What is Pension? (Excerpted from the Judgment of Supreme Court in the NAKARA case) What is pension ? What are the goals of pension ? What public interest or purpose, if any, it seeks to serve? if it does seek to serve some public purpose, is it thwarted by such artificial division of retirement pre and post a certain date ? Pension is a term applied to periodic money payments to a person who retires at a certain age considered age of disability; payments usually continue for the rest of the natural life of the recipient. The Constitution Bench in Devki Nandan Prasad v. State of Bihar and Other [1971-I L. L. J. 557], wherein this Court authoritatively ruled that pension is a right and the payment of it does not depend upon the decision of the Government but is governed by the rules and a Government servant coming within those rules is entitled to claim pension. It was further held that the grant of pension does not depend upon any ones discretion. It is only for the purpose of quantifying the amount having regard to service for the authority to pass an order to that effect but the right to receive pension flows to the officer not because of any such order but by virtue of the rules. Initially this class of pension(Superannuation) appears to have been introduced as a reward for loyal service. Probably the alien rulers who recruited employees in lower echelons of service from the colony and exported higher level employees from the seat of Empire, wanted to ensure in the case of former continued loyalty till death to the alien rules and in the case of latter, an assured decent living standard in old age ensuring economic security at the cost of the colony. In the course of transformation of society from feudal to welfare and as socialistic thinking acquired respectability,State obligation to provide security in old age, an escape from under served want was recognized and as a first step pension was treated not only as a reward for past service but with a view to helping the employee, to avoid destitution in old age. The quid pro quo was that when the employee was physically and mentally alert, he rendered unto the master the best, expecting him to look after him in the fall of life. A retirement system therefore exists solely for the purpose of providing benefits. In most of the plans of retirement benefits, everyone who qualifies for normal retirement receives the same amount . The genesis of superannuation pension can be traced to the first Act of Parliament (in U. K.) to be concerned with the provisions of pensions generally in the public offices. It was passed in 1810. The Act which substantively devoted itself exclusively to the problem of superannuation pensions was superannuation Act of 1834. These are landmarks in pension history because they attempted for the first time to establish a comprehensive and uniform scheme for all who we may now call civil servants. Even before the 19th century, the problem of providing for public servants who are unable, through old age or incapacity, to continue working has been recognised, but methods of dealing with the problem varied from society to society and even occasionally from department to department. Northcoet-Trevelyan Report: A welfare State has an obligation to its citizens who having rendered service during the useful span of life must not be left to penury in their old age, but the evolving concept of social security is a later day development. And this journey was over a rough terrain. To note only one stage in 1856 a Royal Commission was set up to consider whether any changes were necessary in the system established by the 1834 Act. The Report of the Commission is known as Northcote-Trevelyan Report. The Report was pungent in its criticism.(Trevelyan was the son-in-law of Lord Macaulay...you can imagine the magnitude of hatred and despise against the poor!) Let us therefore examine what are the goals that pension scheme seeks to subserve ? A pension scheme consistent with available resources must provide that the pensioner would be able to live : (i) free from want, with decency, independence and self-respect, and (ii) at a standard equivalent at the pre-retirement level. Many are literally surviving now than the post. We own it to them and end ourselves that they live, not merely exist. The philosophy prevailing in a given society at various stages of its development profoundly influences its social objectives. These objectives are in turn a determinant of a social policy. Pension is closely akin to wages in that it consists of payment provided by an employer, is paid in consideration of past service and serves the purpose of helping the recipient meet the expenses of living. To sum up, pensions is not only compensation for loyal service rendered in the past, but pension also has a broader significance, in that it is a measure of socio-economic justice which inheres economic security in the fall of life when physical and mental prowess is ebbing corresponding to ageing process and, therefore, one is required to fall back on savings. One such saving in kind is when you give your best in the hey-day of life to your employer, in days of invalidity, economic security by way of periodical payments is assured. In one sentence one can say that the most practical raison detre for pension is the inability to provide for oneself due to old age. One may live to avoid unemployment but not senility and penury if there is nothing to fall back upon. From the discussion three things emerge (i) that pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer and that it creates a vested right subject to 1972 rules which are statutory in character because they are enacted in exercise of powers conferred by the proviso to Art. 309 and clause (5) of Art. 148 of the constitution; (ii) that the pension is not an ex gratia payment but it is a payment for the past service rendered; and (iii) it is a social welfare measure rendering socio-economic justice to those who in the hey-day of their life ceaselessly toiled for the employer on as assurance that in their old age they would not be left in lurch. The goals for which pension is paid themselves give a fillip and push to the policy of setting up welfare State because by pension the socialist goal of security of cradle to grave is assured at least when it is mostly needed and least available, namely, in the fall of life.
Posted on: Mon, 08 Sep 2014 06:22:12 +0000
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