History of PENSION
updated on 16 December, 2020
PENSIONERS’ DAY —- 17th DECEMBER
History of Pension in India is over 160 years old. Pension system was introduced by the British Government after the Indian Independence struggle in 1857. It was a reflection of the pension system then prevailing in Britain. In the Banking Industry, employees of the IBI and thereafter SBI were the oldest recipients of Pension which was paid since the time of three Presidency Banks which was continued as such after their amalgamation with IBI in 1921 and further in SBI.
The British Government decided to provide financial cover to retired employees for their post retirement life. The system was structured by the Indian Pension Act of 1871. However, final authority for granting pension was vested in Viceroy and Governors due to which the employees /Pensioners were at the mercy of Viceroy and Governors. British Government occasionally compensated Pensioners through increase in their pension to neutralize effect of inflation. Even though retirement benefits were being given by the GOI but they were not incorporated in Fundamental Rules which were made effective from 1-1-1922.
After independence the Government of India framed Central Civil Services (Pension) Rules, 1972 and Regulations governing pension for Civil Services & Armed Forces Personnel. By a Memorandum dated May 25, 1979, the Government of India liberalized the formula for computation of pension in respect of employees governed by the Central Civil Services (Pension) Rules, 1972 and made the same applicable to employees retiring on or after March 31, 1979. By another Memorandum issued on September 23, 1979, it extended the same, subject to certain limitations, to the Armed Forces’ personnel retiring on or after April 1, 1979. By above memoranda’s the liberalization in computation of pension was made applicable only to those retiring on or after the date specified and the benefit of liberalization had been denied to all those who had retired earlier to these dates.
Shri. D S Nakara, Financial Advisor to the Ministry of Defence, an officer of Defence Service (Audit & Accounts services) retired in 1972 and others filed a Writ Petition in Supreme Court under Article 14 of the Constitution challenging the validity of the above two memoranda in so far as the liberalization in computation of pension had been made applicable only to those employees who retired on or after the dates specified in these memoranda and the benefit of liberalization had been denied to all those who had retired earlier. This Writ Petition was heard by the Constitution Bench of 5 Supreme Court Judges comprising of Chief Justice Y.V.Chandradud, Justice. D.A.Desai, Justice. V. D. Tulzapurkar, Justice O. C. Reddy and Justice Bharul Islam.
After detailed hearing of the petition, judgement of the Court was pronounced on 17th December 1982.The Main extracts of judgement are:
“Impugned memorandum, Exhibits P-I and P-2, violate Art. 14 and are unconstitutional and struck down with this specification that the dates mentioned therein will be relevant as being one from which the liberalized pension scheme becomes operative to all pensioners governed by 1972 Rules irrespective of the date of their retirements. Omitting the unconstitutional part, it is declared that all pensioners governed by the 1972 Rules and Army Pension Regulations shall be entitled to pension as computed under the liberalized pension scheme from the specified date, irrespective of the date of retirement. An arrears of pension prior to the specified date as per fresh computation is not admissible. Let a writ to that effect be issued. But in the circumstances of the case, there will be no order as to costs.”
In addition to the treating old pensioners and new pensioners belonging to same class of people alike thereby removing discrimination, the judgement also laid down under-noted principles:-
1. Pension is a vested right which is Statutory in character.
2. All pensioners form one class irrespective of date of their retirement.
3. Pension is not a bounty nor it is a matter of grace depending upon the sweet will of the employer.
4. Pension is not ex-gratia payment but it is a payment for past services rendered.
5. Pension is a right and payment of it does not depend upon the discretion of employer but it is governed by the Rules Regulations and employees coming within the rules is entitled to claim pension.
6. Grant of pension does not depend upon any one’s discretion. It is only for the purpose of quantifying the amount of pension having regard to service and other allied matters that it may be necessary for the authority to pass an order to that effect but the right to receive pension flows to the employee not because of any such order but by virtue of Rules.
7. Pension is a term applied to the periodic money payment to a person who retires at a certain age which is considered as the age of disability and its payment usually continues to the rest of the life of the recipient.
8. Pension payable to employee is earned by rendering long and efficient service and can be said as a deferred portion of compensation for the services rendered.
9. Pension as a retirement benefit is in consonance with the furtherance of the goal of the Constitution which is paid to give a fillip and push to the policy of setting up a welfare state.
10.The pension scheme consistence with available resources must provide that pensioner would be able to live a life
(a) Free from want, with decency, independent and with self respect and
(b) At a standard equivalent to pre-retirement level.
This is a very historic judgement which has stood the test of time for over forty years and even today is considered the most landmark judgement based on which pension cases are being settled even today, based on the principles laid down in this case popularly Known as Nakara Case.
This landmark judgment on pension payment was pronounced on 17th December 1982 due to which this day is chosen to celebrate as PENSIONERS DAY in India.