The Second Pay Revision Committee has recommended the introduction of productivity-linked risk pay, variable annual increment and other sops such as North East allowance, difficult area allowance and underground mines allowance, in a five-tier pay scale.

The report presented by the panel headed by Justice M Jagannadha Rao, retired judge of Supreme Court to Sontosh Mohan Dev, union minister for heavy industries and public enterprises, will benefit around 250,000 central public sector executives.

In line with the recommendations of the Sixth Pay Commission, the committee suggested that the basic pay of chairmen and managing directors (CMDs) should range from Rs55,000 to Rs100,000 and of directors from Rs50,000 to Rs80,000, depending upon the category.

Basic Pay of below board level executives ranges from a minimum of Rs11,500 to Rs70,000 at maximum level. The panel has also suggested a new scale Rs65,000-75,000 below the board level.

Risk pay will range from Rs1,100 to Rs25,000 pm.

It also suggests that the city compensatory allowance be dispensed with along with the upper ceiling on gratuity.

The panel has suggested payment of house rent allowance at the rates of 30 per cent, 20 per cent and 10 per cent of the basic pay, depending upon the classification of the cities or towns, Dev said.

Variable pay or performance-related payment should range from 40 per cent to 200 per cent of basic pay.

Companies should be allowed to formulate employees' stock option plans, the committee suggests.

The highlights of the recommendations are:

The pay revision will be effective 1 January 2007.

• CPSEs have been classified into five categories based on the turnover, size of manpower and geographical spread.
• There will be five sets of pay scales based on categorisation of CPSEs.
• There will be two components of pay, i.e., basic pay and risk pay. Risk pay will be in addition to basic pay which depends on the categorisation, profitability and the level of the executive.

There is, however, no change in retirement age and CCA has been dispensed with. Retirement benefits will be 30 per cent of the basic pay., which includes CPF, pension, gratuity and post retirement medical benefits.

Revision of the scales of pay and other benefits of non-unionised supervisors will be decided by the board of directors of concerned CPSE.