Tuesday, December 08, 2015

LOOKING BACK AT 6 CPC PENSIONS THROUGH THE OROP AND 7 CPC PRISM

This blog post seeks to further examine hypothetical issues arising from a reference in the previous blog-post to some attempts apparently underway for a review of pensions of pre 01 Jan 2006 retirees as fixed by 6 CPC on the principle of minimum of pay for rank in pay-band and to get these fixed on basis of increments earned in the pay-scale corresponding to the appropriate 6 CPC pay-band.

It may come as a surprise to many that at this time, when everyone seems totally engrossed with OROP and 7 Central Pay Commission, such a retro approach of dealing with issues of 6 CPC should be on display. But, the whole matter of pensions and benefits is a continuum and CPC date markers do not provide for some rigid barriers that can't be crossed. Besides, what transpired at the time of implementation of 6 CPC will have a cascading effect on OROP and, in turn, on recommendations of 7 CPC.

As regards this issue of increments based 6 CPC pension fixation, I have very few details other than the rumour that it is based on some litigation involving veteran Major Generals who had their pensions fixed based on increments they had earned in their pay-scale and not on the principle of minimum pay for their rank in the pay-band.

Now assuming there is some basis to this analysis, we need to go back to the tables and fitments of SAI 2/S/08 as amended. To simplify and to illustrate the matter, on a purely hypothetical basis, a table can be derived from the SAI ibid and its subsequent amendments for consideration as follows :


TABLE RELEVANT TO A PRE 6 CPC LT COL RETIREE

  
5 CPC Pay As Laid Down In Amendment To 2/S/2008
6 CPC Basic Pay Corresponding To 5 CPC Pay Scale As Laid Down In Amendment To SAI 2/S/2008
6 CPC MSP
6 CPC Grade Pay
Total Revised Pay
50% Of Total Revised Pay
The Number Of Years Required Currently To Reach This Increment Stage
13500
38530
6000
8000
52530
26265
13
13900
38530
6000
8000
52530
26265
14
14300
39690
6000
8000
53690
26845
15
14700
39690
6000
8000
53690
26845
16
15100
40890
6000
8000
54890
27445
17
15500
40890
6000
8000
54890
27445
18
15900
42120
6000
8000
56120
28060
19
16300
42120
6000
8000
56120
28060
20
16700
43390
6000
8000
57390
28695
21
17100
43390
6000
8000
57390
28695
22
17500
44700
6000
8000
58700
29350
23
17900
44700
6000
8000
58700
29350
24
18300
46050
6000
8000
60050
30025
25
26
27
28
29
30
31
32































Granted, the corresponding 6 CPC basic pay column does not tally with the 6 CPC pay-band 4 starting at 37400/-, but that is how the pension for Lt Col rank was re-fixed at 26265/- as against the previously fixed 25700/- based on PB-4. Pay during 5 CPC, as actually earned, would logically have to be the basis for arriving at equivalent pensions for 6 CPC if at all the arguments for basing pensions on increments earned during 5 CPC are tenable.

In the case of a Lt Col retiree, of course, it would not be too hard to arrive at this hypothetical, re-fixed pension based on increments gained during 5 CPC. All he would have to do would be to take out his DND statement issued on the revision caused by the rank-pay case matter. From there, it would be a simple matter to read the revised pension as shown in the column titled "50% Of Total Revised Pay". A Lt Col who had earned increments in the DND statement so as to reach a basic pay of 17900/- would then, hypothetically, be eligible for a 6 CPC pension of Rs.29350/- and not the Rs.26265/- as fixed from 01 Jan 2006.

But, an important consideration arises here. Would basing the 6 CPC pensions based on increments earned during 5 CPC amount to OROP having been granted for all ex-servicemen during 6 CPC? It would certainly appear to be a case of full parity rather than a modified parity necessitated by the parallel, if one does exist, and that is a very big if, in the eumored litigation involving retirees in the rank of Maj Gen.

However, by having a similar increment based pension for pre 7 CPC retirees and terming it as OROP for all, the 7 CPC recommendations do confound the matter somewhat.

In the above example, true OROP would have resulted if the pension had been fixed for the Lt Col retiring in say 2003 at DND basic of 17900/- if his pension had been fixed equal to pension of another Lt Col with as many years of service retiring in say July 2006. This pension would have been a lot higher than the one based on increments earned during 5 CPC.

The last column in the table indicates how many years would be required during 2006 and later to reach the equivalent 6 CPC basic that a 5 CPC retiree would have retired at. In most cases there would be a significant difference between the years of service put in by a pre 01 Jan 2006 retiree to be at the same level of equivalent 6 CPC basic pay.

That appears to indicate that the manner of OROP based on increments as suggested by 7 CPC may not be the real OROP as we understand it. It also appears to suggest that the logic of obtaining an increment based re-fixation of 6 CPC pensions for 5 CPC and earlier retirees may not be that far fetched.

3 comments:

  1. Dear Sir,

    With the introduction of time bound rank of Lt Col wef 24 Dec 2004, all earlier Lt Cols would start earning increments from 14th year onwards (This is what the entitlement). If a Lt col (whether SG or TS) retires at 21 years, his entitlement for increments is 8 increments either it is in 5th, 6th or 7th CPC. For him add 8 increments to the min of the pay in slab-pay bands then only it would amount to OROP. In this system only a Lt Col retired earlier would draw pension with the Lt Col retiring today with same length of service.

    But my question is if a Lt Col served for 33 years in 5th CPC (where no time scale Col rank was there) then what would be his pay/pension? Will he get 20 increments (33-13)if not then why the govt keeping officers beyond permissible increments why not they being superannuated instead of stagnating at some year say 26th year to 33 years. Since the Govt has used the services of the officer till 33 years and beyond the govt has no reason to justify in keeping the officer in service without increments.

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    Replies
    1. I think the comment by Col MS Raju is relevant only to recommendations of VII CPC. The last column in this blog post can serve to illustrate only the concept of how increments earned should not be confused with years of service. The table here can mislead readers into thinking OROP from January 2006 is the issue in this case for increment related pensions, about which there has been a lot of email floating around, for all those who retired before 1st January 2006. That case to my mind is about fixing pensions from Jan 06 based on increments actually earned and not on minimum of pay in fitment table for rank in pay-band.

      For the case, or the planned case, for revising pensions from 01 Jan 2006, the number of increments actually earned before 31 Dec 2005 seem to be relevant.

      The table in this blog post also shows how two increments earned by someone retiring before 31 Dec 2005 amounted to only half the number of corresponding increments for period from 01 Jan 2006. The same would apply after 01 Jan 2016 for those who had retired before 31 Dec 2005. So it is unclear how pensions could be based on increments actually earned and under OROP taken together.

      I have already indicated on my blog how VII CPC pensions need to be governed for OROP keeping in mind "the years of service" consideration over and above the increments earned.
      goo.gl/J5guDN

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  2. @Col MS Raju : If memory serves me right, the phase one recommendations of AVS Committee were implemented wef 16 Dec 2004. I am not sure how increments were worked out, for those who had completed 13 years or more of service as on that date on getting their time bound promotion to rank of Lt Col. I am also not certain how extra increments were given to those Officers who were already Lt Col then. Those who were in that situation would be the best source of information.

    In the hypothetical situation of adding 8 increments for someone who retired as Lt Col with 21 years of service before 16 Dec 2004, the Govt may or may not be giving him OROP. I presume you are referring to pensions that would be applicable from 01 Jan 2016 as laid down in the matrix given by 7 CPC.

    OROP would come about if that Lt Col with 21 years of service is given, from 01 Jul 2014 (cut off date for OROP) the average of maximum and minimum pension for officers with rank of Lt Col who retired in 2013 with 21 years of service, the same being reviewed every five years, as things stand.

    Please see the table I have provided. It is basically meant to illustrate what 6 CPC pensions would have been if increments earned by pre 01 Jan 2006 retirees had been taken into account. It does not reflect what 7 CPC pensions should be. However, the last column does appear to suggest that with 8 increments we do get to a stage that corresponds to one that a present Lt Col would reach in terms of service years.

    But to learn definitely what exactly would be the max or min pension for that rank with 21 years of service, we'll have to await the actual figures for OROP pensions when they arrive.

    But the issue this blog-post relates to is some form of pull parity for 6 CPC pensions for pre 2006 retirees (that is pensions applicable from 01 jan 2006 upto the date OROP becomes effective, presumably 01 Jul 2014) based on increments that were actually earned for the period of 5 CPC.

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