Friday, March 21, 2014

Models For A Probable Contour Of The OROP Format

{Edit: The contents of this blog post have been cut and pasted on this Yahoo! Group Post of a group located at Bangalore without my permission or attribution to me and without any link back to this post. This manner of reproduction is in infringement of my rights. Could a reader in touch with the group induce them to post this material with due link back and attribution? Thanks and regards}

It is not that the issue of Pension Parity on the lines of OROP has not been attempted to be addressed by CPCs in the past. Everyone affected would already be aware that pensions of pre VI CPC retirees are fixed at 50% of pay in the revised pay-band. This is modified parity of the kind V CPC had introduced for post 01 Jan 86 retirees whilst giving full parity to pre 1986 retirees.

This can lead to the query whether the Govt is envisaging some form of "full" parity in the case of armed forces under the OROP scheme.

How did "full" parity work after V CPC? It brought the notional pay of pre 1986 retirees at the same level as those serving as on 01 Jan 86. Therefore pre and post 01 Jan 86 retirees were at the "same level" (not including the post 01 Jan 96 retirees). At the same time, the pre and post 01 Jan 96 retirees had modified parity, the pre 01 Jan 96 retirees getting, in words of the CPC, "consolidated pension (shall) be not less than 50% of the minimum pay of the post as revised by V CPC, held by the pensioner at the time of retirement".

In the context of OROP, one can ask whether the same sort of idea with "variations upon a theme" is now sought to be implemented as OROP.

This essentially means examining the nature of OROP. Is it intended to be an inter CPC exercise or whether it will operate intra-CPC as well?

As an example, Circular 500 fixes the pension of a pre VI CPC retiree in the rank of Colonel and with 20 years of service at Rs. 22742/- on the "minimum pay in revised pay band" principle. If OROP is purely inter CPC in nature, it could imply that full parity would be restored on a similar fixed-pension basis for pre VI CPC retirees.

Such a full parity working on only "inter-CPC-retirees" basis could mean one of several things:

* Pension of a pre 01 Jan 2006 Col retiree with 20 years of service would be a fixed amount equal to the pension of a Col retiring on 31 Jan 2006 with 20 years of service.

OR

* Pension of a pre 01 Jan 2006 Col retiree with 20 years of service would be a fixed amount equal to the pension of a Col with 20 years of service as given in the table based on post VI CPC  pay-band viz., 31755/-

OR

* Pension of a pre 01 Jan 2006 Col retiree with 20 years of service would not be a fixed amount but would be periodically adjusted with the "current" (at the time of periodic adjustment) pension of a Col retiree with 20 years of service.

In such a (pre-only) format, the pensions of post CPC retirees would be calculated as per the current norms and would not be changed as per the process outlined above.

But the intra CPC implementation {Edit : Ideally, this should be called an "Inter-cum-Intra CPC parity} would essentially mean that all pensions as on "the periodic adjustment date" must be equal for all current and past retirees in the same rank and with the same pension service.

In the periodic adjustment model, the pensions may or may not be as per the table I have provided a link to above. It is again repeated, for the benefit of those with a tendency to gravitate towards cognitive impressions of colored columns of a table rather than to the underlying idea in drawing up of a chart or table, the table only indicates the pension of a Col with 20 years of service would have been 31755/- if he'd picked up the Col rank with 15 years of service as on 01 Jan 2006 and retired 5 years later  as on 31 Jan 2011 with 20 years of service. For all other cases, the post VI CPC pensions of a post VI CPC Col retiree with 20 years of service would be fixed based on the level at which his basic pay was fixed as on 01 Jan 2006. There would be variations.

This is merely to underline the impression that while it ought to be of interest to everyone to attempt to draw some rough contours of the form OROP might take, it would be rash to see an "illustrative" table and jump to erroneous conclusions.

26 comments:

  1. I do not understand why everyone is confusing the issue.
    "OROP" means just that.
    At any given point of time 'two retires with same RANK and YEARS of PHYSICAL SERVICE" will get the same pension.Not having got a particular Rank is a different story and not to be confused.It can be fought separately as required.
    with this simple formula it becomes easy for PCDAP for calculation.
    Bringing in extraneous matters only delays the ISSUE.
    Ramani

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  2. @subramany peri: What you say has been covered in the blog post in the section that posits a scheme in which the pensions of all past retirees would have to be periodically increased to stay at the same level as the current( at the time of periodic review) pension of the same rank and equal service.

    Whether that is what the Govt means by OROP remains to be seen.

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  3. Very well brought out since instead of looking at the tables we should see what is the rule to be followed & your blg brings it out every well.Thx for making me collect my thoughts in trying to give an accepted solution
    The time has come to eat our cake & have it to0.We all know that more than drawing up the tables, the final decision will be the outcome of a ding dong battle between Services Hq & MOF
    Hence what we ask during the negotiation is very important.
    Hence if we ask for some thing (& also easy to draw the tables based on that )which is based on what the CDA itself has done in the past it would be difficult for the MOF to object
    Hence going by the number of options given in the blog the most suitable one is (as i feel) is to follow the circular 500 & just ask the govt to pay based on what is the max pension for that rank would be on a monthly basis announced once in 6 months(as is the case of DA)
    Care would need to be taken to ensure that for ranks who can never serve for 33 years as is the case of many lower level ranks the total pensionable service should be reduced to say 20 years.
    Hence pension for any rank (would be (number of years of service+weightage for that rank)multiplied by the maximum pension for that rank.(leaving out the DA part). For eg a Col with 25 yrs of service would get ((25+7)/33 )*44045=42710(the 44045/ is taken from the table in the earlier blog post & 7 is the weightage for a Col)
    I feel this would take care of 99.9% of the requirements of every one (Individual,Services HQ & MOF) & most importantly do not make the individual feel bewildered since he can calculate it himself.
    Frankly i have not said any thing new at all & hence no one will get shocked & the wily babus can not object since we are just asking OROP which has been passed by the parliament:)

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  4. Sir,
    The methodology proposed by Army HQ to arrive at OROP is to find out the pension of any one rank who draws highest pension from any of the services and take it as bench for that number of years of service. They have also mentioned that 33 years with rank weightage has no meaning for deciding pension of pre - 2006 pensioners.
    For example if a Nb Sub of Y group as on 01 Apr 2004 with say 28 years service (assuming it is the highest in that rank gets pension of say Rs 22,000 pm then all pre - 2006 Nb Subs with 28 years service in Y group will also get Rs 22,000 pm as pension. This clearly indicates any Nb Sub with lesser service will be fixed pension on pro-rata basis.
    At present in some service like Navy, the Officers of Executive branch get promotion faster/earlier than in any other service. So this methodology of Army HQ ensures whether you are from Army or Air Force your pension of a certain number of years of service of the same group in the same rank will be same. This is true OROP.
    Sorry I do not agree to any of your three proposals as these did not reflect OROP correctly since promotions in different services in different branches are different.

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  5. @Sivasankar Vidyasagar: "..methodology proposed by Army HQ.."; Nice to know you are privy to such information.

    By proposals do you mean the speculations and wish-list in the comment by @Venkatesh VT or the options listed in the blog post? You would certainly be missing the point by describing the possible alternatives in the blog-post as "proposals". If you have read through the blog-post, you'll realize they are nothing of the sort.

    Besides, the 'speed' of promotions would have nothing to do with the options listed in the blog?

    Also how can any OROP be "true OROP" if the pension of subsequent retirees in the same rank with the same service keeps on increasing as the years go by and that of the previous retirees stays fixed to that of the 30 Apr 2014 or 31 Jan 2006 benchmark?

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  6. Could the following be clarified?

    Since pension is a function of last pay drawn, won’t there be situations when, during the 10-year reign of a particular CPC, say 6th CPC, two colonels retiring at different points of time but with same service will be drawing different last pay and therefore will have a different pension? If yes, where do we see OROP in this case?

    In my opinion true OROP as recorded in the MOM of RM’s meeting after FM’s announcement of OROP would be possible only if two persons retiring at any point in history in the same rank with same service will get equal pension:
    (1) Every month after their retirement
    (2) Irrespective of their last pay drawn
    (3) Irrespective of when they picked up their rank at retirement
    (4) Irrespective of how much their pay was fixed by any CPC
    (5) Irrespective of which service they belong to.

    I have thought of criteria for officers, but similar dispensation will have to be worked out for jawans since their pay structure has a pay group element.



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  7. @Sharad Paranjape: I couldn't agree more. That is the sort of concept that would require periodic increases in pensions of past retirees as I have been trying to say for some time on this blog and by hints in comments on others' blogs as here.

    The part of this blog post that states "the intra CPC implementation would essentially mean that all pensions as on "the periodic adjustment date" must be equal for all current and past retirees in the same rank and with the same pension" covers the comprehensive OROP you have outlined in your comment.

    But what is the opinion of the Services HQs and the Govt.? Only time will tell.

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  8. @sharadparanjape,

    Not possible. During the tenure of the CPC, say 6 CPC, the start point for a Col is the same. After 10 years they will reach Start point x 3% increment pa x 10 years, unless the latter crosses over into the 7 CPC.

    Simple maths - Y1 45000
    Y2 45000+3%
    Y3 Pay atY2+3%
    ....... Y10 Pay at Y9+3%

    The only difference would be the DA in say year 2013 was 80% and in year 2014 is 100%.

    And DA is not considered for total emoluments and pension at 50% thereof!

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  9. @Sivasankar Vidyasagar: You have mentioned the date 01 Apr 04. What is the relevance of that?

    I personally think if at all UOI decides on giving full parity for past retirees as their version of OROP, then the pension of a rank and certain no. of years of service retiring as on 31st January 2006 would have to be the basis for giving a fixed and full parity instead of the present 50% of min pay in revised pay band.

    Though this parity will be effective prospectively from 01 April 2014, the date of pension parity as 01 Jan 06, i.e. choosing pensions applicable on that date, makes ample sense based on past practice. Why should be another cut-off point in the middle of the 10 year period of VI CPC? It is just that there will be full parity instead of a modified one.

    The expectation that pensions will keep on increasing could be a little on the optimistic side. The next revision for full parity would probably only take place from 01 Jan 2016 as part of VII CPC implementation.

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  10. @Satyam ev Jayate:"..start point for a Col is the same.."

    Provided the Col got promoted to that rank wef 01 Jan 2006 and got the start point pay on that date.

    As for other cases, there is a bit of a question mark.

    Do factor in the fixation of a pay of a Col who had done 2 years of service before 01 jan 2006. Will his pension be the same after 20 years as a Cil who picked up the rank on 01 Jan 2006 and retired also with a service of 20 years in 2011?

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  11. Our mistake is coining some words or concept (like designing a building) with out spelling out how it will be constructed or executed)
    It happened with Rank Pay & its happening with OROP now
    I had given the formula earlier (based on the most practical option (in my view )as given in the blog post )keeping in mind the past present & future retirees
    I did find a suggestion which if adopted may be better i.e pension based on rank across three services.The problem with this appch is Services HQ need to rationalize the rank structure across three services.
    This is never likely to happen & hence discounting this option
    I think taking the maximum pension for the maximum service with the same service for a particular rank would take care of most of the reqmts with very less heartburns

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  12. @Venkatesh VT: "..maximum pension for the maximum service..";

    A "demand" that was considered by V CPC and rejected.

    To any objective and fair minded veteran that would appear to be a bit like the unjust and unfair demands civilian lobbies and vote-banks start agitating on every now and then.

    Perhaps people who have donned uniforms and served the nation as members of the armed forces need to be a bit different and more in tune with principles.

    As per that logic of maximum pay/service, the person who took pre-mature retirement to pursue a lucrative career out of uniform should get the same benefit in terms of pension as a person who served out the full engagement of his tenure.

    By which yardstick is that sort of "parity" justifiable?

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  13. corona8 @As per that logic of maximum pay/service, the person who took pre-mature retirement to pursue a lucrative career out of uniform should get the same benefit in terms of pension as a person who served out the full engagement of his tenure.By which yardstick is that sort of "parity" justifiable?

    I dont remember of saying that the same benefit should accrue to a person with a truncated service compared to a person with full service,what ever the reason & neither i remember of any other ESM saying this(please see the e.g. for a Col with 25 years of service that i had posted earlier which is self explantory)
    All that is said is that the pensions should be proportionate to the number of years of service provided it is a pensionable service as laid down) the the base line should be the maximum pension of any current retiree
    What is being recommended is based on circular 500 & OROP (
    The saddest part of your comment is that people are perusing lucrative careers after taking pre mature retirement.I know that in majority of cases people take premature retirement since they have no further avenue in the armed forces or look after the family & most of them dont get any high flying job at all.
    I also dont want to spell out why people with out getting promotion stay till the end & dont take premature retirement

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  14. @Venkatesh VT , @corona8: Whatever the reasons be for continuing in service or taking premature retirement, the real issue here is coming to an understanding of what could or should be the best basis for providing a pension parity for past and present retirees of armed forces.

    When the information currently available states that OROP would mean equal pension for the same rank for equal service, the other concepts become a bit extraneous to the discussion.

    The doubts applicable even to the current "definition" are quite a few. Those doubts and ambiguities are what give rise to several options only some of which have been listed in this blog post.

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  15. after going through all the comments so far, there is one doubt that needs to be clarified.
    As on TODAY's Pension Scenario "ARE THERE DIFFERENT PENSIONS FOR OFFICERS OF SAME RANK WITH SAME LENGHTH OF " SERVICE".???
    can Sunlit or anybody claify this.??
    Ramani

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  16. Re my last Query/ comment.
    Clarification.
    This is Regarding Post 2008 Retirees
    Because if there are 2 or more Retirees with same Rank and Service
    getting different pensions ,Post 2008
    then PCDAP will have to do a Massive excercise.
    lets hope matters will be clarified soon.,
    Ramani

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  17. @subramany peri: "..can Sunlit or anybody claify this.??;

    Well, the whole blog post and comments are a discussion to clarify such doubts.

    You will have to do a bit of mental exercise to understand the underlying idea of this blog post. A Col retiree who retired on 31 October 2008 with a service of 29 years had a service of 26 years 2 months as on 31 Dec 2005. At what level was his pay fixed with effect from 01 Jan 2006 and, as a result what was his basic pay and hence pension when he retired on 31 October 2008.

    Take another case of a Colonel, who was promoted to that rank from 01 July 2006 with a service of 15 years. What was his basic pay fixed as Lt Col on 01 Jan 2006 and as Col on 01 Jul 2006? When he retires, also with a service of 29 years on 31 July 2020, what will be his basic pay and hence pension? Will it be the same as the pension of the Col who retired on 31 Oct 2008?

    Both have the same rank and the same service and both retired within the same ten year period of VI CPC.

    We need to get clear answers to these questions from someone connected with CGDA or the pay organisations of IAF and IN. Guesswork won't do.

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  18. AS I had mentioned, the solution has to take care of past,present & future so that there is no ambiguity in any one's mind.
    If one takes the date Of OROP as 01 Apr 2014, then from 01 Apr 2014 all Colonels (retired till 31 Mar 2014) should get a pension proportionate to the number of years of service that they had put in against a full service of 33 years against the maximum pension for any Colonel who retired till 31 Mar 2014 with 33 years of service.
    From 01 Apr 2014 onwards the highest pension for any colonel for 33 years of service will become the bench mark.It is also possible that after 01 Apr 2014 the max pension for a 33 year colonel is less than some col who retired till 31 Mar 2014.Then the highest pension will be that of the col who retired till 31 Mar 2014 & proportionately for all lesser service Cols.
    Similar rule should apply for all other ranks.
    The above would compensate for lack of vacancies,early retirement different yardsticks for promotion in various arms & services,early retirement age,no lateral absorption,lack of skills in getting suitable jobs in the civil,loss of fundamental rights,loss of livelihood when the family required financial support,reqmt of Service to remain young,reqmt of Services to remain apolitical etc,reqmt of simplification of pension rules etc etc
    "OROP with one Rule for all ranks" makes the Defence services attractive for new entrants also

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  19. @Venkatesh VT: I have read a few of your views. It seems you are complicating straight forward issues and not discussing the matters related to respective posts in blogs you have commented on.

    I can not make head or tail of your statement or its relevance to the subject when you say, "compensate for lack of vacancies,early retirement different yardsticks for promotion in various arms & services,early retirement age,no lateral absorption,lack of skills in getting suitable jobs in the civil,loss of fundamental rights,loss of livelihood when the family required financial support,reqmt of Service to remain young,reqmt of Services to remain apolitical etc,reqmt of simplification of pension rules etc etc"

    How is all that related to what the Govt is planning to do as per their definition of 'One Rank One Pension'?

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  20. @Dhoop
    How is all that related to what the Govt is planning to do as per their definition of 'One Rank One Pension

    I am sorry i have not made you aware of what i have posted.I will try to explain the process that in my view feel are relevant
    My posts cover design to implementation stage (as is done in the project management world)

    The various stages i have covered are Design,Development,Testing Implementation & deployment.

    OROP is but a concept with different people & system looking at it in a different way.(imagine it to be a new product)
    What we are trying to do in this blog are design & development & testing (as countless others are doing as well as Service HQ)
    It is the implementation stage in which the USER sees what is the final product(how ever well he has been kept informed in earlier
    stages through meetings,documents etc )
    It is at this stage he will accept ,reject or modify it
    In this forum (& in other forums) , every one asks some question & tries to clear their own doubts.But the final decision rests with the USER
    In our case the user is the wily 'babu'.
    In the present scenario he can neither accept it(since he never wanted to give it in the first place) or reject it since the parliament has approved the concept(unlike the past where the politicians never announced it).

    He can only tried to modify (& ALSO DELAY it) it.Hence what ever we want, we need to give reasons to ensure he does not modify it.That involves more than any thing else real good marketing skills
    I have given my solution earlier based on inputs & concepts as presented by numerous people
    (((Number of years of service+weightage)/total years of service) * maximum pension attained ))
    & now i am trying to market it.

    You may have your own solution like many others & you need to market it too with reasons, to get what you want

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  21. At Venkatesh VT
    I think the 6th pay commission has done away with the concept of "weightage for so many years of service". Hence the proportional ratio for actual service to 33 years full service DOES NOT APPLY ANYMORE"
    OR Am I wrong.???
    The pension as I can understand is only 50% of the average last 10 months PAY.( this definition may vary)
    Ramani

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  22. @subramany peri
    I think the 6th pay commission has done away with the concept of "weightage for so many years of service".

    While sixth PC has indeed done away with weigtage for post 2006 it is still applicable for pre 2006 & has been applied in circular 500 (while giving modified parity for pre 2006 pensioners)also.
    We can use it effectively since the wily babus can not object to some thing which is being used for many years

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  23. This comment has been removed by the author.

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  24. As to how the Government will interpret requirements of OROP remains to be seen. But, while evolving possible contours let us not ignore the desirability of removal of existing anomalies on the lines projected by RDOA.

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  25. All these comments and earlier ones have not made one point clear viz that of Majors who retired before 01 Jan 1986. Well take my case as a sample case for doing some justice to all case like that of mine. I retired from Army as Major on 31 Aug 1985. I had continuous service from 15 Mar 1955-first in civil service under Central Govt till I was commissioned on 04 Oct 1964. 2/3rd of this service in civil of 9 years and over 6 months was counted towards pension in Army as well. Due to having been commissioned as Emergency commissioned officer my seniority was reduced and was counted from 04 May 1966. I don't now how and where my pension will get fixed under OROP or in some other way. Or we such officers will have to fight for justice as a separate case. My pension under OROP will be that of a Major retiring now and ever afterwards without taking into consideration the fact that an officer now gets this rank in 6 years.
    Can somebody please clarify and advise me on the subject.

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  26. @Maj R P Sehgal: These comments are merely views and opinions. Each case has its own perspective and logic.

    From what you state, your service as commissioned officer by itself should indicate that for you the correct parity would be with the pension of an Officer who had completed an equivalent amount of service also as a commissioned officer and retired after 01 Jan 2006 as Lt Col.

    As for adding the service as a civilian, we'd need to work out how such a system would've added up for someone retiring after 01 Jan 2006 and what his minimum rank would have been based on the length of service calculated as per current rules.

    More on this concept of pension parity in this blog post.

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