Thursday, February 20, 2014

BENCHMARKS FOR A GENUINE OROP PARADIGM

Whatever the catalysts or driving forces be in the selection, by the Government, of the present point in time for announcing the acceptance of principle of OROP, for retirees of armed forces, it remains to be seen how this would translate into reality at the ground level.

Skepticism has been voiced, in the media and online, as to whether there would be shortfalls in the delivery as against the anticipated outcome. This leads us right back to the question at the heart of the matter. What is the "anticipated outcome"? Has any clarity emerged in the stated positions of the advocates of OROP since the times I had attempted to outline what OROP "could" imply in this blog post?

As far as statements go, the Hon'ble Finance Minister spoke of bridging gaps in pensions. Spokespersons of the political party in power have defined it as equal pension for the same length of service for the same rank regardless of the point of time when an ex-serviceman retired. This, barring the understandable doubts arising from past experiences, could be construed as full pension parity based on the rank at retirement and length of service and not modified parity.

Such an OROP would be expected to fully bridge the gap, with effect from 01 April 2014, between the pension of a pre VI CPC retiree in rank "x" with reckonable service "y" and the pension of a post VI CPC retiree also in rank "x" and length of service "y". Presently, the pre VI CPC retiree gets pension applicable to the length of service corresponding to the minimum of the pay band of rank "x"  post VI CPC.

Now, even if such a happy state came to be realized, it would not completely address the old issues that have been raised off and on. It may help to create a brief list here that could be rationalized, enlarged and/or modified depending on feedback received. The areas that might require fine-tuning are:

*What is the concept of "One Rank"? I've stated in different words elsewhere and have read it on others' blog posts and comments, that "Rank" is a variable, not a constant. Yesterday's rank "x", in the above example, may not be the same rank "x" today in terms of the time-frame required to attain it automatically on the basis of length of service. The clearest recent example is the pre and post VI cpc ranks of Lt Col and Col(TS), respectively, applicable at retirement for pension calculation after an identical service of 26 years, in the same cadre and with the same commission. My old blog post could apply to discrepancies in pensions of two retirees even with OROP.

*Does OROP compensate for the truncation of careers in armed forces as compared to civilian employees? Even with OROP, would the pension, between the time of retirement of a armed forces retiree and the time an equivalent civilian retires, equal the pay and allowances of the latter in the same period? Equally importantly, would the OROP pension of the same armed forces retiree equal the pension of the "equivalent" civilian employee at the time the latter retires several years after the armed forces retiree?

*Does OROP compromise the case for NFFU for the armed forces on the same lines as given to civilians?

Clearly, there would be no simple answers to these questions as well as to others that might arise. But to address the immediate ambiguity as to whether OROP would be full, partial, modified, semi-modified or whatever, we could at least share in clear terms what "full OROP" ought to be.

Let us take the case of a specific rank. For pull parity of pension for a Lt Col who retired before 01 Jan 2006, his pension should equal the pension as per the pay band applicable to a Lt Col serving and retiring beyond 01 Jan 2006 as follows. Please note these figures are subject to verification and any corrections or suggestions for modifications would be welcome.

Guidance provided towards ascertaining pay-band details in the Aerial View Blog is gratefully acknowledged in the making of this table. (For a larger view, please click on the thumbnail below)



{Edit} Please view an update here.




13 comments:

  1. But now Lt Col gets basic pension as Rs 26265 and not Rs 25700 wef Sep 2012.So could the table be amended pl.

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  2. Can you please work out the likely revised pension with OROP for a Pre 2006 retired Major. Thank you.

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  3. @ramesh sharma: Thanks for the input. Through such inputs and the resulting updations, the table should become incrementally more sound and accurate.

    The pension for pre VI CPC Lt Col retirees was revised following the implementation of recommendations by Committee of Secretaries. I had included the revisions in a previous blog post.

    Following your comment, I have made a slight correction in the table relating to this blog post.

    But the COS recommendations might or might not apply to post VI CPC Lt Col pensions. Based on further inputs in this regard, the other figures would also get updated.

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  4. @PK Chhiber:"..Can you please work out.."
    :-)
    This has started out as a collaborative effort. So inputs from others on this particular table are being awaited so as to arrive at the correct picture regarding this pay-band.

    But, it should be easy enough for anyone to make a spreadsheet for Major rank by using the payband III data from this web-page. The template is alreasy available on this blog post.

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  5. Easiest solution to all queries is to delink pay and pension with rank.The pay and pension should be based on number of years of service which will always have an inbuilt One service period one pension. It will also not require any need for NFU. Each individual who joins service is doing equal work thus pay scale should be based on years of service. Thus ranks loose there relevance and stagnation or lack in promotion is catered for. Thus to course-mates one being a general and the other a Col will get same pay and pension. Finally why should we again discriminate on the basis of rank as we know the less vacancies as you move to higher echelons.Even when a person joined AF he was never informed about the subsequent discrepancies in pay due to lack of promotion prospect.
    It is against natural justice to discriminate between two individuals when playing ground is not level. If you have vacancies based on the corp you are fighting or support arms, its a loosing battle in court.The sub cadre is only to facilitate working and cannot become the prime factor.
    Between offrs and PBOR's, One can be equated to class A and the other to class B. They have different starting platforms.But yes a havldar and a sub major with equal service should get same pay and pension. One rank defeats the purpose as if you retire as a col and your batchmate as Gen with same service period you get different pension. Thus earlier you became Col in say 22 yrs now you become in 15 yrs, if you both retire at the same rank you will loose out if you retired earlier. Next all before AVSC II stand to still loose. Again it is not the same playing field. The OROP can only be logical if we did not have cadre reviews /AVSC implementations with subsequent PC. If promotions become faster in future the present and the past stand to loose out always.If NFU comes in 7 CPC only people after that CPC will benefit the rest will still loose out. The methodology has to be for future not the present or the past.

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  6. A comment with general views on pensions but not connected with the contents of this blog post was received from rajat.

    Those who may wish to interact with the author of the comment may consider viewing it here.

    Thanks.

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  7. You have taken the annual increment at 3% of the basic.
    This method is applicable only in case of initial pay fixation as on 01 Jan 2006. Due to bunching, the revised pay was fixed at 38530, 38530, 39690,39690, 40890, 40890 and so on, for 13, 14, 15, 16, 17, 18 yrs.... of service.
    But after the initial pay fixation increment at 3% of (New basic+Grade Pay) was allowed. As such, the annual increments are more than what you have shown in the table.

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  8. You have taken the annual increment at 3% of the basic.
    This method is applicable only in case of initial pay fixation as on 01 Jan 2006. Due to bunching, the revised pay was fixed at 38530, 38530, 39690,39690, 40890, 40890 and so on, for 13, 14, 15, 16, 17, 18 yrs.... of service.
    But after the initial pay fixation increment at 3% of (New basic+Grade Pay) was allowed. As such, the annual increments should be more than what you have shown in the table.

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  9. @Sainathan: The increment has been correctly calculated at 3% of basic(after fixation) plus grade pay. Please check again.

    However, you are quite right about the bunching and the initial fixation. The initial fixation had been corrected in the subsequent blog post.

    But calculation of the increment is correct.

    Given your figures of basic fixation, a similar table can be generated for those who had their initial basic fixed at the figures as quoted by you viz., 39690 and 40890 and so on.

    The point of the blog post is the pension of a post VI CPC retiree would vary as per the fixation at the time of implementation of VI CPC.

    A pre VI CPC retiree would have to work out the pension being currently drawn by a post VI CPC pensioner of equal service in that rank as per the methodology given in the table. That pension would depend on where the basic of the corresponding post VI CPC pensioner was fixed with effect from 01 Jan 2006.

    But, again, the increments are in order.

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  10. @Sunlit
    Request you to reconsider your views on increments.
    For some reason (logic of the Babu to find ways and means of shortchanging the Fauji)Grade pay not taken into account while calculating increments whereas, as per SAI 2/S/2008, annual increment is @ 3% of (basic+GP).
    Hence, the basic pay of an officer after every year of service beyond 13 years will be more than the amount shown in initial fixation. Interestingly, even among two officers of the same rank and same service, retiring after 2006 will not be the same!
    Officers who retire earlier(in the same rank and same length of service) would draw less basic pay(and hence, lower pension) due to bunching effect than officers who retire later, who are not affected due to bunching.

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    Replies
    1. @Sainathan: The table shows increments based on basic and GP, so what "views" need to be, as you put it, reconsidered?

      The table has a note to the effect that people with the same years of service could have different pensions.

      Kindly refer to the update to this blog post.

      Delete
  11. We are talking about 01 April as cut off date and working out tables on that basis where as it appears that all the Hon'ble Fin Min said was that OROP will be implemented wef 01 Apr 2014.
    Normally speaking, pension comes at the end of career, so we should look for the maximum for a particular rank for a maximum years of service say 33 years and then work out downwards after giving the benefit of weightage of service as had been prescribed before implementation of third Pay Commission. Literally speaking, as per the applicable pay scales, the difference in the maximum pension between two ranks will be the grade pay ie a Lt col with maximum years of service will have 50 % of (67000+8000+6000) and a Col will have 50 %(67000+8700+6000). This could be worked out downwards. Few anamolies which crop up due to changes in promotion pattern of Major and Lt Col can be sorted out as small anamolies.

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  12. @Shimlacharlie:"..We are talking about 01 April as cut off date.." ;

    Actually, your comment on this particular blog post is out of context as this blog post is not about "01 April as cut off date" at all. No table has been worked out in this blog post on, as you put it,"on that basis".

    As for the logic, "anomalies which crop up due to changes in promotion pattern of Major and Lt Col can be sorted out as small anomalies", one only has to look at the track record to realize what little chance there is of anomalies, big or small, getting "sorted out" separately from the main issue.

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