Government to introduce Rs 5000 crore pension plan

The Union cabinet is all set to approve a new Rs 5,000-crore pension formula that is expected to benefit more than five million central government employees.

According to sources it is said that the central government is expected to approve in next week and the new formula will calculate pension based on the latest drawn salary for a particular post.

The new method was fixed by an empowered committee of secretaries (Ecos) headed by secretary (pensions).

The seventh pay commission recommended that pension could be calculated by two methods: One, pension would be 50% of the last salary and multiplied by 2.57. The second was an incremental method where pension was fixed at the last salary drawn with adjustments of increments drawn in that particular pay band.

The incremental method was found to have lacunae as 20% of records were found to be missing in various government departments, and officials felt this could lead to litigation in future.

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