The pension system in India has been changing from time to time, especially for government employees and their families. There have been many significant changes in pension before and after 1986, 1996, 2006 and 2016. In this article, we will understand these changes in detail and know how they affect pensioners.
Introduction to pension system
Pension is a financial scheme that provides economic security to the person after retirement. The pension system for government employees and their families in India has been amended from time to time. The aim of these amendments is to ensure the service period of the employees and their income based on their economic needs.
Main Changes: 1986, 1996, 2006 and 2016
The table below has summarized the main changes in the pension system related for these years:
| Year | Main change |
| 1986 | Pension calculation started with amendment in pay scale. |
| 1996 | The minimum pension was increased under the recommendations of the Fifth Pay Commission. |
| 2006 | The Sixth Pay Commission implemented the grade pay based pension system. |
| 2016 | The Seventh Pay Commission provided for pension calculation on the basis of “notational pay”. |
Pension system before and after 1986
Before 1986
- Calculation of Pension: Based on the original salary and service period.
- Minimum pension: There was very low, causing economic problems.
- Dearness allowance: Limitedly applicable.
After 1986
- According to the recommendations of the Fourth Pay Commission, the pension was based on the “Notational Pay”.
- Total pension was increased by adding dearness allowances.
- The minimum pension was fixed so that all retired employees could get benefits.
Pension system before and after 1996
Before 1996
- Prior to the Fifth Pay Commission, pensioners had limited benefits.
- Dearness allowance was low and was not updated regularly.
After 1996
- The Fifth Pay Commission proposed to increase the minimum pension to ₹ 1275 per month.
- Family Pension was also amended.
- Provision was made to increase dearness allowances regularly.
Pension system before and after 2006
Before 2006
- Prior to the Sixth Pay Commission, grade pay based system was not applicable.
- The last salary of retirement time was the basis of pension.
After 2006
- The Sixth Pay Commission implemented the Grade Pay based system.
- The minimum pension was fixed at ₹ 3500 per month.
- A provision was made to amend dearness allowances every six months.
Pension system before and after 2016
Before 2016
- Before the Seventh Pay Commission came into force, the use of “notational pay” was limited.
- There was a big difference between minimum and maximum pension.
After 2016
- The Seventh Pay Commission implemented the “Notational Pay” based calculation.
- The minimum pension was fixed at ₹ 9000 per month.
- Dearness allowance was added according to the new formula.
- Family pension was also amended so that it is 30% of the total income.
Important point
- Dearness Allowance (DA):
- It is revised every year or six months.
- This keeps the purchasing power of retired employees.
- Minimum and maximum limit:
- Each Pay Commission has increased the minimum limit so that all employees get adequate benefits.
- Family Pension:
- It has also been updated regularly to benefit family members.
- Digital process:
- Now it has become easier to apply through online portals.
Summary: Which beneficiaries are?
The list below reflects those who can take advantage of these changes:
- Government employees who have retired before 1986, 1996, 2006 or 2016.
- Their family members who get family pension.
- Military personnel and other special categories such as employees with disabilities.
conclusion
The Government of India has from time to time has improved the pension system as per the recommendations of the Pay Commissions. Its purpose is to provide economic security to retired employees and their families. However, there are still some challenges such as to benefit all the beneficiaries at the right time.
Disclaimer:
This article is written only for the purpose of giving information. The information given in it is based on various government orders and reports. Be sure to verify on the concerned department or portal before claiming any scheme or profit.
