CGDA – CENTRALISED PENSION DISBURSEMENT SYSTEM CONCEPT PAPER FOR ARMED FORCES PENSIONERS
Ministry of Defence disburses appx Rs. 51,000 crore every year as pension benefits to 24.16 lakh defence pensioners – both service personnel as well as defence civilians. While pension sanction is being done in a centralised way – by PCDA (Pension) Allahabad in r/o Army and defence civilians; by PCDA (Navy) in r/o Navy personnel and by JCDA (AF) Subroto Park, New Delhi in r/o Air Force personnel, pension disbursement is being carried out by a number of agencies who are working as PDAs (Pension Disbursing Agencies) – 28 Public Sector and 4 Pvt Sector Banks, 63 DPDOs, State Treasuries and Post Offices. Banks have the largest number of pensioners on their roll – appx 18.06 lakh pensioners or 75% of the total number of defence pensioners. And they disburse Rs. 3800 crores every month (or Rs. 45,600 crores per annum which is almost 90% of the total pension disbursement to defence pensioners) as pension to these pensioners. Instances have come to notice where different practices have been followed by banks or where different interpretation have been arrived at and implemented for one government order, resulting in complaints from pensioners. An analysis of grievances received at the Ministry or at CGDA office or at PCDA (Pension) office reveal that more than 95% of the complaints pertain to pensioners drawing their pension from the banks. The task of addressing these grievances and providing services to pensioners to their complete satisfaction is an arduous one. This, however, could be changed by adopting a new paradigm for pension disbursement.
2. This new paradigm is centralised disbursement of pension. This simply means disbursing pension from a central agency viz. Centralised Pension Disbursement Agency to all the pensioners. The Existing Pension Disbursement System.
PDA – (CPPC) – Bank A/c
PDA – (DPDO) – Bank A/c – Cash Payment
PDA (Treasury) – Bank A/c- Cash Payment
3. The present system of pension disbursement is an opaque one in the sense that it does not easily provide details reg. no of pensioners, category wise distribution of pensioners, amount of pension disbursed in a month and govt’s pension liability. Collation of the information from various sources is quite difficult and the output is not always accurate.
4. Further, in the existing system, there is a multiplicity of PDAs ‐ 29 Banks, 63 DPDOs and a large number (500+) of State Treasuries. As mentioned earlier, many a times PDAs tend to interpret Govt. Orders differently. This, in some PSA cases delays the implementation of the order itself and in some other cases the order gets to be implemented differently by different PDAs. In both cases, generally, pensioner is the sufferer. There are other issues/difficulties in the existing pension disbursement system:‐
I. With multiple PDAs, the system is not amendable to effective monitoring as well as grievance handling. It makes the task of all decision makers including the Ministry, a very difficult one.
II. There is a delay in booking the pension amount to Govt. account. This also makes it relatively difficult to know the exact pension liability.
III. Even at a given time, it becomes an arduous task to exactly find out the number of active defence pensioners (including categories‐wise) as the information is to be collated from a large no. of PDAs.
IV. Maximum pensioners are drawing pension from banks. It has been experienced that they (Banks) do not have dedicated staff to deal with pensioners’ issues. Also, they are not well conversant with orders/issues peculiar to Defence pension..
The Proposed System
5. The proposed system of Centralised disbursement of pension is not only transparent but easy for information processing and retrieval (PPO & pension (Pension amt) documents).
PSA – CPDA – Pensioners – Bank A/c
6. Under the proposed system, after sanctioning pension and issuing Pension Payment Order, the pension sanctioning authority will forward the PPO and other details – including bank details – of the pensioner to the Centralised PDA on soft format through a secured channel. It could be on the CGDA intranet and for enhanced security could also be with digital signature. The CPDA will process the papers and will initiate first payment as well as subsequent monthly pension payments for credit to the pensioners’ bank accounts (as given by the PSA along with the PPO) through the NEFT/RTGS or the CMP (on‐line payment mechanism with SBI). Since the CPDA is making payment of pension – he can directly book the amount to the government account, avoiding any delay or suspense head booking. For the pensioners, there will be no change as they would receive pension in their bank account, as is the status presently. The proposed system only replaces the multitude of PDAs with a single PDA without affecting the pensioners’ interest and rather bringing about a focused delivery mechanism. There are a number of benefits of the proposed system –
i. Uniform interpretation and implementation of govt orders
ii. Instant booking of pension payment to govt accounts – giving authorities a true picture of the pension liability and payment.
iii. Better grievance monitoring system can be instituted with a single PDA. Easier for everybody.
iv. Centralised database will help in better exploitation of information and communication technology for the betterment of services to the pensioners.
v. There will be no change as far as pensioners are concerned. They will continue to receive their pension in their given bank accounts.
vi. No loss to the banks in terms of accounts maintenance as they will continue to be the final pension paying agency.
vii. Future scalability is possible and relatively simple. For example, a centralised call centre could provide solutions to the pensioners for their queries or complaints.
7. In addition to these benefits, the proposed system will also result into a large saving to the Ministry of Defence. Presently, MoD pays Rs. 60 per transaction to Banks; and with 12 regular payments and 4 DA payments in a year, MOD pays Rs 960 per pensioners per year. For 18.06 lakh Bank pensioners, this amounts to almost Rs. 180 Cr. every year. If all pensioners are brought under the centralised PDA system ‐ where CPDA will credit pension in pensioners Bank A/c through NEFT/RTGS ‐ saving of Rs. 180 Crore could be achieved.