Thursday, 31 August 2017

Why Should Not Hybrid Type Contributory Pension?

The agitations from the part of employees from various Central government departments were not powerful when the government introduced Contributory Pension system in 2014. The reason was clear and as far as employees’ unions are concerned, at that time, the protest against NPS was actually a fighting for protecting the interest of employees who are not entered into service. Since the strength of aggrieved employees were very few compared to employees who are not covered under NPS just after its introduction, no one was much concerned about the pros and cons of this scheme.

In other words, we can say that it was a struggle between self-protection of majority and a mere need of minority. In that phase, the majority succeed and neglected the minority.

After 13 years, the scenario has changed a lot when the NPS Babies have been grown and attained considerable strength in number. The old majority will become minority in near future.  Now think of a situation described below.

If the government, in 2024 while celebrating the 20th anniversary of implementation of contributory pension system, decide to spread the NPS facility to remaining employees who are supposed to enjoy the statutory pension benefits also and the government decide to give a lumpsum amount after calculating government contribution and appropriate percentage of interest as if the employee was in NPS system from the beginning of his career for investing it into an annuity of an insurance company for getting pension.

Whether NPS Babies have to fight against the government decision or not at that time?  Because most probably they will be the majority at that time.

We cannot blame them, if someone think that why should they give up their salary by conducting strikes for protecting the statutory pension of minority who had not fought against NPS in 2004.

But this lack of unity will not bring anything good.  So, everyone should go in unity and thereby weaken the tactics of divide and rule.

Even if the above said circumstances are hypothetical only, employees under statutory pension may be distracted due to various concerns which exist in the mind of employees und NPS also. Then why should they…?

Ok leave it, now we can forget the past and look forward with realistic approach.

While considering various factors, it is difficult and chances are very low to reinstate the old statutory pension system in government service.   Then the practical way is to propose different modifications in the existing contributory pension system to implement it in more beneficial manner.

Now most of the new employees are ready to contribute to their pension fund and they are mentally adjusted with that.  Even if there is a slight risk factor, I am sure that the benefit of 10% compulsory contribution will bring more happiness at the time of retirement.

A steady growth rate of 12 to 14 percent in NAV can be expected every year which is very high compared to traditional savings schemes. Another notable advantage is the low allocation charge and strict baring in the investment portfolio which reduces both risk and return.

There is no ambiguity and concern up to retirement and receipt of 60% of total net worth in the pension fund.  The confusion actually starts only while thinking about the remaining 40%. 

There is no assurance on option of Annuity Service Provider(ASP) or insurance companies which will be available at the time of retirement.

Inconsistency of pension amount is the main issue and there is no possibility for assured timely progress in pension amount to overcome the inflation like DA in statutory pension. (The only one option allows 3% increase in every year).  Following are the different pension options offered by ASP empaneled by PFRDA.

1.   Annuity/pension payable for life at a uniform rate.
2.   Annuity payable for 5, 10, 15 or 20 years certain and thereafter as long as the annuitant is alive.
3.   Annuity for life with return of purchase price on death of the annuitant.
4.   Annuity payable for life increasing at a simple rate of 3% p.a.
5.   Annuity for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
6.   Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
7.   Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor.

The clever tactics here applied is that no rate or amount has been mentioned in the available options and the rate of increase is mentioned in only one option which is very low.  When we opt for annual increase of 3% all other benefit like pension for spouse and return of purchase price will have to be ignored.  One thing is clear that pension amount will vary from option to option and there is no provision to switch between options.

What will be your Pension in Contributory Pension System?

Let us see approximately how much pension will get for a central government employee who have come under National Pension System.

If an employee having 20 lakhs rupees in his NPS account retires from service, he will have to spent 8 lakhs rupees (40%) to purchase annuity from any of the insurance company.  As per the existing rate of Annuity Service Provider, the employee will get Rs.3800/- to Rs.5900/- per month as pension.

Normally an employee need to complete 20 years of service to reach 20 lakhs rupees in his contributory pension fund in the existing salary pattern.

For example, suppose if a 40-year-old GDS entered into the departmental service as Postal Assistant in the year 2005 when he completes 12 years in service in 2017 he will have approximately Rs.8,00,000 in this CPF account. He will have approximately Rs.20,00,000/- in his NPS account when he retires in 2025.  

As per present rate he will get an average amount of Rs.4850/-  as monthly pension in 2025. And the same amount will continue forever.

Somebody may think that these figures are only my assumptions. Following are the annuity quotes provided by the Central Recordkeeping Agency applicable to above said example.

Subscriber Type
Government Sector Subscriber
First Annuitant Age
60 years
Purchase Price (excluding taxes in ₹)

Annuity Service Providers
Scheme Names

Annuity for life
Annuity for life with return of purchase price on death
Annuity payable for life with 100% annuity payable to spouse on death of annuitant
Annuity for life with a provision for 100% of the annuity payable to the spouse of the annuitant for life on death of the annuitant, with return of purchase price on the death of last survivor
Annuity payments would be made to the annuitant and his/ her spouse throughout their lifetime. Thereafter, these payouts would be made to the subscriber's mother and after her, to the father. On death of the father, the purchase price would be refunded to the annuitant's child/ nominee.

Life Insurance Corporation of India
Not Applicable

SBI Life Insurance Co. Ltd

HDFC Life Insurance Co. Ltd
Not Applicable
Not Applicable

ICICI Prudential Life Insurance Co. Ltd
Not Available
Not Available
Not Available
Not Available
Not Available

If you are interested to check the approximate Pension amount in NPS with different NPS amount and different age, use following link

Can anyone live for ten or twenty or thirty years with same amount of pension. Think of a situation in which a retired employee gets pension of Rs.5900 per month in 2050 at the age of 85. After 33 years the welfare pension will be many times more than this service pension.

I am sure that you may be distracted by above said statistics, if you are an employee coming under contributory pension system.  If nothing changes, the pension of a person who retires from service one month back in same rank having statutory pension facility is incomparably higher than your pension under NPS.

Hybrid Type Contributory Pension

It is better to go for a thing which we can achieve easily or with minimum effort first than waiting for a thing which we cannot be made it as real even in far future by sacrificing everything. 

Hence as a practical move, the demand from the part of employees should be for restructuring the pension payment pattern in NPS in such a way that the pension amount should be equal to eligible service pension as per pension rule at that time and to ensure the timely increase to overcome the inflation instead of blindly demanding for statutory pension.

Seeking various possibilities is not a sin especially in the case of service matters.  We can suggest an amicable solution for this issue without imposing much financial burden on government. It is Hybrid type of NPS in which the government can take over the 40% of the pension fund of an employee at the time of retirement instead of giving it to the insurance company.

Government can increase the percentage of takeover up to 70% if 40% is not sufficient.  Unlike Annuity, no need to refund the amount at any stage. The employee should get the service pension and all other benefits as if he is under statutory pension. This hybrid type of pension will be equally beneficial to the Government and employees. Here the


Creative thinking and fair debate are necessary in all areas and it is the starting point of every revolution. Let’s start the discussion here and pave the way for a big change. Beware that if you don’t come forward to raise and discuss your issues, no one will do for your sake.

Monday, 6 February 2017

Why this Cheating from India Post Payments Bank?

First of all, don’t think that IPPB has made any financial malpractice while reading this headline. This is about an injustice made by IPPB towards some artists and MyGov initiative of Govt. of India.

I have a pain in my mind for criticizing IPPB, the long-cherished dream of India Post, at this moment when it’s first branches have been inaugurated at Ranchi and Raipur.  At the same time, I am writing this post with immense pleasure because the fact which I had explained earlier through my previous post “Total Confusion in IPPB Logo Design Competition” have come true.

I am not repeating the issues that I had kicked up but you can still read that post from the following link if you didn’t read that article or you forgotten the matter.

Now my questions are very simple.

1.   Where is the selected 20 logos?
2.   Who is the winner and who got the price money?

I am sure that no authority will answer these questions.  But since I have raised the issue and predicted something, I have the responsibility to answer these questions myself.  Before answering the questions, I am quoting some portion of my previous post here so that you can cross check the answer with this scenario.

 “Lots of questions remaining unanswered while seeing the review process.

1.  Whether it is a serious competition or for a media publicity?
2.  What is meant my Approved Submission?
3.  Whether actually reviewed all the submissions?
4.  Whether it is a part of preplanned drama?

What is in short?

1.  Inviting logos from public and declares price money.
2.  4861 logo submissions happening.
3.  Simply shown last submitted 600 logos are approved without making any review.
4.  Selecting 20 logos violating all logo criteria for voting.
5.  Other 4261 logos are still under the review process. “

In the above extract, I had raised so many questions and finally I had come to a conclusion.  Like earlier following are the answer to the question that I have raised now.

1.  Where is the selected 20 logos?

Actually, like everyone I don’t know what has happened for that 20 logos but I can presume something.  Due to the substandard quality of 20 selected logos, the authorities might have been ignored that.  Otherwise some expert scrutiny might have been done on other logos or they decided to drop the contest and take an advice or design from professional design institutions.

2.  Who is the winner and who got the price money?

Since the logo of IPPB is not from the so called selected 20 logos, there is no chance to declare a winner or give the price money.

What about new logo

The final logo of IPPB which I have shown below cannot actually be considered as a new logo.  The first condition of the IPPB logo design competition was it should be original.  But no one will say that the IPPB logo is original, instead it will say that it is a mere copy of India Post logo.  The only notable difference is the round shape of red background instead of rectangle.
I don’t know whether it can be registered as Registered Trade Mark or not. Even though IPPB is a fully owned company of India Post or India Post has no objection to take its logo for IPPB, since India Post is a Government Department, I am not sure about the legal implication behind the RTM.

If we leave the criteria, I personally loved the IPPB logo and it has all the brand image of India Post.  According to my opinion the dark theme color is the highlight of this logo and it is superb and it clearly distinguish from all other banks’ theme colours. Only a talented designer can choose a design like this.

The tagline “Aapka bank aapke dwaar” is an apt one for IPPB. My submission in this contest was “Your Nearest Bank”


Even though the IPPB logo design competition was very popular among public and it has got very good attention from medias, the authorities were not serious about this event.  Lots of mistakes, mismatches and suspicious thing had been seen everywhere and it has continued until the final selection of IPPB logo.

It is common that the logos of desired standard may not be received in a competition.  Then the organizers have the full right to cancel the contest and go for another logo.  This condition is also included in the terms and conditions of the contest. 

But here the scenario is different because without reviewing all the submissions by experts they have merely selected 20 below average logos for final voting. That is why the selected logos got negative feedback.  And without any official announcing or explanation they opted another logo for IPPB.

If they have the intension to use this logo for IPPB earlier, the pre-planned logo design competition drama could have been avoided. This is purely an injustice toward the persons who participated in the competition. The complete responsibility of the failure of this contest is vested up on the persons who authorized to review the submissions.

The only thing the authorities can do at this moment is to release an official explanation on this subject.  So, let us wait for that……

Friday, 25 November 2016

Luxury in Deficit Pushed India Post into Crisis

I have made an integrity pledge few weeks before as part of the observance of Vigilance Awareness Week from 31.10.2016 to 05.11.2016 and got inspired by some words in the pledge.

Then I decided that I have to contribute something to this campaign as a citizen of India.  For that, I have selected a particular area to which the eyes of media have not been reached.

No. 1 – Story of Recovery

Let us start with a story of recovery from a Sub Postmaster who made a loss to the Department of Posts.  The incident happened in 2015 and the loss amount was Rs. 17.08.

One day the above said Sub Postmaster had received a letter from Divisional Office stating that they have found out some misuse of money from NPC Bill Returns and the Sub Postmaster has to credit Rs.17.08 in UCR as a recovery of loss.

The only crime that had committed by the SPM was that he had paid the office telephone bill after pay-by-date along with a late fee of RS. 17.08.
The most obedient SPM had credited the amount in UCR without any objection and had made a compliance report to the Divisional Office.

Actually, the SPM was not liable to pay the amount because the telephone bill was received only after the pay by date.

You may think that this story is only an imagination.  So the copy of the letter sent to the SPM by DO is shown below.

Through this story, I am not trying to blame the officer or staff who took the decision to recover the amount.  Instead, I am taking this opportunity to congratulate the officer for doing their work so vigilantly and thereby saving Department’s money.

Some people may disagree with me on this subject.  Let us stop this story here and start another story.  After completing the new story, we can discuss and compare these two stories.

No. 2 – Story of Misuse

For the last few years, India Post employees and its customers were repeatedly hearing the word “change” and everyone was waiting for that change.  Especially India Post employees had so many expectations in IT Modernization Project 2012.

When we hear, or see the name, IT Modernization Project, normally we think of the replacement of computers and other hardware or its upgradation.  But everything happened in India Post except the change of hardware.

Everyone is speaking about the various projects of India Post incurring billions of rupees but nobody is sure about the exact amount.  Some reliable source says that it is approximately 4000 or 4900 crore rupees.  Anyway, I am not going for an assessment of the project amount because of it is beyond our limit.

I am focusing on some limited areas where we can assess the cost factor and its return.  Whether it is 4000 Crore or 4900 Crore, one thing is sure that the amount is so big and it is almost sufficient to meet the modernization requirement of India Post.

But when we come to reality, the project implementation is lagging due to the shortage of funds.  Otherwise, the old systems could have been replaced with a new one.

From the study, it is clear that something wrong happened in the spending pattern of India Post in connection with the IT Modernization project.  But I am not ready to call it as “India Post Scam” because I am not competent to do so and it is unfair that I am acting like CAG.  You can decide whether it is a scam or not after reading the remaining paragraphs.

Misuse No.1 - Juniper Switch, HP Router, and Rack

This is the most painful part of the story and we can say it as ‘totally mysterious’ one.

If you take the case of the purchase of network equipment for Post Offices in connection with Sify network integration, you can clearly understand that lakhs of rupees had been misused in each Post Office.

75% of the amount spent for the purchase Network switch and the router was actually misusing Government money.  Crores of rupees have been lost in this connection all over India. Most of the employees and the general public are unaware of it.  So I am specifically explaining that area below.

All General Post Offices (GPOs), Head Post Offices (HOs), MDGs, LSG Offices and selected B Class Offices are using Juniper EX 4200 Series switches.  As per invoice sent along with the packet, the price of one 48 port Juniper switch is Rs. 1,63,112 (One lakh sixty-three thousand one hundred and twelve) and 24 port switch is 1,46,716(One lakh forty-six thousand seven hundred and sixteen). GPOs and HOs are supplied with 48 port switch and others are supplied with 24 port switch.

The most important question is whether the Juniper EX 4200 switch is actually required for Post Offices.  The answer is clear that it is not at all appropriate for the use of Post Office.

The EX4200 Ethernet Switches are the high end fixed-configuration solution that is used in campus installations, as well as in 1 Gigabit Ethernet (GbE) access environments in the Data Center. That means these types of switches are used in extra-large institutions which need to connect different units spread in different areas of the same campus or very complex and secured network environment like Data Center.

Even bigger banks or other bigger financial institutions are not using this type of high-end switches.  They are using switches ranging from Rs. 20,000/- to Rs. 40,000/-, which can satisfy all the needs by limiting the cost.

If we take the case of Routers, Post offices are using HP A-MSR 30-20 Multiservice routers. Actually, this router model is designed for medium to large scale organizations with the ability to meeting complex needs.  Don’t forget that these types of routers are using even in the Singlehanded Sub Offices. The market price of this router is ranging from Rs. 1,20,000 to Rs.1,40,000.

Post offices need only mid-range routers like HP MSR 1003-8 AC router.  There is no need for separate network switch for small office since MSR 1003 has 8 network ports integrated with the router.  The price will be around Rs.60000/-

Purchase of Network Rack is another big mistake committed by somebody.  All departmental offices are supplied with 4U or 5U network rack in connection with the NI project.  Price of these racks are ranging from Rs.4000 to Rs.6000.  These racks were supplied without assessing the actual requirement because all most all offices already had the networks.  A number of offices is using the old network rack instead of the newly supplied one due to various reasons.

Misuse No.2: HP Desktop Systems

Recently India Post has purchased some business Desktop computers which were also a misuse of money.  Now India Post is moving to web based applications for the various operations at Post Offices so there is no need for systems with high-end processor.  A minimum configured system is sufficient to operate all types of web applications.  When we come to the OS section, I have already explained about the loss incurred by the Department of Posts in connection with the purchase of Windows OS in my post Throw Windows and Use Open source and Save India Post

Another important thing is the price spent on each system purchased recently. Limited numbers of computers which have purchased centrally have been supplied to various Divisions recently.  When we look at the price label, we can clearly see that it is Rs.54926/ system. But the HP systems with the same model and configuration can be purchased from the open market for Rs 42000/-.

Normally Central Government Departments make a purchase on DGS&D rate which is comparatively lower than the market price. But things happened reversely here.

Even if there is an apt word for depicting such activities, decently we can call it as misuse of Government money.

Misuse No.3: HP Colour Laser Printer & LPT Port Card

All Head Post Offices have been supplied with HP CP4025dn colour LaserJet printer for using in PLI CPC by spending Rs.1,47,000 each.  The only color print out to be taken in CPC is the New Policy Bond.  There was no need of purchasing HP CP4025dn Color LaserJet printer for Post Office since it is used for high precision professional graphics printing in big research organizations and the printing cost is very high.  We need to spend above Rs. 70000 for purchasing fresh cartridge for this printer.

Lots of economy colour printing options were available in the market for use in PLI CPC. Colour Ink Tank System Printer was the best option for office color printing.  These types of printers are available in the market for Rs.10000/- or below. The cost per printing is very low and the price of refill ink is very cheap.  In this sense, it has misused Rs. 1,46,000 for each Head Post office in India.

The real example of misuse of money is the supply of LPT card along with the laser printer.  Above said laser printer has a USB port and LAN port to connect with computers.  There is no need for an LPT port in this printer actually, but the LPT port card has been purchased for Rs.4000 per printer.

Most interesting thing is that the newly supplied computers don’t have an LPT port.

Misuse No. 4:  HP Scanjet

Good quality scanners are available in the market for an amount under Rs. 25,000 but the authorities opted HP Scanjet 8270 pricing around Rs. 53,000 for the use of PLI CPC.  HP 8270 is a 4800x4800 dpi printer and it is used for scanning and saving high-quality color graphics.  PLI CPC mostly needs black and white images or a maximum grayscale version of scanned image so 2400x2400 dpi was sufficient. But it has spent double the amount.

Over All Idea about Misused Amount

Calculations made in this portion are based on the available records and prevailing market prices.

If we consider an HO or a Sub Office with MPLS connection, total of Rs.3 Lakh had been spent only for purchasing Switch, Router and a Rack.   All the hardware of an office including computers, printers, etc. could have been replaced for the misused amount.  Actually, two lakh rupees is sufficient to meet all the technological requirement of B class SO.

In order to give an overall picture of expense, I have created a table with approximate numbers of equipment purchased in different units in India Post and it's approximate purchase price.  After analyzing the tables, you can decide how much misuse had been taken place in India Post.  The actual amount would be more than the following figures.

Name of hardware
No. of items purch
ased (Appr
Unit price in MRP
 Amount spent on purchasing
Misused money 
HP Routers
Juniper Switch 48 port
Juniper Switch 24 port
HP Colour LaserJet 4025
LPT port card
HP ScanJet


525.87 Crore

324.64 Crore
*assumed that only 1000 systems have been purchased in this batch (actual number will be high)
** misused money= actual expense - amount required to meet the needs

Misuse No.5:  Some old misuse memories

It was during 2008-2009 when India Post had purchased large number of computers for the vide scale computerization of Post Offices.  For a B class Sub Office, two computers with pre-loaded Windows Vista Business OS, four printers including one laser printer and one passbook printer, Two Lipi Barcode scanner (Cost was nearly rupees 6000 per scanner and most of them have not lasted for more than one year actually)

Interesting part was the supply of Windows Server 2008 and SQL Server 2008 along with above said hardware.  The approximate price of these items was Rs. 24,000/- and Rs. 40,000/- respectively at that time.  This software could not use at the respective offices because they were not compatible with the departmental software at that time.

After the release of Meghoot 7, the scenario had changed a little bit.

The word OMEGA will haunt you lot when you think of weighing machines.

If I continue each and every story, I cannot conclude this article.  Since it is not an investigation report or audit report this is enough to convey some messages to the employees of India Post and the general public.

So, let’s remember the last paragraph of the first story where I have mentioned about a comparison between two stories.

In the first story, officials are more concerned about the loss of Department and they are trying to save each money and thereby save India Post from huge loss. Such decisions are mostly taken at a lower level.  That is why I have told you that such decisions deserve some good words.

On the other side, somebody misuses the Government money including those saved by above-said officials too.  This article is only a sign that somebody will watch everything even if majority ignore it.

Lot of expenditures in India Post are yet to come including purchases for India Post Payment Bank (IPPB). I expect that, the mistakes committed in past will not be repeated. Now each citizen has to use his ultimate weapon i.e., RTI Act 2005 to bring the light into the darker section if anything goes wrong. 
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