Thursday, October 15, 2015

Pay-Bands, Tables And Fitments For OROP

In the face of unknowns involved in a matter such as OROP, it may be a more prudent approach to first try and identify the type of variables one could come across rather than to attempt assigning values to those variables.

There is no need to be troubled here with the notion that for arriving at a OROP fixation one would have to apply some esoteric principle that an Operations Research boffin might have conjured up on one of his more productive days.

At the same time, I have always felt that before undertaking the churning out of tables for OROP estimates, with jubilant cries of "Viva Excel!", I might as well put in some system for validating guesstimates and opinions. Any time I had posted a table on what OROP or the rank pay revisions could involve, I tried to take pains to underline the fact that figures quoted were hypothetical, a means to illustrate a point, subject to validation and/or not for universal application.

However, some extremely useful information has recently been made available on the Aerial View blog by way of painstakingly compiled tables on what OROP could be, based on pay-bands applicable post 01 January 2006. In face of the marked silence from the Government and ESM associations on the subject, these tables are like a shining beacon, pointing towards where the reality would probably lie.

For the purpose of appreciating a need for validation, the following points might be of use
  • OROP is at a different plane altogether when compared to the modified parity principle of a pre/post CPC fixation of pensions for pre CPC retirees.
  • In the context of VI CPC, it needs to be remembered that fitments in the MOD letter dated 2008, and its amendments, centered around the concept of modified parity. That will not apply for OROP.
  • Circular 500 and its precursors were all geared towards the "minimum of pay for rank in pay-band" principle. OROP is an entirely different paradigm.
  • The concept of OROP can be seriously undermined if the process of calculation gets mired in the old concept of fitment tables that applied to pre/post VI CPC pay fixation.
  • OROP seeks total parity of pensions of older retirees with pensions of present retirees (for the time being, those retiring in 2013).
As an example, to be absolutely certain of what is implied in a table, which for the purpose of suggesting the OROP pension of a Major with QS of 13 years, states the pay of a Major is 29820/- at QS of 13 years, it needs to be clearly understood that a per the table the pay would be 29820/- in 2019 for a Major commissioned on 01 Jan 2006. 

As to what would the pay of a Maj with a QS of 13 years be in base year 2013, the answer would be based on a host of other parameters such as fixation of his pay from Jan 2006 and date of actual promotion, among others. Again, the very fact that QS of 13 years would not result in a pension, goes to show the hypothetical nature of such an estimate.

For that exact reason, for OROP, we need to have validation of estimates in pay-band tables against actual pay and pension data as applicable to personnel retiring in 2013.  For such validation, the focus should also be on actual pay/pension data as applicable in base year 2013. If there is no actual average pension data for 2013 in respect of a certain rank cum years-of-service combination, then pay actually being drawn in base year 2013 by serving personnel with that rank cum years-of-service combination can be a basis for arriving at the "potential average pension".

Sometimes, a blank table does help to point out what the missing variable values are and how these can be obtained. An absence of actual figures may not exactly seek to reinforce the "Less Is More" principle, but it can help in a clearer understanding of what the issues are or could be. In a previous blog-post I had sought to suggest such an approach. Now, in order to include the pay-band estimates currently available, I have updated the table-format in that blog-post as follows:

(By hovering the cursor on the table format it can be viewed with magnification)

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.