PENSION UNDER DPE GUIDELINES _ BY CAPT NARAYAN SINGH RAYHORE

PENSION UNDER DPE GUIDELINES _ BY CAPT NARAYAN SINGH RAYHORE
By Badrinath Vasandi in EX-ONGCIANS ·

PENSION UNDER DPE GUIDELINES

by Narayan Singh Rathore on Monday, November 14, 2011 at 4:00pm

DPE GUIDELINES FOR OWN PENSION SCHEME OF CPSE (ONGC)



1. DPE OM No.2 (70)/08-DPE (WC) dated 26th November 2008: -

“Para 12: Long Term Incentives, introduction of cost to the customer (CTC) concept in CPSEs, Pay of Executives on deputation / transfer to CPSEs, Pay of Government officers on deputation to CPSEs and Superannuation Benefits will be as per Annex.-IV.”

1.1. Para V of Annex.-IV:

“Superannuation Benefits: CPSEs would be allowed 30 of Basic Pay as Superannuation benefits, which may include Contributory Provident Fund (CPF), Gratuity, Pension and Post-Superannuation Medical Benefits. The CPSEs should make their own schemes to manage these funds or operate through Insurance companies on fixed contribution basis. The amount of Pension, Gratuity and Post-Retirement Benefit will be decided based on the returns from the schemes to be operated. The Pension and Medical benefits can be extended to those executives, who superannuate from the CPSE and have put in minimum of 15 years of service in the CPSE, prior to superannuation.”

2. DPE OM No. No.2 (70)/08-DPE (WC)/GL-VII/09 dated 2nd April, 2009:

“Para 2. The Government, after due consideration of the recommendations of the Committee of Ministers have decided further as follows:

(ii). Superannuation Benefit: The ceiling of 30% towards superannuation benefits would be calculated on Basic Pay plus DA instead of Basic Pay alone. Any superannuation benefit will be under a “defined contribution scheme” and not under a “defined pension scheme”. CPSE that do not have Superannuation scheme, may develop such scheme and obtain the approval of their Administrative Ministry. However, no other superannuation benefit can be granted out side this 30% ceiling. (para 12, Annex.-IV (v) of OM dated 26.11.2008 refers).”

3. DPE OM No.2 (81)/08-DPE (WC)/GL-IXI/2011 dated 20 July,2011:

“Para 2:

(i). Administrative Ministry/Department may consider creating a common corpus for the retired employees of the CPSEs, under their Administrative control. The purpose of the corpus would be to take care of medical and any other emergency needs of retired employees.

(ii). Each CPSE under their Administrative Ministry/Department, to contribute not more than 1.5% of its PBT for the above said corpus.

(iii). A Committee, headed by an independent Director, to be decided by Ministry/ Department may be formed by the respective Administrative Ministry/Department for implementation of said corpus.

(iv). Scheme based on individual CPSE as conveyed in OM dated 8.7.2009 to continue but basic conditions like not more than 1.5% PBT (whether Ministry/Department based and or individual “CPSE” based) and no budgetary support by Government would apply to the Ministry/Department based scheme proposed now. Therefore, there may be a situation, where a CPSE under a Ministry/Department may have a separate scheme for its employees, but at the same time contribute to common corpus for retired employees of other CPSEs under Administrative Ministry/Department. In such cases also the total contribution will not exceed 1.55 of PBT of a particular financial year. For individual CPSE based scheme, constitution of Committee will be that as already indicated in para 5(iii) of OM dated 8.2.2009.

(v). Purpose of the scheme (individual of common corpus under a Ministry/Department for its CPSEs) to be as per from 2(i) above. The scheme may be implemented preferably through approved Insurance companies. It is clarified that scheme should not become a defined benefit pensionery scheme.

(vi). Benefits under the Scheme may vary from year to year depending upon the contribution by CPSE(s) in a particular year as the contribution is in turn dependent on the profits, affordability and sustainability of the CPSE s) concerned.

(vii). Such Corpus will cover only those employees of CPSEs, who retired prior to 1.1.2007

Para 3. Administrative Ministries/Departments may suitably issue instructions to CPSEs under their administrative control for their information and necessary action.

This issues with the approval of Minister (HL & PE).”

3. Extract from Presentation made by Director, DPE in Workshop on 16.11.2011:

“Committee recommended upto 30 % of basic pay towards superannuation benefit after providing for PF and gratuity a buffer available for pension and/ or post retirement benefits. This was available only for those who superannuate after 15 years service in a CPSE.

Corpus from 1.5% PBT be created by CPSE for medical and any other emergency needs for retired executives and also those who were not adequately covered by a pension scheme.

Creation of Corpus was provided for benefit of those who had no support system like pension or medical benefit scheme. However, for those retiring after 1.1.2007, superannuation benefits upto 30% of basic pay + DA was provided which include CPF, Gratuity, Pension and Post Superannuation medical benefits.”



COMMENTS:

a) Since ONGC did not have its own contributory Pension Scheme, it could formulate an independent Pension Scheme. Corpus to be created from 1.5% PBT of Previous year (s). Superannuation benefits at 30% of Basic + DA included CPF, Gratuity and Medical benefit. Amount remaining as buffer from the Corpus could be used for Pension with approval of Ministry of P& NG. Incidentally, ONGC being a Maharatna Company, it is expected to make contribution to the Common Corpus under Ministry of P& NG, out of 1.5% PBT.

(a-i). This Pension Scheme being fully supported by ONGC’s own Contribution, other Schemes like PRBS & EPS-95 are not to be linked.