Pension Anomaly Resulting From AVS-I {Updated 18 January 2013}

{NOTE: Contents of this blog post have been updated to reflect the current situation as on 18 Jan 2013, following implementation of Committee Of Secretaries Recommendations}

 
Now that we're awaiting the recommendations of the panel on anomalies affecting pay and pensions of armed forces have been implemented, there are expectations, that some of the less prominent existing anomalies would be rectified and similar aberrations would be prevented in future when the complex processes of introduction of NFFU and modified parity are approached by the powers that be, have not been met fully.

In this context, an existing anomaly, affecting a portion of the armed forces veterans fraternity, requires to be highlighted as it's closely linked to the issue of parity of pensions. It may be added at the outset, any views, comments or corrections in respect of what follows would be very welcome.

• While fixing pensions for Armed Forces Officers who had retired prior to 01 Jan 2006, VI CPC had, initially, not placed retirees in the ranks of Lt Col and Lt Col(TS) in pay band IV. This was done subsequently.
• Even then, no consideration was applied to the issue of parity of pensions of retirees who had retired prior to implementation of Phase-I recommendations of AV Singh Committee with pensions of retirees with equal service who retired after the implementation of AVS-I.
• This led to Officers, holding the same type of commission and with the same qualifying service, being fixed in different pension-tables post VI CPC depending on which side of the AVS-I implementation date they retired on.
• Upto a service tenure of 26 years, the pension of a pre AVS-I Lt Col and Lt Col(TS) would not be an issue. But for a qualifying service of 26 years or more, a retiree with a PC would have automatically been fitted in the pension table for Col/Col(TS) at a pension of Rs.26050/- 27795/- if he had retired after implementation of AVS-I.
• A pre AVS-I Officer retiree, in the rank of Lt Col, also with the same qualifying service of 26 years is now fitted in the column for Lt Cols at a monthly pension of 25700/- 26265/-, and a pre AVS-I Lt Col(TS) at a monthly pension of Rs.24143/- 24674/-.
• {Edit}: These amounts reflect revisions following the implementation of recommendations of the COS Committee and the difference between pre and post AVS-I retirees has become even more glaring.

• {Edit 2}:    A similar anomaly existing for Major retirees with more than 21 years of service was recently rationalised albeit on different grounds but reflecting on principles very similar to those sought to be highlighted in this blog post. More details on that rationalisation can be accessed through this link.

At a time when a weighty subject like One Rank One Pension is hanging fire over the entire veteran community, surely this anomaly ought to strike some people as being an issue. It requires to be understood that this pre/post AVS-I issue would also impinge on pensions of Major, Capt and Lt, though different conditions might apply.

This also does not exactly amount to yet another outburst as to why the AVS-I recommendations were not implemented retrospectively. Here the issue is an award of VI CPC, not AVS-I, which treats two identical tenures of service differently while fixing pension merely on account of the intervention of the implementation of AVS-I.

All service people would know there is no select rank involved here. If an Officer retiring post AVS-I after 26 years of service automatically gets Rs. 26050/- 27795/- as pension without getting the next select rank, it stands to reason the pay-commission should have fixed the pension at the same level in the case of all other Officers, with the same type of commission and with the same qualifying service, who retired without picking up the next equivalent select rank prior to AVS-I.

This line of reasoning ought to have been given due consideration at the time of implementing the anomalies-panel recommendations. The subject of the blog post relates merely to the parity of one set of armed forces pensioners. When fitment into bands takes place after introduction of NFFU, these concerns could assume even greater importance and complexity.

The following table aims to bring out the rationale for refixing the pensions of pre AVS-I Lt Col/Lt Col(TS) retirees (with qualifying service of 26 years and more) to equal those fixed for post AVS-I Col/Col(TS), with equal service,  as shown in the area shaded yellow.

Qualifying Service	PENSIONS OF PRE 01-01-2006 PENSIONERS VIDE ANNEXURE-A to MOD LETTER 1(11)/2012-D(Pension/Policy) 17-01-2013 {All figures subject to verification}			PENSIONS REQUIRED FOR OBTAINING PRE/POST AVS-I PARITY
	LT COL(TS)	LT COL	COL/COL(TS)	LT COL(TS)	LT COL
				{FOR THOSE WHO, IF THEY HAD NOT RETIRED BEFORE AVS-I, WOULD HAVE BEEN ELIGIBLE POST AVS-I FOR COL[TS] RANK ON COMPLETION OF 26 YEARS OF SERVICE MENTIONED IN FIRST COLUMN}
20	19898	21490	22742	19898	21490
20.5	20296	21888	23163	20296	21888
21	20694	22286	23584	20694	22286
21.5	21092	22684	24005	21092	22684
22	21490	23082	24426	21490	23082
22.5	21888	23480	24848	21888	23480
23	22286	23878	25269	22286	23878
23.5	22684	24276	25690	22684	24276
24	23082	24674	26111	23082	24674
24.5	23480	25072	26532	23480	25072
25	23878	25470	26953	23878	25470
25.5	24276	25868	27374	24276	25868
26	24674	26265	27795	27795	27795
26.5	25072	26265	27795	27795	27795
27	25470	26265	27795	27795	27795
27.5	25868	26265	27795	27795	27795
28	26265	26265	27795	27795	27795
28.5	26265	26265	27795	27795	27795
29	26265	26265	27795	27795	27795
29.5	26265	26265	27795	27795	27795
30	26265	26265	27795	27795	27795

 

 

 

 

Current Speculations On The Recommendations Of Government Panel On Armed Forces Pay Anomalies

 

With recent news trickling in on the latest Government view-point on OROP and NFFU, a list of probable scenarios can be drawn up, viz.,

*The proposal for OROP would not be accepted.

*NFFU would be introduced for serving Officers.

*Modified Parity would be the basis of enhancing pensions of past  (preVI CPC) retirees.

*New pay bands would be created rank wise for fixing pensions.

This leads to the very basic, fundamental and principle-based consideration that lies at the core of the OROP matter. In other words, litmus-test questions, based on two primary considerations of truncated careers and intra-veteran-parity, can be posed for establishing the validity of such a readjustment of pensions, as follows:

*Would the truncation of careers of armed forces personnel vis-a-vis those of equivalent civilian employees be compensated for in terms of pensionary benefits? A very basic, rule of the thumb yardstick for comparison would be whether the pension of a person in the armed forces retiring today at age 50 equal, ten years later, the pension of an equivalent civilian employee, who had joined at the same time as the armed forces retiree, the civilian retiring 10 years later at age 60 years?

*Would the pensionary benefits of a person retiring in the armed forces today at age 50 years have appropriate compensation for the shortfall in the pension he’d draw over the next 10 years as compared to the pay and allowances the equivalent civilian employee would be drawing over the same period? This compensation would, of course, not be required if the person from the armed forces was absorbed in a Government civilian post for the said period.

*Though one rank one pension may not have been agreed to, for some manner of parity, or modified parity, within the set of retired personnel of the armed forces, would the re-fixation of the pension of pre VI CPC retirees take place in:

                **Pay-band of the rank in which the veteran retired?

**Pay-band of the rank the retiree would have automatically attained under present rules merely on the basis of the length of his service? Example: A pre VI CPC retiree in rank of Major (PC) with more than 20 years of service would have been automatically in the Pay-band of Lt Col now.

**Pay-band of the rank the retiree would have been placed in based on the length of his service AND after application of NFFU? Example: A pre VI CPC AND pre AVS-I retiree in the rank of Lt Col (TS) with 30 years of service would have been in the pay-band of Col (TS) without NFFU and Brig with NFFU.

Another yardstick for checking the rational basis of the rejigged pensions would be the enhancement factor for the pension of an Honorary Officer or, say, a Branch Commissioned Officer of IAF, who suffer negligible truncation of career, as compared to the enhancement factor applied to the pension of an Officer with a Permanent Commission who might have retired at age 52 in the rank of Lt Col or a non-commissioned Officer retiring at an even younger age. This is not to say a Hony Officer or an IAF BC Officer should not have an enhancement in pensions, but the factor for truncation needs to be proportionally higher for those retiring at earlier ages.

Inputs for arriving at basic assumptions for the foregoing were provided by the contents and comments on this ---> valuable blog post

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Basis For Fixation Of Pension : Length Of Service Vis-A-Vis Rank

Post VI CPC, most of the adjustments, corrections and rationalisations that the authorities found the need to incorporate in the original awards have already been put into place.

However, the matter of parity of pensions on the basis of length of service rendered continues to remain unaddressed.

At a few times in the past decades, the minimum service required to attain time-bound elevation to the next higher, non-select, rank has seen a quantitative reduction, but the defence services personnel who retired prior to these reductions, continue to be considered for pensions on the basis of the ranks they retired in and not on the basis of the higher ranks they would have automatically been given, had they continued to serve, based purely on the length of the service they had rendered.

This discriminates against older retirees in spite of the equal, or even longer, service they might have put in relative to subsequent retirees. In a scenario of variable qualifying service for time-bound promotions, the length of service rendered assumes significance.

This applies to most cadres across the services at the levels of Officers, JCOs and all other ranks.

A specific example can be cited in the case of Officers who were affected in this manner by the implementation of Phase I recommendations of AV Singh Committee which were implemented with effect from 16 December 2004. A Lt Col/Lt Col(TS) retiree, who retired before 16 December 2004, with more than 26 years of service, would have automatically been eligible for being given the rank of Col(TS) if he had continued to serve beyond 16 Dec 2004. But his pension, inspite of the length of service rendered, is that of Lt Col.

In this case, the most just resolution would, of course, have to be a retrospective implementation of Phase-I of AV Singh Committee recommendations. But that may involve dealing over prolonged periods of time with intractable issues. Besides, it is hard to find a justification for retrospective implementation, of AV Singh Phase I recommendations, earlier than the date of convening the committee.

But, there's an immediate stop-gap resolution feasible at least for pensionary benefits. The pre AV Singh Phase I retirees in the ranks of Lt Col/Lt Col(TS), with the requisite length of service that would have made them automatically eligible for the rank of Col(TS), presently 26 years, need to be placed alongside Col(TS) in the column listing pensions post VI CPC.

A similar step is required for the post pre 16 December 2004 retirees in the rank of Major with the same proviso, viz., of completing the requisite length of service that would have made them eligible for the next post AVS Phase-I rank of Lt Col. {Edit: As an afterthought, it's difficult to not agree with the viewpoint, emerging elsewhere, as to why a pre 16 Dec 2004 Maj retiree with more than 26 years of service would not be eligible for the same pension as a post 16 Dec 2004 Col(TS) who would have retired before implementation of VI CPC}

The primary rationale here is the length of service is just as valid a yardstick for parity of pensions as are the ranks held at retirement, provided due consideration is applied to the fact that the next higher ranks attained through selection, as opposed to those based purely on length of service rendered, would certainly justify higher pensions.

This is an extension of part of the logic put forth in this blog post.

Beyond The OROP "Slogan"

"One Rank One Pension", or OROP in short, is not just a single issue. It is a concept and represents a whole spectrum of underlying concerns, ideas and principles related to fairness, equity and justice. The chief danger in the term OROP being tossed about in the media, as well as in sundry blogs and forums, is that the finer details and nuances of the concept are likely to become victims of hype and the low quality of discourse and discussion overseen by the not exactly keen intellects that are usually the first to get engaged in great numbers with hype of any nature.

Presently, a common understanding is evolving to a loosely held notion that OROP would mean that an armed forces retiree would get the same pension applicable to his rank regardless of when he or she retired. This brief idea now seems to represent to vast numbers amongst those affected the totality of "OROP" which has in a way been reduced to a slogan without any common understanding as to what OROP should precisely mean.

Now, let us not dispute the usefulness of slogans, per se. In order to convey a range of issues to those affected in an abbreviated form, slogans are particularly useful as devices for capturing the 'popular imagination'. A slogan can also be the platform for engaging in negotiations and discussions on the complete range of issues covered by the single slogan. The caution that needs to be exercised is the slogan be discussed and amplified to explain its full meaning so that people do not confuse the whole depth of the matter with the wording or text of the slogan.

In that sense, OROP meaning equal pension for all retirees in the same rank would fall well short of a state of equity for a veteran of the armed forces vis-a-vis a civilian counterpart. For even a reasonable, not perfect, mind you, resolution of the imbalances tilted against the veteran, OROP needs to take into account the following principle-based considerations:

*There is a need to redress the imbalance in earnings, to the veteran's detriment, on account of his truncated career vis-a-vis a civilian counterpart. The present day veteran retirees' pensions therefore must be fixed at a higher level than those of 'equivalent' civilian counterparts as the latter serve for longer periods drawing incrementally enhancing emoluments for longer periods and also, as a result, getting higher pensions at super-annuation.

*There is a need to ensure parity in pensions of veterans who retired in the past and those who super-annuate currently.

*Rank of an armed forces retiree, though an important yardstick for OROP, cannot by itself be the sole criterion for ensuring parity of pensions for veterans. For past retirees, parity of pensions with present day retirees needs to be established considering the service rendered in a particular rank and, most importantly, pegging the parity at the current pension for the rank the former would have been currently entitled to purely on the length of service they, the past retirees, had rendered at the time of retirement.

There is an urgent need for all affected retirees to comprehend all aspects of the matter and to begin to list out and consolidate the various relevant ideas that have a bearing on this issue. Some ideas on the same subject have been highlighted in this Blog in the past.

A New Angle To OROP

With the recent news of the increase in the age of superannuation for civilian employees, the defence fraternity could consider factoring in the resultant effect on the parity of defence pensions with those applicable to civilian counterparts. 

The "One Rank One Pension" issue may, perhaps, need to be viewed not only from the viewpoint of parity amongst defence veterans but also with reference to what a civilian pensioner, in an equivalent post to the one the veteran retired in, would get by way of pension. 

Let's take the example of a Col, or equivalent rank in IAF or IN, retiring at the approximate age of 55, depending on the branch or arm. Now, when he reaches the age of 62, would his pension equal that of a civilian in an equivalent post retiring at 62? 

The disparity would have been considerable even without the increase in retirement age for civilians by two years. That is why there may be some relevance to the apparently abstract points raised in a previous blog post.