Proposal for Centralised Pension Disbursement System for Ex-Servicemen – CGDA presentts Concept Paper
CONTROLLER GENERAL OF DEFENCE ACCOUNTS
CENTRALISED PENSION DISBURSEMENT SYSTEM
CONCEPT PAPER
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 (CPDA) to all the pensioners.
3. The present system of pension imbursement 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 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.
6. Under the proposed system, after sanctioning pension and issuing
Pension Payment Order (PPO), the pension sanctioning authority will
forward the PPO and other details – including bank details – of the
pensioner to the Centralised PDA (CPDA) 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 (MoD). 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.
Implementation Modalities
8. Phase I can cover all new pensioners – appx. 80,000 per year –
coming into pension fold. This can be done from a particular date which
can be decided after taking decision on centralised pension disbursement
and creating necessary IT and Communication infrastructure.
9. In Phase II all DPDO pensioners can be covered. All original files
may be shifted to the CPDA DPDO‐wise. Given that out of 63 DPDOs, 52
have been centralised under Project Ashraya (Pension disbursement
system), this is likely to be smoother phase wherein shifting of files
and their appropriate indexing will be the main activity / focus.
10. In Phase III existing bank pensioners can be covered depending upon the response of the banks.
This would be the toughest phase both in terms of making banks agree
to the new model and in database management Banks revenue loss will also
be a big issue from their perspective. As such this phase will require
perseverance and a different strategy (including for database
management) which can be derived and decided later from the success of
the first two phases.
11. An issue which may require a conscious decision would be whether
the centralised disbursement should be from one location or
multi‐location. It is considered that in a networked environment,
location may not be an important factor from the view‐point of users.
However, for the ease and adaptability with the existing pension set‐up,
it is recommended to have three centres associated with the existing
pension sanctioning authorities, viz. PCDA
(P), Allahabad, PCDA (N), Mumbai and JCDA (AF), New Delhi. It is also
recommended to have a centralised call centre, which can have access to
the complete database of the three centres of CPDA. The call centre can
be co‐ located with one of the three centres for the purpose of
administrative convenience.
Role of DPDOs in the proposed centralised system
12. DPDOs are Pension Disbursement Agencies (PDAs) in the exiting
set‐up. Each DPDO is a distinct PDA. Presently, 63 DPDOs – 51 in
northern India and 12 in Southern India (Eastern central and Western
India have no DPDOs) – are working as PDAs for 4.7 lakh pensioners.
13. If we divide the role of a DPDO in terms of (i) processing of
monthly pension payments and (ii) identification exercise (which is not
restricted to any specific month (e.g. November for bank pensioners) and
continues for the whole year) then it can be stated that in the
proposed CPDA paradigm, role of DPDOs will not be there for first part
(i.e. payment processing). However, they can be effectively used for the
second part ‐ identification of pensioners. This would mean that DPDOs
would need to be remodelled as service centres for pensioners/ which
will carry out their annual identification, accept change
requests/applications on behalf of CPDA (for cases related to
re‐marriage, re‐ employment, death, Bank account changes etc.) and can
also act as grievance handling /settlement centre as they would be
linked with the CPDA server and can have a higher protocol communication
with the CPDA call centre. It is considered that in the proposed model ‐
one DPDO may only require one AO, one AAO (or two AAOs) and one MTS ‐
all proficient on the new system. Savings achieved in manpower (to be
assessed) can be used for opening up a few more service centres in areas
where pensioner concentration is relatively very high or in existing
offices of DAD or even with the Zila Sainik Board Offices.
Infrastructure requirements
14. To start the work at the CPDA, it is assessed that manpower
strength of one IDAS, One AO, two AAOs, 4 Adrs and 2 MTS would be
sufficient and can even last for the first two phases with 2‐4
additional Adrs. It is assessed that this manpower can be spared from
the existing resources of the organization of CDA (PD).
Source: CGDA
