Hearty Welcome !

This presentation is on

SPECIAL RULES

Governing the Development Officers

Best Wishes!

Special Rules – Genesis

An Overview in Brief

With Heartfelt Tributes to Shri.S.W.Kalwit

You are Appointed…Appointment Letter

Dear Sir/Madam,

With reference to your application in terms of LIC of India (Recruitment Of

Apprentice Development Officers) Regulations, 1999 and the subsequent

training you had with us as an Apprentice Development Officer, we hereby offer

you appointment as a Probationary Development Officer with effect from …..

On the following Terms & Conditions.

“Your Confirmation will depend ,inter alia upon, fulfillment of the minimum

business requirements set out in Para …. above.

The grant of increments to you shall be governed by the targets assigned to

you as per this appointment letter read with Regulation 56 of LIC of India

(Staff) regulations, 1960….”

You are Confirmed…Confirmation Letter

Dear Sir/Madam,

Further to our letter dated….issued to you giving

terms & conditions of your appointment as a

Probationary Development Officer, we have pleasure

to inform you that you are confirmed in the services as

a Development Officer with effect from…..

All other Terms & Conditions of your Appointment set

out in the letter remain unchanged.

(1)The Central Government may, by notification in the Official Gazette, make rules to carry out the purposes of this Act.

(2B) The power to make rules (i) the power to give retrospective effect to such

rules; and(ii) the power to amend by way of addition,

variation or repeal….with retrospective effect

Section 48 in The Life Insurance Corporation Act, 1956

Section 48 in The Life Insurance Corporation Act, 1956(2C) The provisions of clause (cc) of sub-section (2) and sub-section (2B) and any rules made under the said clause (cc) shall have effect, and any such rule made with retrospective effect from any date shall also be deemed to have had effect from that date, notwithstanding any judgment, decree or order of any court, tribunal or other authority and notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or any other law or any agreement, settlement, award or other instrument for the time being in force.

2015 MODIFICATION? !

2009 SPECIAL RULES

1989 SPECIAL RULES ON MOU

1976 BLUE ORDER BACK

1971 NEW SERVICE RULES ( T A PAI )

1964 MEMORANDUM OF SETTLEMENT

1957 BLUE ORDER (CLASSIFICATION FORMULAE)1956 LIC OF INDIA FORMED

1969 NEW SERVICE RULES

Their major function is to procure new business through their agency organization and to render prompt after-sales-service. The nature of their work mainly involves field duties.

Employees of other classes work for specified time in the office where their output is directly supervised.On the other hand, the Development Officers have no fixed hours of work.

Their performance has necessarily to be judged with reference to the results of their efforts in the forms of new business secured through their agents and the cost incurred in relation thereto.

Why Special Rules for Development Officers….(Management’s Reason)

Why they changed 1989 Special Rules in 2009Management’s Reason… “We have modified the Incentive

Scheme/s of Development Officers in the year 1997, 2000 and 2004. Growth oriented Incentive Bonus Scheme (GOIB) was introduced with effect from 1st September 2004. However, there has been no change in the Special Rules for Development Officers since 1989”

Why they changed 1989 in 2009Management’s Reason… “Out of 18933 Development Officers

whose appraisals were settled in the year 2006-07, 836 Development Officers are working above 17% cost ratio, which works out to 4.42%.

Out of 18933 Development Officers whose appraisals were settled in the year 2006-07, 83 Development Officers are working above 35% cost ratio, which works out to 0.44%”

Life Insurance Corporation of India Development Officers (Revision of Certain Terms and Conditions of Service) Rules, 2009------------------------------------------------------------------Special Rules 2009……..In exercise of the powers conferred by sub-section (1), read with clause (cc) of sub-section (2), of section 48 of the Life Insurance Corporation Act, 1956 (31 of 1956), the Central Government hereby makes the following rules regulating certain terms and conditions of service relating to business performance of Development Officer of the Life Insurance Corporation of India-------------------------------------------------------------

DEFINITIONSIncludes:Basic,FPA,HRA,CCA,HA,FCAAnd Other Reimbursement ofTE, Telephone, Mobile Bills,Vehicle Insurance PremiumDoes Not Include:PLLI, IB,PL Encashment, CashMedical Benefit

Remuneration

For COST purpose

DEFINITIONSIncludes:Schedule First & First

Year Premium brought in by the agency organization.

Does Not Include:Second & Subsequent

years Premium.

Premium Income

For COST purpose

Schedule Premium means the actual credit of the premium as per a plan & term

Expense Ratio & Population of the Area of Operation

Prescribed Expense Ratio = Expense Ratio + Relaxations

19%Occasions 21% >21 TO 23 > 23<=32 >32 <=35 >35

Fisrt Time NIL No Increment

No Increment

No Increment

ONE Decrement

Second Time NIL No

IncrementNo

IncrementONE

DecrementTWO

Decrement

Third Time NIL No

IncrementONE

DecrementTWO

DecrementTWO

Decrement

EXPENSE RATIO As per Existing Special Rules 2009

DISINCENTIVE TABLE – SELECT FROM DROP DOWN FROM THE YELLOW BOX

Table of DisincentivesSpecial Rules 2009

Where the Cost Ratio Exceeds the Prescribed Limit

Continuous Occasions

Up to 2%

>2% but <4%

>4% but CR<=32%

>32% but <=35%

>35%

First Time

NIL No Increment

No Increment

No Increment

One Decrement

Second Time

NIL No Increment

No Increment

One Decrement

Two Decrement

Third Time

NIL No Increment

One Decrement

Two Decrement

Two Decrement

TERMINATION CLAUSE …. TWO SCENAREOS

Deferment of Disincentive…

“If a Development Officer has completed 10 years of service or more as a Development Officer, and has not exceeded the prescribed expense limit for a continuous period of not less than 10 years immediately preceding the relevant appraisal year”

Subject to the provisions of Rule 9, 1.the current decrements may be reinstated subject to the future cost being within ceiling.2.The reinstatement provided under Rule 9 or Rule 10 together shall be limited to three occasions for which decrement were suffered during the entire service as a Development Officer.3.The decrement suffered during an appraisal year may be reinstated during the period of next five appraisal years, and not thereafter.

Reinstatement of Current Decrements Suffered…….Under Rule 9 & Rule 10

Reinstatement of Current Decrements Suffered…….Under Rule 9 & Rule 10 Subject to the provisions of Rule 10, if a Development Officer does not exceed the basic expense limit in three successive appraisal years, the current decrement for one year may be reinstated from the relevant appraisal date.If a Development Officer is eligible for reinstatement both as per Rule 9 and Rule 10, he may choose the same either under Rule 9 or under Rule 10; and not under both. The choice so exercised shall be final.

(5) Where the representation received under proviso to sub-rule (4) discloses, (a) any factual inaccuracies in the computation of eligible premium or other figures(b) any cause beyond the control of the Development Officer, such as accident or sickness

The competent authority shall forward the representation to the Zonal Manager, for decision. If the Zonal Manager is satisfied, he may consider and pass such orders as he may deem fit. If the Zonal Manager rejects, the DO may submit a Memorial to the Chairman in respect of that matter.

Grounds for Representation for Not to Effect the Disincentive Explanation

Re-appointment of terminated Development Officer:

If a Development Officer, whose services are terminated in pursuance of rule 7 has completed at least seven years of service in Class II on the date of such termination and has not completed 55 years of age, he shall be eligible for reappointment in the service of the Corporation to do administrative work in Class III either as Assistant or Record Clerk

Special Cases- Review by MD:

There is a provision for review by the Managing Director in deserving cases subject to the provisions of Rule 12. A deserving case where the performance of a Development Officer may be regarded as good would be one if his cost ratio does not exceed 15% on the basis of his annual remuneration in each of the two consecutive preceding appraisal years and he has otherwise carried out his official duties in a satisfactory manner.

Special Rules Impacts…..

The Reality as at 2013-14… Development Officers are largely impacted… WHY?1. De-growth observed ranging from 4.52%

to 41.22% in the last 5 years2. 7,53,888 agents recruited BUT 18,56,689

agents Terminated3. De-growth in agency net addition 17.05%

(minus)4. Closure of All Plans on 31.12.20135. 49 out of 52 plans withdrawn

The Reality as at 2013-14 Development Officers are largely impacted… WHY?1.By the end of 2013-14, only 12 plans2.2014-15 Just 7 more plans3.Service Tax@12.36% imposed from

01.01.20144.Sec 194DA imposed in Income Tax

amendment5.Changes resulted in Sec 10(10)D

impacted SB & Maturity proceeds6.Environment has affected Conventional

Insurance Plans

The Reality as at 2013-14…Development Officers are largely impacted HOW?After the Implementation of Special Rules 2009,Total of 11,729 Development Officers have faced Disincentives on different counts. This is 47% of the Cadre Strength.Recruited around 8700 new Development Officers incurring 20 Cr expenses.Even 50% of them could not gain confirmationOut of 22,975 Development Officers as at 2014, 601 were working at cost ratio exceeding 38%472 have been terminated already as on Mar 2014

2006-07 2013-14

Above 17% only 836

11279 in Disincentive

Above 35% only 83

601 above 38%

472 Terminated

4500 PDOs not confirmed

Alarming Impact of Special Rules 2009

Job Lost! Wages Lost ! Increment Lost!

Pension Lost! More VRS sought!

Occasions Up to 2% >2%<=4% >

4%<=32%>32% <=35 >35%

Fisrt Time NIL 30% cut in FCA

50% cut in FCA

60% cut in FCA

60% cut in FCA & No Increment

Second Time NIL 50% cut in

FCA60% cut in

FCA

60% cut in FCA &

No Increment

80% cut in FCA & No Increment

Third Time NIL 60% cut in FCA

60% cut in FCA & No Increment

80% cut in FCA &

No Increment

80% cut in FCA & One Decrement

Fourth Time NIL

60% cut in FCA & No Increment

80% cut in FCA & No Increment

80% cut in FCA &

One Decreme

nt

No FCA & One

Decrement

Fifth Time NIL80% cut in FCA & No Increment

80% cut in FCA & One Decrement

No FCA & One

Decrement

No FCA & Two

Decrements

Modifications Expected (as is being circulated by NF)

Relaxations for Higher Age(in Expected Modifications)

Termination RulesAs per Modifications Expected

Scenario 1

When Cost Ratio in the relevant year exceeds 50% AND the aggregate Cost Ratio of the Relevant Year and the TWO Appraisals preceding the Relevant Year Exceed 50%

Scenario 2

When the basic pay after applying disincentive table repeatedly, falls below the 'Minimum Scale of Pay' for the SECOND TIME in the entire career

Wage Revision expected to fetch 20% gross increase

Even in the Modification (proposed) The Expense table is unaltered for increment purpose. If one exceeds the Prescribed Cost even by a fraction, he will not be eligible for increment (excluding 2% buffer in the disincentive table)

OBSERVATIONS

Post Wage Revision, there is going to be an automatic escalation of minimum of 4% to maximum of 9% approximately.Present 19% will become 23%Present 38% will become 46%For recently confirmed 35% will become 42%For seniors on stagnation 21% will become 25.3%Thus, the Modifications considered prior to Wage Revision, would get nullified with all the said relaxations not matching the wage increase.This would lead to Decrement again.

Friends,

This is just an attempt to improve our awareness & understanding of what is in store.This is not an exhaustive presentation.We may have missed out on some.

Hope this presentation has kindled your thoughts in that direction.

Best Wishes & Regards,

Thanks for Watching

Long Live National Federation!

Long Live Our Unity!