Sunday, August 30, 2015

The OROP "Increment" Issue

In the midst of media frenzy, which can often turn bizarre and out of touch with reality, some mis-conceptions, borne out of tendencies of individuals or sub-groups to hold forth on their rather unique interpretations of a subject, can get wider publicity than deserved. Even more dangerous is the possibility of such discernibly untenable views bringing dis-credit to an entire subject or issue to which these "opinions" are sought to be linked.

As to how the subject of a "3% annual increment" arose in relation to OROP could be the subject of post-mortems and analysis for decades to come. There is, already, very sound analysis on the dubious nature of the "increment" matter. A link is placed at the bottom of this blog post.

Suffice it to say, to ensure that OROP means "OP", there will be a requirement of an annual review of the pension bench-marked for each rank corresponding to varying years of service. It would need to be checked that the pensions bench-marked for April 2014, the implementation date for OROP, are not lower than the pensions actually paid in months of review, viz., July 2014, July 2015 and so on. As pension payment and salary disbursement processes are computerized, such annual checks ought not to present difficulties to organizations such as PCDA.

Very briefly, this can be done for pensions paid in July 2014, July 2015 and so on. Data for 2014 and 2015 should already be available and for July 2016 and later it could be made ready by September of the respective year. It must be noted that from January 2016 onward, recommendations of VII CPC would apply. But, as those recommendations may be put into effect at a much later date, this system of reviews could continue beyond 2016 till implementation of recommendations of VII CPC.

Let us be clear, these July reviews may or may not result in enhancements in pensions bench-marked for the month of April 2014, the starting point for OROP. If at all some enhancements are called for they may or may not apply across the board. The enhancements, if any, may or may not amount to 3%.

Just because the salaries of serving personnel get annual increments does not mean these would necessarily result in enhancement of pensions for the same rank with the same number of years of service. As an example, when a serving person with 24 years of service gets his next increment, his years of service may also go up to 25, though not in all cases. So his pension with 25 years of service may still be equal to that of a previous retiree with 25 years of service. The pension of a retiree with 24 years of service may not get affected.

Ready-made salary tables showing actual salaries of serving personnel, though extremely useful as inputs for further study, can mislead if read out of context. Instead a blank format as embedded below may serve to illustrate what is required to be done in a process of pension review and what are the issues involved.

The format also highlights the need for parity of pensions desirable in the context of time bound promotions, an issue as important as the need for an annual review, if not more. {Edit: The Maj_Lt Col/Col 26 years parity zone in green applies only to Officer Retirees with PC as per terms and conditions of commissions}

{Edit} : For a check on the validity of irrational scare-mongering on outgo, a snap-check has been proposed in this subsequent blog-post.

For further reading on the 3% "matter" readers may also like to peruse this blog post.