method is to calculate the amount of all increases NOT given on the commuted part from 1.12.2001 till the restoration date. And then add the commuted amount, plus the amount of all such increases to the pension on the restoration date.

13. If the calculations are correct, both methods would yield the same result, and the amount of pension upon restoration would be the same, and double the un-commuted part + increases.

Table A, all increases on Gross Pension up to 1999, and the 2001 increase on Gross / Net

	All increases in Gross Pension						2001 increase in Net Pension
	Increases on Un-Commuted Part						Increases on Un-Commuted Part
	Year	1991	1995	1997	1999		Year	2001	2001
1	Increase on	1,000	1,050	1,208	1,304		Increase on	1,435	1,435
2	increase %	5	15	8	10		increase %	10	10
3	Increase Rs	50	158	97	130		Increase Rs	143	143
4	With increase	1,050	1,208	1,304	1,435		With increase	1,578	1,578
5	Net received	1,050	1,208	1,304	1,435		Net received	1,578	1,578
	Increases in the Commuted Part						Increases in the Commuted Part
	Year	1991	1995	1997	1999		Year	2001	2001
								Gross	Net
6	Increase on	1,000	1,050	1,208	1,304		Increase on	1,435	435
7	increase %	5	15	8	10		increase %	10	10
8	Increase Rs	50	158	97	130		Increase Rs	143	43
9	With increase	1,050	1,208	1,304	1,435		With increase	1,578	478
10	Less commuted	(1,000)	(1,000)	(1,000)	(1,000)		Less commuted	(1,000)
11	Net received	50	208	304	435		Net received	578	478
	Increases on Both Parts						Increases on Both Parts
	Year	1991	1995	1997	1999		Year	2001	2001
12	Increase on	2,000	2,100	2,415	2,608		Increase on	2,870	1,870
13	increase %	5	15	8	10		increase %	10	10
14	Increase Rs	100	315	193	261		Increase Rs	287	187
15	With increase	2,100	2,415	2,608	2,869		With increase	3,157	2,056
16	Less commuted	(1,000)	(1,000)	(1,000)	(1,000)		Less commuted	(1,000)
17	Net received	1,100	1,415	1,608	1,870		Net received	2,156	2,056

Table B, showing notional increase of Rs. 614.14 from the date of restoration, 1 Jan 2006

Date	Row #	Item	Including commuted 1,000	Excluding commuted 1,000	Diff
			Rs	Rs	Rs
1-Jan-91	1	Pension	2,000.00	1,000.00
1991~99	2	Increases to 1999 on Gross	435.00	435.00
	3	With increases	2,435.00	1,435.00
1-Dec-01	4	10%  increase on Net	243.50	143.50	100.00
	5	With increase	2,678.50	1,578.50
1-Jun-03	6	15%  increase on Net	401.78	236.78	165.00
	7	With increase	3,080.28	1,815.28
1-Jul-04	8	16%  increase on Net	492.84	290.44	202.40
	9	With increase	3,573.12	2,105.72
1-Jul-05	10	10%  increase on Net	357.31	210.57	146.74
	11	With increase	3,930.43	2,316.29
1-Jan-06	12	Commuted part restored		1,000.00
	13	Total with restoration	3,930.43	3,316.29	614.14
	14	Notional increase	0.00	614.14
	15	With increase	3,930.43	3,930.43
	16	Total of both parts	7,860.86
	17	Double of 3,896.55	7,860.86

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