Saturday, October 10, 2015

OROP: Another Look At Issues Of Average Pensions And Pre-Mature Retirees

As details about Government thinking on OROP implementation have failed to emerge, there has been time on stake holders’ hands, permitting at least some of them to step back and examine all aspects of the matter in a more detached frame of mind.

To have a rational view, it cannot hurt to try and justify even extreme opinions diametrically opposite to one’s own by searching for principles that could possibly support them. In this manner, one can be a little surer of one’s own stand on issues and also arrive at a fuller understanding of what is involved.

In the context of the 5th September 2015 statement about OROP, two issues could be subjected to this process.

Average Of Pensions In Base Year:

It caused a bit of consternation in many quarters that OROP fixation would involve averaging of pensions in base year. Since the wording of the statement was so vague, and given past experiences of denial of dues based on phraseology (the “as on” vs “where is” example comes to mind), stake holders, like burnt children dreading fires, had forebodings of the worst kind.

*What if the average was to be taken of all pensions paid in base year, including the low pensions of pre 2006 retirees of same rank and same service?

*Why was an average required at all? Why could not the highest pension, for a certain rank with a certain number of years of service, be the basis for fixation of pensions of all previous retirees in the same rank and the same years of service?

Perhaps this "averaging" clause can be justified on the grounds that in the base year, serving personnel who retire in a certain rank and with the same number of years of service may not have the same pension. Their pensions would be based on last pay drawn and these could vary from one retiree to another, all retiring in the base year and in the same rank and with equal number of years of service. The last pay would be dependent on criteria other than years of service, such as date of promotion to the rank, hence service in that rank, as well as initial fixation of pay on the last promotion.

This in fact leads to what is being stated as the defining basis of OROP, viz., “same rank and equal years of service”.  Now, does that apply also to personnel who retired one year prior to OROP base year?

Take the example of a Colonel who earned a pension of Rs. 26111 33950/- in the year before base year on completing 24 years of service. What if another Colonel, also with 24 years of service, gets his pension fixed at Rs.26953 34880/- in the base year on account of the way the latter’s pay was fixed on promotion or the length of his service in the rank of Col? Would the former then be eligible for getting his pension upgraded to the level of the latter’s pension regardless of the last-pay-drawn principle? Let us not forget, both Colonels in the example are post VI CPC retirees.

Given this consideration, perhaps averaging of pensions in base year for the same rank and with same years of service could have some basis for fixing pensions of all previous retirees, keeping in mind no previously fixed pension would be brought to the level of the base year average if the average is lower.

But questions and doubts remain:

·  When Hon’ble Defence Minister mentioned "average of minimum and maximum pension in 2013", of all the doubts that sprang from that sentence, one of the most important was, and still is, were these to be the pensions actually paid/fixed in respect of those who retired in base year? Or is some calculation based on existing pay band to be the criteria?

·   What about the rank and years of service combinations for which there were no retirees in base year?

·     What about that old ambiguity, repeated ad nauseum, about older retirees who got their ranks based on time-bound promotions after putting in 20 to 29 years of service for which there would be no parallel in base year?

Till issues such as these get cleared up, it would be extremely rash to voice a firm opinion on how and why “averaging” could make sense.

Applicability Of OROP To Pre Mature Retirement Cases: This proved to be the most volatile of all issues after the statement was read out. How could excluding a premature retiree from benefits of OROP ever be justified? Let us be clear, a person who took pre-mature retirement after a service of 21 years in 1975, 2001 or 2007 would be entitled, under OROP, to the current pension of someone retiring in base year in the same rank with equal service. He would not get the OROP pension of someone retiring in the same rank but with more service, say 22 years or more. So what is the issue with that?

There is a clear basis for allowing someone to proceed on pre-mature retirement. If PR has been granted, then it is as per Service norms and a pension has been duly earned. That older pension would need to be equalised with current pension of a base year retiree in the same rank and with the same years of service. A pension is a pension is a pension. A pre mature retiree’s pension cannot be treated differently from the pension of someone who super-annuates from service, now not even in the matter of weightages.

Whether or not a pre-mature retiree takes up a lucrative second career, perhaps even with the help of DGR, would not seem to be a basis for a differential treatment of his duly granted pension in terms of parity with OROP pension fixed for his rank and years of service.

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