Central Pension Disbursal System proposed by CGDA- Coming Problem with ESM

Dear Sir,

1. Kindly refer to my mail sent on 12 Feb 2020 on Central Pension Disbursal System proposed by CGDA and likely to be approved or already approved for implementation.

2. I visualize some more problems likely to come up when the new pension disbursal system is implemented without much thought. Whenever such new procedures are to be implemented, it is advisable to carry out pilot project in each of the states to see how this can be implemented without any financial distress to the pensioners. As on date we have 28 PSU banks and 4 Private Banks, 62 DPDOs, few treasury offices and post offices involved in pension disbursal. The banks over a period of time have developed Central Pension Processing Centres (CPPCs) to improve the pension disbursal system. SBI and PNB which are major banks with large number of defence pensioners have opened their cells in the premises of PCDA (Pensions) Prayagraj to get instant clarifications sought by their CPPCs on any policy matter on pensions. 

3. Master Data Base. If the new Centralised Pension Disbursal system is to be implemented effectively, the CPDA must have a master database containing the service no, rank, name of pensioner, name of bank, its IFSC, location, amount of pension now being paid for 25 lakh pensioners. As is done by PCDA (O) Pune, one consolidated RTGS is sent to each of the banks from where the pension is remitted to the serving Army Officers. This master data base which contains data of 25 lakh pensioners (with addition of 50,000 to 60,000 every year) need to be updated almost on daily basis due to many changes in the data. Pensioner may change his bank in the same city or town or village. He may relocate to another city or town due to re-employment of for any other reason. This change has to be reflected in the master data base and also to the individual branch of bank. This can be done only when the pensioner intimates such changes to the CPDA. In addition, the CPDA has to have data bases branch wise, bank wise so that RTGS payment is made every month or whenever Corr PPO is issued enhancing pension by PSAs. 

4. Likely Problems Encountered in the New System of Pension Disbursal.

 (a) Revision of Pension. CPPCs have been tasked to work out pension revision as and when it takes place like in 5-year OROP or in 10-year Central Pay Commission. They are also required to work out arrears of revised pension as orders of Government for implementation of pension revision come almost one year to one and half years later. The PCDA (Pensions) Prayagraj simply issues a circular like Circular 555 for implementation of OROP – 2013 w.e.f. 01 Jul 2014. It took almost six months for the banks to develop the software required to work out the arrears and remit them. The OROP – 2018 should have been implemented w.e.f. Jul 2019 but not a word is heard about it. God knows when it will be implemented. Since OROP is a statutory activity approved by the Hon’ble Parliament in the Finance Act of 2014, OROP cannot be discontinued. Therefore, as and when circular for OROP – 2018 is issued by PCDA (Pensions) Prayagraj, then CPPCs and DPDOs will have to work out revised pension and also the arrears. PSAs wash off their hands once Circular is issued. It is not easy to work out revised pension of 25 lakh pensioners in spite of best softwares available. Since the job is being presently undertaken by 32 CPPCs, revision of pension takes less time. How this gigantic task of revision of pension will be undertaken by one Central Pension Disbursing Agency (CPDA)?

(b) Disability Element of Pension. Disabled soldiers who are denied disability element at the time of their retirement get it approved either by Min of Def during their first and second appeals or by AFTs. When sanction of disability element is given from date of retirement, it takes minimum one week for banks to arrive at arrears including half yearly DR on disability element from the time of retirement in MS Excel. Maybe it may take one day if CPDA has the necessary software. Will CPDA manned by DAD staff be able to do it correctly to all disabled soldiers though such cases may not occur at the same time?

(c) Enhanced Pension Sanctioned by AFTs. There are a number of judgments of AFTs which sanction higher pension such as pension of Lt Col to Majors with 21 years of qualifying service or pension of Nb Sub to Pre – 2006 Hony Nb Subs etc. The arrears including half yearly DR has to be worked out as per the judgment of AFTs. Will one CPDA carry out this onerous task?

(d) Legal Cases. Most of the legal cases involve financial effect. A Maj Gen though approved to the rank of Lt Gen could not get his promoted rank due to lack of vacancies. He therefore goes to AFTs and gets a judgment by which he was required to be promoted to the rank of Lt Gen from the day he retired as Maj Gen. The pay and allowances of the rank of Lt Gen for two years from date of retirement as Maj Gen with half yearly DR plus enhanced pension of Lt Gen has to be worked out. There are few Maj Gens who got such judgments from AFTs in the past. Can CPDA work out such arrears which is a very complex job?  

(e) Fixation of Pension of Widows of Ex-Servicemen. Whenever an Ex-Serviceman of any rank goes to his heavenly abode, the Corr PPO is issued fixing pension of the widow on production of death certificate through Service HQs for officers and through Record Offices for JCOs / OR. This also takes few months. Unless the master data base of the CPDA is amended to show death of pensioner and fixation of pension of widow, there is a possibility of remittance of pension of deceased Ex-Serviceman which results in over payment.

(f) Change of Bank. Presently the pensioner has the freedom to change his bank or bank branch in case he finds the services are poor. Unless the pensioner intimates such changes to CPDA and unless the master data base is updated, the pensioner will get his pension to his old bank where the account is closed.  This will result in the pensioner not getting his pension and amount so received by old bank will go into suspense account of the bank till the problem is resolved. How will the pensioner inform change of bank to the CPDA?

(g) Hacking of Master Data Base of CPDA. The softwares have become so effective hackers have the ability to hack any software in spite of best anti-virus softwares. Even web site of Dept of Defence of USA is hacked. What will happen if the master data base of pensioners with the CPDA is hacked or modified?

(h) Change of Staff of CPDA. The new system is to be mastered by staff who operate it. The DAD personnel are not likely to be placed in CPDA for life. They will move out after every 3 or 5 years to the new location on regular transfer or may go out on promotion. Till the new staff is well trained to operate the new system confidently, many problems in pension disbursal are likely to arise. 

5. I am not suggesting that new system should not be introduced. It has definitely some advantages over the present system of pension disbursal. Unless pilot project in each of the 28 states and 8 UTs with the new system of pension disbursal is carried out and problems encountered are resolved at the earliest, pensioner is likely to be put to financial distress. There should be an effective and prompt pension grievance redressal system so that pensioners gain confidence in the new system.

6. Please give me your valuable suggestions on the likely problems and your remedial measures so that one consolidated case is made out and sent to Min of Def (ESW) on the new pension disbursal system. Rs 180 crores per annum presently paid to the banks who have gained expertise in pension disbursal is a very small sum compared to the grievances likely to be encountered by the pensioner. None of the DAD personnel in the new system at CPDA will ever be affected as they get their monthly pay and allowances. It is the pensioners who will suffer if there is a malfunction in the system. Let us not depend too much on modern data bases etc. These data bases need to be revised almost every day as some changes are bound to take place. Who will do all these in CPDA?

Warm regards,

Brig CS Vidyasagar (Retd)

040-48540895

13 Feb 2020