State government pensions
From Indiapensions
Pension rules in states typically vary from state to state. Each state has its own set of rules, barring a few like Himachal Pradesh and Tripura, which follow the Central Civil Service Pension Rules, 1972. The pension scheme of most states is a defined benefit scheme paid out of the State Government revenues. The State Governments have been increasingly unable to keep up with pension payments. For example, the pension payments of all states put together were 17.1% of their own revenue receipts as of 2001-02. This number is only likely to increase in the future. Keeping the increasing liability in mind, many State Governments have initiated reform of their pension systems. Till now, sixteen Indian states have issued orders to join the new pension system for the new entrants to the State Government services. The old schemes continue for the existing employees.
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Applicability
Pension schemes typically cover all the State Government employees. There is however, a slight difference in the way employees of grant in aid institutions, local bodies and panchayats are covered under State pensions. There is also considerable variation in the way employees of State Electricity Boards (SEBs) and State Road Transport Corporations (SRTCs) are covered. In most cases the pension burden of employees of these organisations is borne by the State Governments. There are, however, a few states where the burden is also met by the concerned institutions themselves.
Pension Benefit
Calculation of pension
The basic pension amount is calculated with reference to average basic pay drawn by the State Government employee during the last 10 months of service. However, in a few states like Orissa, the basic pension is computed on the basis of the last pay drawn by the employee. The full pension amount is 50% of the average pay, payable to employees who have completed 33 years of qualifying service. For those employees who have not completed 33 years of service, the basic pension is calculated on a proportionate basis. In most of the states, there is a provision for adding 5 years to the total qualifying service while working out the basic pension pay in the case of employees seeking early retirement, provided they are left with 5 years of service. However, the total number of years shall not exceed 33 years for the purpose of calculation of pension. The minimum eligibility period for receipt of pension on retirement, other than voluntary retirement, is 10 years of service. In case of voluntary retirement, minimum service period is 20 years. The minimum pension/family pension payable is Rs.1275 p.m. The maximum limit on pension is Rs.12250 p.m and on family pension it is restricted to Rs.7350 p.m. There are, however, instances of minor variations. For example, in Tripura, the minimum pension is Rs.1300 p.m, while the maximum pension is Rs.11200 p.m. States normally follow full wage indexation for the pensioners. The exception is Kerala, where the government has not adopted full wage indexation.
Commutation of pension
A pensioner has the option to take away a portion of his/her pension, not exceeding 40 per cent of basic pension, as a lumpsum payment. Some State Governments, however, limit the commutation amount to one-third of the basic pension. The lumpsum amount payable is calculated with reference to the commutation table constructed on an actuarial basis. The monthly pension is reduced by the portion commuted and the commuted portion is restored on the expiry of 15 years from the date of receipt of the commuted value of pension. In Orissa, restoration of the commuted portion is allowed after 12 years. In Rajasthan and Assam, restoration of the commuted portion is allowed after 14 years. Dearness relief on pension, however, continues to be calculated on the basis of the original pension, i.e. without reduction of commuted portion.
Gratuity
There are three types of gratuity available to State Government employees:
- Retirement gratuity: A minimum of 5 years qualifying service and eligibility to receive service gratuity/pension is essential to get this one time lumpsum benefit. Retirement gratuity is calculated at the rate of one fourth of the last basic pay for each completed six monthly period of qualifying service.
- Death gratuity: This is one time lumpsum benefit payable to the nominee of the deceased employee.
- Service gratuity: An employee is entitled to receive gratuity (and not pension), if total-qualifying services is less than 10 years. Admissible amount is half-month basic pay for each completed six monthly period of qualifying service. There is no maximum or minimum monetary limit on the quantum. This one time lumpsum payment is paid over and above the retirement gratuity.
Non-pensionary benefit
On retirement, the State Government employees are entitled to certain additional non-pensionary benefits such as leave encashment, government employees insurance schemes, etc. It is mandatory for the government servant to contribute a certain (6 per cent) portion of his/ her emoluments towards the General Provident Fund.
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