Tuesday, 25 February 2014

KNOW ABOUT - Liberalized Active Retirement Scheme for Guaranteed Employment for Safety Staff (LARGESS)

KNOW ABOUT - Liberalized Active Retirement Scheme for Guaranteed Employment for Safety Staff (LARGESS)



Monday, 24 February 2014

50% DA MERGER - Impact of Merger of 50% Dearness Allowance with Basic Pay

Any possible to convert 50% of dearness allowance to dearness pay..!

Everyone's pointing fingers at "Parliament Election"...! 

50% of dearness allowance had been merged with basic pay for Central Government Employees and Pensioners with effect from 1.4.2004. This was followed the recommendation of 5th Central Pay Commission and the Union Government had decided to merge 50% of dearness allowance with baisc pay and issued orders on 1.3.2004.  (61% - 50% = 11%) 50% of dearness allowance merged with basic pay and remaining 11% had been issued as normal dearness allowance with effect from 1.1.2004.

Example : An employee's Basic Pay had revised as under on 1.1.2004 after 50 % DA merged with basic pay...

Basic PayDearness allowance 61%TotalBasic PayDearness PayRemaining percentage of Dearness allowance 11%TotalDifference









[And the next instalment of additional dearness allowance from 1.7.2004 declared as 3%, then the total dearness allowance went up to 14%. When implementation of 6th CPC, the above employee's basic pay was 4200 as on 1.1.2006, it just multiply with 1.86 and add with corresponding grade pay.]

Everybody thinking as more benefit on 50% of DA merge with basic pay...not like that..!

It is essential to CG Employees, of course for others, getting from some other way in hike in regular income...

For Example, an employee's basic pay Rs.10000 as on 1.1.2011, after merging of 50% dearness allowance the calculation is clearly shows the difference only 50 rupees per month...

Basic PayDearness allowance 51%TotalBasic PayDearness PayRemaining percentage of DA 1%TotalDifference









"Note that the 50% of Dearness allowance will not merged with basic pay, instead of the amount showing only as 'Dearness Pay'. This amount will pay upto only the date of implementation of 7th pay commission. 

This is only as a advance hike for all employees before the implementation of 7th CPC. 

When fixation of pay on the recommendations of 7th CPC on 1.1.2016 according to the revised pay rules, the amount of ‘basic pay’ will be taken without dearness pay. 

For example, approximately basic pay of the above employee will be 12,250 as on 1.1.2016 . This amount only will be taken as Basic Pay for the calculation of pay fixation against the amount of 18,375. 

The enhanced amount will be given for us as ‘Interim Relief’ for the period between announcement and implementation...It is not at all merged with ‘Basic Pay’..!

We can hear, what about hike in HRA and other entitlements...

The rate of HRA is provided according to the cities, like 10, 20 and 30%. Don't think all Central Govt Employees are getting 30%. And one more important points is the percentage hike in HRA will not applicable to those who are living in Government Quarters. In major metropolitan cities, thousands of employees are residing with Government Accommodation. They will pay more as HRA to Government and they don’t bother about increasing in HRA. 

Transport Allowance is providing according to their GP and classified cites, the amount is vary from 400 to 3200 plus DA thereon. The DA amount may decrease when 50% of DA merged with basic pay. 

So, ultimately hike in Basic pay only the factor is more beneficial in DA Merger.

But in 6th CPC there was no recommendation to convert dearness allowance as dearness pay each time the CPI increase by 50% over the base index recommended in pay commission report. 

All Central Government employees federations are showing maximum effort to achieve the demand of "Merger of 50% Dearness Allowance with Basic Pay" at this time. 

 Federations sources said, there will be chance to announce before March...!
Source: 90paisa

Saturday, 22 February 2014

Regulation of pay on imposition of a penalty under CCS (CCA) Rules, 1965 – Dopt Orders

No.6/3/2013-Estt (Pay-I) 
Ministry of Personnel, Public Grievances and Pensions 
Department of Personnel & Training
North Block, New Delhi 
Dated the 6th February, 2014

Subject: Regulation of pay on imposition of a penalty under CCS (CCA) Rules, 1965. 
The undersigned is directed to say that the following penalties prescribed in the Rule 11 of CCS (CCA) Rules, 1965, have a bearing on the pay of the officer:

11. Penalties
Minor Penalties – 
(iii a) reduction to a lower stage in the time-scale of pay by one stage for a period not exceeding three years, without cumulative effect and not adversely affecting his pension. 
(iv) withholding of increments of pay;

Major Penalties – 
(v) save as provided for in clause (iii) (a), reduction to a lower stage in the time- scale of pay for a specified period, with further directions as to whether or not the Government servant will earn increments of pay during the period of such reduction and whether on the expiry of such period, the reduction Will or will not have the effect of postponing the future increments of his pay

(vi) reduction to lower time-scale of pay, grade, post or Service for a period to be specified in the order of penalty, which shall be a bar to the promotion of the Government servant during such specified period to the time-scale of pay, grade, post or Service from which he was reduced, with direction as to whether or not, on promotion on the expiry of the said specified period –

(a) the period of reduction to time-scale of pay, grade, post or service shall operate to postpone future increments of his pay, and if so, to what extent; and

(b) the Government servant shall regain his original seniority in the higher time scale of pay , grade, post or service;

2. Consequent upon implementation of the recommendations of 6 th CPC under the CCS (RP) Rules, 2008 pay scale of a post/grade for below HAG level means the Pay Band and Grade Pay specified for that post. Under the CCS (RP) Rules, 2008 a Pay Band may cover Government servants in more than one Grade Pay or posts in the hierarchy. As per Rule 9 of the CCS (Revised Pay) Rules, 2008, the rate of increment in the revised pay structure is 3% of the sum of the pay in the Pay Band arid Grade Pay applicable, which is to be rounded off to the next multiple of 10. Further, as per Rule 10 of the CCS (Revised Pay) Rules, 2008, there is now a uniform date of increment, that is, lst July of the year.

3. The mode of implementation of these penalties has been clarified to individual Ministries/Departments wherever references have been received. It is now proposed to issue detailed guidelines on the issue. The regulation of pay on imposition of these penalties is in the subsequent pants:

A. Reduction to a lower stage of pay by one stage (Rule 11( iii a)

On imposition of a penalty under this Rule, the pay would be fixed at the next lower stage in the Pay Band. In other words, in case of reduction by one stage, the revised pay would be the pay drawn in the Pay Band at the stage before the last increment. Grade Pay attached to the post would remain unchanged. The pay will be fixed by reversing the mode of allowing increments given in Rule 9 of the CCS (RP) Rules, 2008. The formula would be:-

Reduced Pay In Pay Band = {(Pay in Pay Band+ Grade Pay) x 100/103} less (Grade Pay) (rounded off to next 10) 
Pay would be Pay in Pay Band as above + Grade Pay

B. Withholding of increment {Rule 11(iv)} 

As the uniform date of increment now is 1st July, on imposition of a penalty of withholding of increment, the increment(s) due on the 1st of July falling after the date of imposition of the penalty would be withheld. In case where penalty of withholding of more than one increment is imposed, increments due on 1st of Juty in the subsequent years would similarly be withheld. The increment would be restored at the end of the period for which the penalty is imposed.

This also applies to cases where the penalty is imposed for part of a year. For instance, if the penalty of withholding of the increment for six months is imposed on a Government servant in April 2013, then the increment falling due on 1.7.2013 will be withheld for a period of six months, that is, till 31.12.2013. The increment would be released w.e.f. 1.1.2014. In this case the next increment falling due on 1.7.2014 will also be allowed.

C. Reduction to a lower stage in the time-scale of pay for a specified periodfRule 11(v)} 
The process of imposition of penalty of reduction by one stage under Rule 11(iii a) explained above shall be repeated for every additional stage of reduction by taking the pay arrived at notionally as pay for the second reduction, and so on. Grade Pay shall remain unchanged.

NOTE 1: It is not permissible to impose a penalty under this rule if the pay after imposition of the penalty would fall below the minimum of the Pay Band attached to the post.

NOTE 2: A Pay Band may cover Government servants in different Grade Pays or holding posts at several levels in the hierarchy. It needs to be kept in mind that reduction to lower pay scale or grade is a distinct penalty, under Rule 11(vi).Therefore, while imposing a penalty of reduction to a lower stage in the time-scale of pay under Rule 11(v) of the CCS (CCA) Rules, 1965, Disciplinary Authorities should weigh all factors before deciding upon the quantum of penalty, i.e., the number of stages by which the pay is to be reduced.

D. Reduction to lower time-scale of pay under Rule 11(vi) 
As a result of imposition of a penalty of reduction to lower time-scale of pay, the pay of the Government servant would be reduced to the stage of pay he /she would have drawn had he/she continued in the lower post for the period of penalty. The mode of fixation of pay in this case is similar to reversing the mode of fixation of pay on promotion. Therefore, both pay in Pay Band and Grade Pay would be reduced.

However, Disciplinary Authority has the power, in terms of FR 28, to indicate the pay which the Government servant on whom a penalty of reduction in rank has been imposed, would draw. The Government servant will be entitled to the Grade Pay of the post to which he has been reduced. Thus, the power of the Disciplinary Authority under FR 28 is limited to indicating the pay in the Pay Band applicable to the lower rank/post.

In some cases imposition of a penalty under Rule 11(vi) may also involve a change in Pay Band. For instance a Government servant holding a post in PB-2 with Grade pay of Rs.4200/- may be reduced to a post in PB-1 with Grade Pay of Rs.2800/-

It may also be noted that a Government servant cannot be reduced in rank to a post not held earlier by him in the cadre. For example, an LDC who qualifies as Assistant as a Direct Recruit and is later promoted as Section Officer cannot be reduced to the rank of LDC but only to that of an Assistant.

4. Some illustrations on pay fixation in above types of cases are annexed.

(Mukesh Chaturvedi) 
Deputy Secretary to the Government of India 


Representation of SC, ST, OBC, Minorities and the Women on Selection Board / Committees.

Government of India 
Ministry of Personnel, Public Grievances & Pensions 
Department of Personnel &Training 

New Delhi, dated the 13th February, 2014 


Subject: Representation of SC, ST, OBC, Minorities and the Women on Selection Board / Committees. 

The undersigned is directed to draw attention of the Ministries/Departments to this Department's O.M. No.42011/15/1995-Estt(SCT) dated 1lth July, 1995. Para 2 provided as follows:- 
" 2. In partial modification of the above instructions it has now been decided that wherever a Selection Committee Board exists or has to be constituted for making recruitment to ten or more vacancies in Group 'C' or Group 'D' posts or services it shall be mandatory to have one Member belonging to SC/ST/OBC and one Member belonging to Minority Community in such Committees/Boards. Further, one of the Members of the Selection Committees Boards whether from the general category or from the minority community or from SC, ST,OBC should be a lady failing which a lady member should be co opted on the Committee Board. It may please be ensured that where the number of vacancies against which the selection is to be made is less than ten no effort should be spared in finding SC/ST/OBC officer, minority community officer and a lady officer as explained in para (2) for inclusion in such Committees/Boards. " 

 2. The matter has been reviewed and in partial modification of above instructions, it has now been decided that wherever a Selection Committee/Board exist or has to be constituted for making recruitment to 10 or more vacancies in any level of posts or services, it shall be mandatory to have one Member belonging to SC/ST, one Member belonging to OBC category and one Member belonging to Minority Community in such Committees/Boards. Further, one of the members of the Selection Committees/Board, whether from the general category or from the minority community or from the SC/ST/OBC community should be a lady failing which a lady member should be co-opted on the Committee Board. It may also be ensured that where the number of vacancies against which selection is to be made is less than ten, no effort should be spared in finding the SC/ST, OBC officer and the Minority Committee Officer and a lady officer, for inclusion in such Committees Boards.

3. Similar instructions in Public Sector Undertakings and Financial Institutions including Public Sector Banks will be issued by Department of Public Enterprises and Ministry of Finance respectively. 

(Sandeep Mukherjee)
Under Secretary to the Government of India 


Guidelines regarding change of cadre of Indian Administrative Service Officers appointed against vacancies reserved for Physically Handicapped (PH) category.

No.13017/16/2003-AIS-I (Pt) 
Government of India 
Ministry of Personnel, Public Grievances and Pensions 
Department of Personnel and Training 

North Block, New Delhi 
Dated the 14th February, 2014 


Sub: Guidelines regarding change of cadre of Indian Administrative Service Officers appointed against vacancies reserved for Physically Handicapped (PH) category. 

The undersigned is directed to refer to the subject cited above and to say that change of cadre of Indian Administrative Service Officers is governed by Rule 5(2) of the Indian Administrative Service (Cadre) Rules, 1954 and guidelines as contained in DOPT's O.M. No. 13017/16/2003-AIS (I) dated 08.11.2004. 

2. This Department has been receiving requests from IAS officers appointed against vacancies reserved for physically handicapped candidates for change of their cadre to a preferred cadre including their home cadre on the grounds of hardship. Therefore, a need has been felt to have a suitable policy by allowing separate dispensation for PH category officers in the matter of change of cadre. 

3. Accordingly, the Competent Authority has approved the following guidelines for change of cadre of Indian Administrative Service Officers appointed against vacancies reserved for Physically Handicapped (PH) category, with immediate effect:- 

A request/application for change of cadre by an IAS officer appointed against a vacancy reserved for PH category has to be made to the DoPT through the parent cadre/LBSNAA as the case may be so as to reach DoPT within three months from the date of notification of the cadre allocation in the official website of the DoPT. Along with application, documents in support of the ground(s) in which cadre change is sought, should also be enclosed. An 'advance copy' of the application must be sent to DoPT directly by the officer along with enclosures. 

(ii) In the said application, the officer appointed against vacancies reserved for PH Category while applying for change of cadre is required to indicate along with his/her request, a minimum of three states, in the immediate proximity / neighbourhood of their Home State, to which they would like to be transferred, in order of priority. The proximity or neighborhood as mentioned would mean States which are geographically contiguous to the home state of the officer. In the absence of three such contiguous states, the state(s) closest to the home state in terms of distance would be admissible. 

(iii) The Government may, on a case to case basis and taking into account [based on the report of a medical board] the extreme hardship faced by an IAS officer appointed against a vacancy reserved for PH category, permit his/her transfer to a cadre in the immediate neighbourhood / proximity of his/her Home State for the purpose of mitigating such hardship. No such transfer to the Home State of the officer shall be permitted. 

(iv) In case the transfer is agreed to 'in principle' by the Government (DoPT), the concurrence of the concerned State Governments shall be sought, as per the order of preference cited by the officer. In case none of the preferred states are willing, the Central Government may, after consulting another neighboring State Government willing to accept the officer, may affect such transfer. The decision of the Central Government on the selection of State / Cadre shall be final and binding on the officer. 

(v) These guidelines will be implemented with prospective effect. However, the officers already appointed to IAS against vacancies reserved for PH category and suffering extreme hardship in the cadre allocated, shall be given one-time option to exercise their choice for change of cadre under these guidelines within three months of the date of notification of these guidelines in the DoPT's web site. Such application should be made through the cadre where the officers are allocated presently. 

(4) The provisions of DOPT's O.M. No. 13017/16/2003-AIS-I dated the 8th November 2004 regarding change of cadre of All India Service officers will stand modified to the above extent. 

(Narendra Gautam)
Under Secretary to the Government of India


Kendriya Vidyalayas set to switch to 5-day week for primary classes

All Kendriya Vidyalayas (KVs) across the country are likely to switch to a five-day week for primary classes (up to Class 5) from the new academic session.

The proposal for a five-day week to “give space for students to pursue self-learning as per their aptitude and interest” is set to be taken up by the Board of Governors of the Kendriya Vidyalaya Sangathan on Tuesday. Officials said the board was likely to clear the move. However, a proposal to cut the working hours of KV teachers was unlikely to be passed, said sources.

HRD Minister Pallam Raju chairs the board, while Minister of State Jitin Prasada is a member. The proposal to switch to a five-day schedule is in keeping with the Right to Education Act. The proposal was first mooted by the KVs in 2012, but was rejected.

“There should be no objection to a five-day week for primary students as the KVs will still be able to meet the 200 school days requirement mandated under the Right to Education (RTE) Act. The schools will also be able to meet the stipulated minimum teaching hours requirement under the Act. So there is little argument to subject the younger children to an extra day at school,” said an official.

The KVs have increased working hours for teachers from 6 hours 10 minutes to 7 hours 30 minutes, as stipulated under the RTE Act. Teachers have opposed the decision.


10 Signs You're A Bad Employee

sleeping on job

Confidence and self-esteem in the workplace can go a long way. Too much of either, though, and you may end up being the dreaded "problem employee."

If you've got an inflated sense of self-worth or are just ignorant of how your bosses and co-workers perceive you, you could be dragging your team down without even realizing it.

Want to find out if you're the office outcast? Take a look at the list below. 

1. You're always late.

Maybe you just happen to move slowly in the morning, the line at your favorite lunch place adds 10 minutes to your break, or important calls seem to always come up before meetings. Whatever the case, rationalizing it won't help your reputation. Habitually poor time management will make your boss see you as selfish, disrespectful, unreliable, and disorganized. 

2. You make a lot of excuses.

People take notice when your excuses for why you can't do something outnumber the times you successfully do your work. And if problems you can't solve do arise during the day, communicate them to your boss and colleagues immediately and honestly.

3. You complain about unexpected assignments.

Nobody likes the surprise of extra work, but if you regularly communicate your dissatisfaction with grumbling or even an explicit denial of the assignment, you will be labeled as someone with a poor work ethic.

4. You love to gossip.

Getting the inside scoop on your colleagues can be hard to resist, and sharing all your problems with coworkers can be cathartic. But after time, rumors and complaints will be associated with you, and you will lose the respect of your peers.

5. You're convinced you're the smartest person in the office.

Let's just assume that you are as brilliant as you think you are; you're still part of a team. And arrogant employees who don't respect the corporate hierarchy aren't going to last very long.

6. You don't believe in your company's mission or values.

If you're regularly making snarky remarks about what your employer stands for, your colleagues will likely have a hard time trusting your judgment on decisions. If you separate yourself from your company, then your employer is going to catch on and could separate from you. 

7. You're noticeably less productive than your colleagues.

If your boss seems to be spending more time with you than your coworkers, and these colleagues are constantly having to assist you, your employer may eventually determine that trying to improve your performance is a waste of time and money.

8. Your colleagues clearly don't enjoy working with you.

If it seems like coworkers aren't making eye contact with you or are uncomfortable when working with you on a project, it may actually be because they are afraid of you, or at least categorize you as a bad team-player. If you're too aggressive or pushy, you'll come to be seen as a "lone wolf" that no one wants to deal with.

9. You find yourself regularly apologizing to clients — or having your boss do it for you.

Everyone makes mistakes, but if it seems like your customers are regularly dissatisfied with your work, your employer is going to start seeing you as a danger to the company.

10. You can't take "no" for an answer.

If you find yourself defending your idea even after everyone has expressed he or she disagrees with it, you'll start to be seen as a troublemaker. Sometimes you just need to let things go for the sake of the team.

Source - sfgate


Source - Facebook

Investigation concludes Portland's equity director violated harassment rule over comment about employee's eyes

Dante James, the Portland administrator hired in 2012 to launch an office dedicated to promoting racial and other forms of equity, violated the city’s policy against harassment last year when officials concluded he told a female subordinate she had “beautiful” or “pretty” eyes.

A city investigation substantiated that allegation but dismissed eight others by the employee, Muna Idow, who resigned from the Office of Equity and Human Rights on Feb. 4 in exchange for a severance package.

The investigation also found James made some “generally unprofessional” comments in front of employees but did not violate city rules.

James, who earns $140,691, received no discipline. When questioned by city human resources officials, James said he did not remember commenting on Idow’s eyes.

The city released a summary of its investigation and other documents this week in response to The Oregonian’s public records request.

The case marks the third investigation of allegedly inappropriate comments by an official who reports to Mayor Charlie Hales.

In June, Hales suspended Baruti Artharee, a top policy aide, for a week without pay for making sexually suggestive comments about Multnomah County Commissioner Loretta Smith. Artharee later resigned for unrelated reasons.

Last month, mayor’s office employee filed a state labor complaint against Hales’ chief of staff, Gail Shibley, accusing her of discrimination and making inappropriate comments because the employee is HIV-positive.

Idow joined the city in 2008. She made allegations about a different boss in 2010 and complained to the City Council about the James case in a December email.

She said in an interview that she feels “outraged and infuriated” James kept his job.

“I don’t believe that Mr. James is in any position to be leading any effort on equity in this city,” she said.

James said he disagrees that he violated Portland’s anti-harassment policy. But even so, he said, the violation cited by the city was minor and does not hamper his ability to lead equity initiatives.

“I have support from everybody else that I work with, so I’m not concerned about my ability to continue to lead this office,” he said.

The investigation

Idow complained about James on June 18, almost two weeks after learning she was being investigated for assertions she took excessive absences from work and one day before an investigatory meeting had been scheduled.

Idow provided The Oregonian with a copy of the four-page letter she sent to Portland’s Bureau of Human Resources. In it, Idow claimed that James had been “harassing, intimidating, and bullying me on the job.”

Idow told The Oregonian that she didn’t complain sooner because “I felt I could handle it on my own.”

Idow said after the city raised concerns about her attendance, she felt she was “being set up” and stepped forward to complain about James.

Idow claimed in her complaint that James would make comments like, “You know, you have really pretty eyes. Has anyone ever told you?”

The city investigated nine allegations from Idow ranging from inappropriate comments to workplace retaliation, according to a city summary of the investigation.

Anna Kanwit, the city’s human resources director, led the investigation. It substantiated just one allegation.

The violation: “James told you that you have beautiful eyes,” according to a Sept. 26 memo from Kanwit to Idow, which Idow provided to The Oregonian.

Kanwit wrote that the investigation supported a “finding of a violation” of the city’sprohibition against workplace harassment, discrimination and retaliation.

James told investigators he did not recall telling Idow she had beautiful eyes, according to the city’s investigative summary. Even so, officials concluded that he made the comment.

The report and findings were forwarded to Hales, who, according to Kanwit’s memo to Idow, would review the report “and take appropriate remedial action.”

Hales took no action against James.

“No discipline was recommended in such a single circumstance nor was any imposed,” the city’s investigative summary reads.

City managers are taught that comments about a person’s physical appearance are problematic under the city’s anti-harassment policy, according to the city’s summary. Managers are instructed that it is generally acceptable to comment about a person’s clothing, for example, but not his or her body.

Hales received guidance from the city attorney and human resources before making his decision.

“We took appropriate action, and are all in agreement that the matter has been concluded,” Hales said in a statement Friday.

Other complaint, unprofessional comments

The City Council created the Office of Equity and Human Rights in September 2011. It replaced the city’s Office of Human Relations, where Idow, a Somali American, worked since 2008.

In 2010, Idow’s then-boss, Maria Lisa Johnson, said Idow had accused her of being racially biased against Africans. Idow never filed a formal complaint but Johnson asked for a formal investigation. Human Resources dismissed the claim as unsubstantiated.

City Commissioner Amanda Fritz selected James, whose previous experience included directing affirmative action for Denver, to launch the new equity office in 2012.

Among other things, the office was created to “promote equity and reduce disparities within City government.” Today, the city spends about $1.4 million on the office and its nine-person staff.

The city did not substantiate the vast majority of Idow’s allegations about James’ behavior.

Officials did conclude, however, that James made some inappropriate comments that did not violate city rules.

One happened during a conversation about the Roe v. Wade abortion case, according to the summary. “James allegedly commented that when he was younger, he never went home from an event without leaving with a woman so he was grateful” when the U.S. Supreme Court shot down a state law banning abortion, the document said.

The investigation summary said James denied making the statement, but that a witness confirmed that while talking about the decision “James referred to his past dating.”

The city concluded that his comments in that conversation were “generally unprofessional.”

James on Friday said he doesn’t remember making any comments about his personal life.

James also said he doesn’t remember commenting to Idow about her eyes.

“If, in fact, I complimented Muna at some point, I’ve certainly learned my lesson and I won’t be complimenting any other employees,” he said.

As part of her resignation, Idow received roughly $34,000, or about six months salary.

- Brad Schmidt

Public-employee pensions and the “California rule”: blog post and op-ed

Most states are free to alter public employee pensions, as long as they do so on a purely prospective basis. For instance, a state can reduce cost-of-living adjustments (COLAs), say from 3% to 2%, as long as the amount accrued so far is still subject to the old COLA. But the rule is otherwise in California: California courts have held that “upon acceptance of public employment [one] acquire[s] a vested right to a pension based on the system then in effect.”
In California, when a public employee begins work, he not only acquires a right to the pension accumulated so far—presumably zero on the first day, and increasing as he works longer—but also the right to continue to earn a pension on terms that are at least as generous as the ones then in effect, for as long as he works. And if pension rules become more generous in the future, then those more generous terms are the ones that are protected. Any changes to these rules must be reasonable, meaning that they “must bear some material relation to the theory of a pension system and its successful operation,” and any disadvantages to the employees “should be accompanied by comparable new advantages.” This is the “California rule.”

How can the rule be fixed? Merely reciting the need to shore up pensions or invoking a “fiscal emergency” doesn’t help: if the fiscal emergency was largely caused by governments’ past unwillingness to fully fund the pension, then the underfunding is the government’s own fault. This is even true when the crisis is created by a tax-limiting voter initiative like Proposition 13. In any event, the California rule would still require compensating the harmed employees with comparable benefits, so the ability to modify pensions seems to be of little help in resolving a fiscal crisis. Here are some possible fixes:

Shifting toward defined-contribution plans. A defined contribution plan is just an investment account that earns whatever it earns based on contributions. With these plans, the whole issue becomes moot. Defined-contribution plans are also always fully funded, so disguised deficit spending or unsustainable promises become more difficult. But since defined-contribution plans are riskier for the employee than defined-benefit plans, the employer may have to pay for the shift to defined-contribution plans through higher wages or more generous benefits.
A flexible definition of benefits. One possibility would be to expressly reserve flexibility in the statutory definition of pension benefits, for instance by providing that employee contributions would be determined based on ongoing actuarial advice.
Short-term contracts. Perhaps providing benefits via short-term contracts (rather than by statute) could preserve government flexibility to modify pensions prospectively. If pension terms are enshrined in memoranda of understanding—perhaps the result of collective bargaining with public-employee unions—that expire at a certain time, it seems hard to argue that the employees have acquired any vested rights to anything beyond the term provided. But this theory may be on shaky ground in the case of pensions; California courts might hold that terms must be preserved not for the length of an individual contract, but for the entire length of government service.
State constitutional amendment. The California rule could abolish by state constitutional amendment. (Such an amendment has already been proposed and may soon be on the ballot in California.) But this might itself be a law impairing the obligation of contracts, so it might be valid only for future employees.
Changing state case law. A long-term possibility would be to alter the California rule by appointments to the state supreme court.
Privatization. Another possibility—which alleviates the problem but doesn’t solve it structurally—is to pursue privatization and outsourcing. Firing state employees is constitutional, and providing pensions and retirement plans for the contractors’ employees will be left to the private employers. Those private pensions, if offered, will have to be ERISA-compliant, which alleviates problems of underfunding; and in any event, the state won’t be on the hook for anything beyond the current contract price.

These are all possibilities for treating pension benefits just like other aspects of compensation: as something earned over time and not guaranteed for the future. In addition to being more rational as a public-employee compensation policy, abandoning the California rule would also give governmental units in California, and wherever else the rule has been adopted, flexibility to deal with changing circumstances.
Source-washington post