PAY BONANZA FOR EXECUTIVES OF CPSU The Government has approved the Ministry of Heavy Industry’s recommendation for pay revision of the executives of the Central Public Enterprises. The Minister of Heavy Industry and Public Enterprises, Shri Santosh Mohan Dev highlighted a few important aspects of this pay revision at a press conference in New Delhi . He said, “this was the best ever package given by any Central Government to the executives of CPSE. The entire exercise was based on the premise that the existing disparity between the salary of private sector and the salary of the public sector executives should be minimized as far as practicable. This will certainly lower the feeling of deprivation amongst the Central PSU executives and also arrest the attrition of employees who are migrating to private sectors.” The Minister said this package has been finalized in the fastest possible mode. The 2nd Pay Revision Committee was constituted in November, 2006 with Justice Rao as the Chairman and Dr. Nitish Sen Gupta, Dr. Parakh and Shri Bhaskarudo as Members. The Committee submitted its report on 30th May, 2008. Shri Santosh Mohan Dev said that in this package, the ministry has taken care of not only the salary structure but also the future growth, so that the executives are encouraged to perform better. The salient feature of the decisions of the Government which have been taken today for pay revision of CPSE executives are as follows:- 􀂾 There would be a single set of pay scales for below Board level executives with an elongated span, which includes the Risk Pay at the minimum and maximum level instead of 5 sets of scales of pay. The revised pay scales are being circulated to you separately. 􀂾 The Government has decided to give uniform fitment @ 30% of Basic Pay + DA as on 01.01.2007 to all executives, instead of graded fitment of 3% to 42%. 􀂾 Government has decided to give running pay scales for Directors and CMDs depending upon the schedule of the CPSE, by including Risk Pay at the maximum instead of Fixed Pay, which was suggested by the Committee. 􀂾 The existing categorization of CPSEs into 4 schedules will continue. 􀂾 The Government has accepted the recommendations of the 2nd Pay Revision Committee with regard to Dearness Allowance, House Rent Allowance, Leased Accommodation, City Compensatory Allowance, other allowances/ perks, Variable Pay/ Performance Related Pay, Performance Management System, Remuneration Committee, Long Term Incentives, Cost to the Company, retirement age and Superannuation Benefits. 􀂾 The benefit of one additional increment for every two increments would be provided to mitigate the problem of junior and senior executive getting the same pay. 􀂾 A uniform rate of annual increment as well as stagnation increment @ 3% of Basic Pay in all CPSEs will be adopted. 􀂾 The Government has even provided pay increase to the marginally profit making CPSEs at the fitment of 10% or 20% of their existing pay + DA, depending upon the affordability of concerned CPSE. 􀂾 A big demand by CPSEs employees regarding raising the limit of gratuity has been accepted by the Government and the ceiling of gratuity for the executives would now stand increased to Rs. 10 lakhs. So far the said ceiling was Rs. 3.5 lakhs. 􀂾 Appropriate compensation package in respect of non unionized supervisors would be decided by the respective Board of Directors of CPSEs. 􀂾 Expenditure on account of pay revision would be borne by the CPSEs, out of their earnings. 􀂾 Even if there is any specific issue/problem of CPSEs employees, government has also constituted Anomalies Committee to look into such issues. 􀂾 The effective date of pay revision will be 01.01.2007. REVISED SCALES OF PAY AT BOARD AND BELOW BOARD LEVELS IN CPSEs *E7 only in CPSEs of Schedule A, B & C. * E7 only in CPSEs of Schedule A,B & C. *E8 only in CPSEs of Schedule A & B. *E9 only in CPSEs of Schedule A. REVISED PAY SCALES


New Pension Scheme-Features The NPS is a new contributory pension scheme introduced by the Central Government for its own new employees. Under the new pension system, each new central government employee will open a personal retirement account on joining service. Every month, and till the employee retires or leaves government service, a part of the employee's salary will be transferred into this account. When the person retires, he will be able to use these savings to take care of the needs and expenses of his family during old age. Pension Fund Regulatory and Development Authority was established by the Government of India on 23rd August 2003 to promote old age income security by establishing, developing and regulating pension funds, to protect the interests of subscribers to schemes of pension funds and for matters connected therewith or incidental thereto. When you join Government service, you will be allotted a unique Personal Pension Account Number (PPAN). This unique account number will remain the same for the rest of your life. You will be able to use this account and this unique PPAN from any location and also if you change your job. The PPAN will provide you with two personal accounts: 1. A mandatory Tier-I pension account, and 2. A voluntary Tier-II savings account. 1. Tier-I account: You will have to contribute 10% of your basic+DA+DP into your Tier-I (pension) account on a mandatory basis every month. You will not be allowed to withdraw your savings from this account till you retire at age 60. Your monthly contributions and your savings in this account, subject to a ceiling to be decided by the government, will be exempt from income tax. These savings will only be taxed when you withdraw them at retirement. 2. Tier-II account: This is simply a voluntary savings facility for you. Your contributions and savings in this account will not enjoy any tax advantages. But you will be free to withdraw your savings from this account whenever you wish. Main Features and Architecture of the New Pension System The new pension system would be based on defined contributions. It will use the existing network of bank branches and post offices etc. to collect contributions. There will be seamless transfer of accumulations in case of change of employment and/or location. It will also offer a basket of investment choices and Fund managers. The new pension system will be voluntary. The system would, however, be mandatory for new recruits to the Central Government service (except the armed forces). The monthly contribution would be 10 percent of the salary and DA to be paid by the employee and matched by the Central Government. However, there will be no contribution from the Government in respect of individuals who are not Government employees. The contributions and returns thereon would be deposited in a non-withdrawable pension account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the central Government service. In addition to the above pension account, each individual can have a voluntary tier-II withdrawable account at his option. Government will make no contribution into this account. These assets would be managed in the same manner as the pension. The accumulations in this account can be withdrawn anytime without assigning any reason. Individuals can normally exit at or after age 60 years from the pension system. At exit, the individual would be required to invest at least 40 percent of pension wealth to purchase an annuity. In case of Government employees, the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse at the time of retirement. The individual would receive a lump-sum of the remaining pension wealth, which she would be free to utilize in any manner. Individuals would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitisation would be 80% of the pension wealth. There will be one or more central record keeping agency (CRA), several pension fund managers (PFMs) to choose from which will offer different categories of schemes. The participating entities (PFMs, CRA etc.) would give out easily understood information about past performance & regular NAVs, so that the individual would able to make informed choices about which scheme to choose. Individual will not be eligible to Gratuity The General Provident Fund (Central Service) Rules, 1960 also do not apply to them. They will not be permitted to contribute towards GPF more details:


CCL –Clarification-fear of staff shortage The CCL, which is over and above the existing six-month maternity leave, will now be available only after the women employees exhaust their earned leave or EL. The CCL was announced two months ago on the recommendations of the Sixth Pay Commission to help women employees take better care of their children and family. But the more virtually backfired with several central government departments being flooded with applications from women employees for CCL. Alarmed, department heads then petitioned the government, arguing that granting such leave for long periods would cause acute staff shortage. The department of training and personnel (DoPT) has now modified the earlier order saying women employees cannot demand the special leave as a matter of right and can avail themselves of it only after they have exhausted their EL. “The intention of the pay commission in recommending CCL for women employees was to facilitate them to take care of their children at the time of need. However, this does not mean that CCL should disrupt the functioning of central government offices. The nature of this leave was envisaged to be the same as that of earned leave. Accordingly, while maintaining the spirit of the pay commission’s recommendations and also harmonising the smooth functioning of the offices, clarifications are issued. CCL can be availed only if the employee concerned has no EL to her credit,” the new DoPT circular says. Accordingly, CCL will be treated like EL and Saturdays, Sundays, gazetted holidays falling during the period of leave would also be counted in it, as is the case with EL.

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