Friday, September 25, 2015

Some Ideas On Possible Manner Of OROP Fixation

In order to not misinterpret or over-interpret the statement issued on 05 September 2015 regarding the outlines of OROP, there is a need to raise more queries. Even if no one provides answers to these queries, at least the possibilities get narrowed down and a clearer understanding can emerge on where the OROP pension fixation could be headed, at the same time keeping firmly in view where it should be headed.

The Hon'ble RM had clearly stated,  "..Pension will be re-fixed for all pensioners retiring in the same rank and with the same length of service as the average of minimum and maximum pension in 2013..".

This had been the subject of some speculative reasoning in a previous blog post.

However, we need to introduce some rationality into assumptions. Some of the restrictions that can be placed on the previous interpretations can be summarised as follows:

*The average pensions mentioned in the statement could, most probably, refer to the average of pensions of ESM actually retiring in the calendar year 2013. (It is well known there are ongoing representations and discussions that it should be Fin Yr 2013-14 or the period 01 Jul 2013 to 30 Jun 2014, but for the time being, let us stick to what the statement contains, viz., calendar year 2013).

*The average pension mentioned in the statement would not only be in respect of one rank but graded as per years of service for retirees in that rank. This is an essential requirement based on the definition of OROP. For example the average pension for a Col with 24 years of service would be based on max and min pensions of retirees in 2013 with that many, i.e. 24, years of service. It would be calculated separately for a Col with 25 years of service, based on max and min pensions of retirees in 2013 with 25 years of service and so on.

If we take actual pensions (or potential pensions, as explained in the table and the text that follows) for 2013 into consideration and do not wander off, right at this stage, into the rather grey area of fixing OROP pensions based on pay-bands (more on that in a subsequent blog-post), we could draw up a table, more to give an idea of how OROP could/should be fixed rather than to provide actual figures. The table, for reasons of simplification, applies to Officer retirees but the concept applies to all ESM. (Please click on the embedded table to obtain a pop-out enlarged view) :



Based on some alarming over-simplifications reported on the blogosphere, as here, it might be useful to keep some things in mind:

*Pensions of older retirees should not be based on those of current retirees or on pay of currently serving personnel if the current retirees/serving personnel are in a lower rank due to denial of time-bound promotion to the next rank on disciplinary or medical grounds.

*In case there is no actual normal retiree in 2013 for a certain rank and service-years combination, the potential pension based on max and min pay of serving persons in 2013 with the same rank and service-years combination could be a logical way to establish the OROP pension as shown.

*In case personnel normally retire, currently, on time bound basis, in a higher rank with the same years of service, then the "parity zones" such as those shown in the table need to apply.

Again, these ideas are subject to verification. That is all the more reason for official thinking on the subject to be placed in the public domain for a meaningful and transparent dialog.

4 comments:

  1. Sir, It is a quite simple statement. Average of minimum and maximum pension for 2013. Consider any rank say Colonel with 20 years of QS. Minimum pension of a Col with 20 years QS in 2013 and maximum pension of a Colonel with 20 years of QS in 2013 will be added and this total will be divided by 2 to get an average. This average will be pension under OROP for a Colonel with 20 years QS.

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    1. "..quite simple statement.."
      :-)

      That is what the table says.

      What if no Col retired in 2013 with QS of 20 years? What will be the OROP pension of earlier Col retirees with QS 20 years?

      What will be the OROP pension of an old Major retiree with 24 years of service? Where will you get a Major retiring with 24 years of service in 2013?

      So, the statement is very very simple. But what if it means all pensions paid in 2013 for a Col with QS of 20 years including those who who retired, say in 2005 November. Would their low, minimum of pay in pay-band, pension paid in 2013 be used for averaging also? Or only pensions of ESM retiring in 2013 be used, as I have surmised in this blog-post?

      What does the simple statement say about that?

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  2. Sir, there are two important terms related to OROP. Current Pensioners and Past Pensioners. Please be sure that pension of Current Pensioners is to be fixed based on their last pay. Pension of Past Pensioners is to be fixed based on the pension of Current Pensioners. Fixation of pension of Past Pensioners can not be done based on pay scales under the definition of OROP. Statement of RM is simple and will remain simple so far average of pension for 2013 is concerned.

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    1. @SK Jain: "..Current Pensioners and Past Pensioners.."

      Your comment does not clarify. Current at what time?

      The "statement" makes no mention of "current pensioners". You are putting your own words in your analysis. The statement merely states, I repeat, "average of minimum and maximum pension in 2013".

      Considering the past record, treating anything emanating from certain quarters as simple would be the nearest thing to being simple-minded.

      You are right, of course, that pensions of current pensioners are based on last pay. I think that has been a fairly standard practice over the last six decades. How is that relevant? I also don't think pension of past pensioners ought to be done merely on pay-bands as some rep of one of the ESM associations had apparently suggested.

      But there is a correlation between pay bands and pensions in base year of 2013. That will have to be carefully worked out.

      But you haven't provided any clarification, based on your knowledge of the simple statement, to the queries posed in my previous comment.

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