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93,000 retired MTNL, BSNL staff to get ex-gratia plus pension pay-out under VRS: Report

The government has decided to give out ex-gratia payment for only 40 months

March 18, 2020 / 07:01 PM IST

The Centre has offered ex-gratia pension plus pay-out to nearly 93,000 Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL) employees who retired on January 31, The Indian Express reported.

The paper accessed documents detailing the specifics, as per which, ex-gratia pay-out is limited to 35 days for each completed year of service and 25 days for each year of balance service left until the actual date of retirement. Employees are divided into two groups. Those above 55 years of age will get a lump sum once they reach 60, For those below 55, the pension would be commuted in 2024-25. Gratuity dues will also be delayed in a similar manner, the paper said.

Further, the ex-gratia-plus-pension pay-out will also be capped at 125 percent of the present basic and dearness allowance (DA); and the government has decided to give out ex-gratia payment for only 40 months, irrespective of the employees’ remaining service term as of January 31, it added.

Usually, VRS from PSUs would entail employees receiving lump-sum dues accumulated over the period of service, plus the remaining service period’s salary – all paid out in one go if so chosen.

For example, if an employee earned Rs 10,000 per month and 40 months of service at the time of VRS, the pay-out through the ex-gratia and pension benefit payment for the remainder of service would have come to around Rs 6 lakh. However, the actual pay-out now will be 125 percent of their respective current salary or Rs 5 lakh. In case an employee had 79 months or more of service left, the lump sum would still be paid only for 40 months and as less than 125 percent of salary, the paper stated.


“The ex-gratia payment is divided equally for this and the next financial year and the pension will be spaced over the next 10 years. The immediate estimated savings would be around Rs 2,000 crore to Rs 2,500 crore, an official from the Department of Telecommunications (DoT) told the paper.

Moneycontrol could not independently verify the report.

The government aims to undertake the new VRS model for BSNL and MTNL for the next 10 financial years and aims to slim staff strength at BSNL to below 50,000 for BSNL and at 2,600 for MTNL in 2027-28. The numbers take into account new hires, retirements and VRS, the paper noted.

When the VRS option was floated for BSNL and MTNL employees in November–December 2019, half of BSNL employees (78,569 of 153,000) and 80 percent of MTNL employees (14,400 of 18,000) took the option.

The new model, conceptualised for employees of strained public sector utilities (PSUs) in Gujarat, and thus dubbed the ‘Gujarat Model’ of voluntary retirement scheme (VRS), allows companies to cap the immediate payable dues. VRS is available to employees in the 50-60 age group.

The first recipients were employees of the Gujarat State Petroleum Corporation (GSPC) and the erstwhile Indian Petrochemicals Corporation (IPCL). The government divested 26 percent stake in 2003 when 1,800 employees opted for the scheme and again in 2005 when 600 opted for it.
Moneycontrol News
first published: Mar 18, 2020 10:27 am
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