Minimum Guaranteed Pension As Related To The Rank Pay Matter

For some time the matter of the minimum guaranteed pension has been in the news, the latest a recent update being on the Aerial View blog. {Edit: The most recent update is accessible with the link at the bottom of this blog post}.

Briefly, the issue is related to the date of implementation of revised "Minimum Guaranteed Pension" for pre 2006 retirees, which was fixed as 26 24 September 2012 vide Govt. Of India, Ministry of Defence letter number 1(11)/2012-D(Pen/Policy) dated 17 January 2013, a copy of which was circulated with PCDA Circular 500 of the same date.

As stated in the Aerial View blog post, referred to at the first para of this blog post, the litigation for re-fixation of date of implementation as 01 Jan 2006, in place of 26 24 September 2012, is nearing it's final phase, the hearing now being stated to be scheduled on 13 Jan 2015 {Edit 1: Update ; Now awaiting a fresh listing, perhaps in February 2015 Judgement now having been delivered on 17 March 2015}.

The case had to be taken up in the highest court of the land, at great expense and with herculean effort. Therefore it is all the more pertinent, for direct stake-holders and all the others affected, to review some of the attached issues which affect or are impinged upon by the likely positive outcome of the case. To start with, queries begin to form in one's mind as follows:

• The case apparently, and the word "apparently" is important in this context, is concerned with just the date of implementation of the "Minimum Guaranteed Pension". Since it is a litigation in the Hon'ble Supreme Court of India, was it also intended to include the effect on the quantum of "Minimum Guaranteed Pension" as a result of the implementation of the rank pay revisions? Would the tables issued with the GOI letter of 17 Jan 2013 ibid now stand revised?

• Since the rank pay matter concerns retired Officers of the armed forces, would the litigation also deal with the important and, so far, un-addressed, issues of parity of "Minimum Guaranteed Pensions" of Majors having 21 years of service with the pensions of Lt Col and "Minimum Guaranteed Pension" of Maj and Lt Col with more than 26 years of service with the pension applicable to Col(TS) of equal service?

• While implementing the Hon'ble Supreme Court judgement on rank pay, GOI, MOD vide letter number 34(6)2012-D(Pay/Services) dated 27 December 2012, had also ordered payment with effect from 01 Jan 2006, of interest on arrears, including those of pension, resulting from the partial implementation of the rank-pay judgement. Would the litigation also aim to obtain a more just and equitable compensation by way of interest for arrears not ascribable to the rank pay case but applicable only to those arising out of the "Minimum Guaranteed Pension" matter? 

Whatever be the scope of this litigation, it's outcome would be of interest to all veterans and yet another reason to feel proud of the direct litigants and the inspiring role of RDOA in coordinating the whole issue. {Edit 2} : The order of Hon'ble Supreme Court, delivered on 17 March 2015, is accessible by following this link.

{Edit 3} For the most recent update, please use the link to the blog Indian Military: Service Benefits And Issues .

{Edit 4} For the connected issue of pension parities between ESMs that retired in years gone by and those who retire in the present, the blog post on 'Variable Retirement Rank' may also be relevant.

Considerations At The Time Of Assessing VII CPC Issues

This was anticipated.

Discussions have begun to address issues related to VII CPC even as pending matters arising out of VI CPC continue to receive attention on a parallel plane.

It is indeed praiseworthy that future courses of action are now being planned and foresight coupled with experience are now in play for ensuring future outcomes meet the expectations of those in uniform as well as armed forces veterans.

However, the manner in which progress has come to a stand-still, be it in the Rank Pay litigation, OROP or the sundry representations on issues related to ESMs, is reminiscent of the state of oppressive lack of movement in "The Rime Of The Ancient Mariner" 

                             "Day after day, day after day,
                              We stuck, nor breath nor motion;
                              As idle as a painted ship
                              Upon a painted ocean".

There is a very urgent need to quickly grasp and act upon the fact that crucial requirements are to prioritise ("First Things First"), learn to distinguish between individual issues ("OROP is different from Rank Pay") and to not be distracted from present issues by engagements entered upon by way of discussions that might or might not have a bearing on future outcomes.

To summarise:

• The Rank Pay litigation now awaits a hearing. A near-total lack of information on the current status of the subject contributes to a general perception of the issue being in a state of limbo.

• Even as OROP awaits finalisation by the Government, ESM bodies have not fully clarified as to where the matter of parities of even the current pensions, without OROP, stands. To clarify by an example, there is the issue of pensions of the 70s pre cadre-review retirees and pre AVS-I pensioners. The issue was discussed in greater detail in this blog post.

• In the case of OROP, the cut-off date and the mechanism, if any, for periodically upgrading pensions of previous retirees, remain unclear.

In order to ensure these substantive pending issues are not simply swept under the carpet as soon as the sound and fury of VII CPC are upon us,  it may be in the interest of all stake holders to obtain factual information of how things are at ground level.

The "As On" vs "With Effect From" Matter, Again

With the issue of the Government Corrigendum dated 24 July 2014, there had been some palpable signs of slow movement, granted it was but a fraction of what is actually required but a movement nevertheless, towards an incremental improvement in the Rank Pay arrears scenario.

The reversal of deduction of rank-pay at the time of calculating revised emoluments for V CPC is a step forward and would address an anomaly that had come to light at a time when it was not even a blip on most radars, which were mostly fixated on tracking the IV CPC pay fixation.

But it is the language used in two recent official communications, one from Integrated Headquarters Ministry Of Defence (N) Directorate Of Pay And Allowances (Pay Section)  and another from Dte Of AV at Air HQ, that has served to highlight the efficacy, or the lack of it, of substitition of the "As On" in the original GOI implementation letter dated 27 December 2012 with "With Effect From" vide the corrigendum date 24 July 2014.

The letter issued through channels of Indian Navy states how, to take an example, a Lt Cdr, lets call him Lt Cdr "A", would not stand to gain by non-deduction of rank pay at V CPC if his un-revised basic pay "as on" 01 Jan 96 was below Rs.4050/- pm. The first thing that comes to mind is, what is meant by "unrevised basic pay"? Common sense would appear to suggest this is the value of the pre V CPC basic pay duly revised after implementation of Govt of India letter dated 27 December 2012. So it should be, essentially, the value of the "revised un-revised BP" at the time of implementation of V CPC. In other words, this should be the IV CPC basic pay for December 1995 as given in the "Due And Drawn Statement" issued by pay disbursement authorities issued in compliance of GOI letter dated 27 December 2012.

A simple calculation would reveal, that at the one-step lower IV CPC basic pay stage for Lt Cdr "A" in the example, viz, Rs. 3900/- pm, the revised emoluments for V CPC would work out, now without deduction of rank pay as ordered vide the GOI Corrigendum dated July 2014, as follows

[3900(Unrevised IV CPC BP but its revised value after implementation of GOI letter dated 27 December 2012) +600(RP)+550(IR)+4950(DA)+0.4{3900+600}] = 11440/-pm.

This figure is lower than the starting pay for Lt Cdrs in the revised V CPC pay scale of 11600-325-14850. So the Lt Cdr, whose "revised un-revised" IV CPC BP "as on" 01 Jan 96 was 3900/-, would still have his revised V CPC BP fixed at 11600/- in terms of the letters issued through the Naval HQs and Air HQs channels, presently resulting in "nil" arrears for him.

Let us examine this from another angle. Let us assume, another Lt Cdr "B" with "x" years of service was drawing 4500/- (after revision vide GOI letter dated 27 Dec 2012) in Dec 1995. His V CPC revised emoluments would be as follows

[4500(Unrevised IV CPC BP but its revised value after implementation of GOI letter dated 27 December 2012) +600(RP)+610(IR)+5202(DA)+0.4{4500+600}] = 12952/-pm.

The revised V CPC basic pay of this Lt Cdr for January 1996 would now, after reversing the V CPC rank pay deduction as ordered vide the GOI Corrigendum dated July 2014, be fixed at Rs. 13225/- in the V CPC pay scale for Lt Cdrs.

Now the Lt Cdr "A" in the previous example, whose BP was fixed at the starting point of Rs. 11600/-, would attain "x" years of service after 2 years ('transit time' from IV CPC basic of 3900/- to 4500/- in terms of the old scale). The thing to consider is would his basic pay at "x" years of service also equal that of Lt Cdr "B" when the latter had completed "x" years of service in January 1996?

This manner of BP parity appears tied to the "as on" vis-a-vis "with effect from" issue as well as the dubious concept of amending the basic pay without touching the basic pay scales. The whole overview of the cited case would change if the rank pay stages in the IV CPC running pay-scale and the discrete pay-scales of V CPC get reviewed for rationalising the pay-scales themselves after correcting for non-transparent reductions on account of Rank Pay while formulating the pay scales.

The above example is a hypothetical one. In reality, the Lt Cdr "B" of the example would have minimally been given the time scale rank of Cdr around the time of V CPC and Lt Cdr "A" would have followed suit, unless promoted by selection. So finding actual equivalent BPs at "x" years of service may not be an easy task.

Given the complexities involved, it may be prudent, as well "politically correct", for every one connected with the issue to steer clear of contentious terminologies of the "as on" variety while making out cases or issuing implementation directives. Given past experiences, inadvertent use of words or phrases, even if made in a valid manner in some specific context, poses a risk of misuse and manipulation by certain structures within the administration which, in any case, do not need unwitting assistance in their area of expertise and specialisation, viz., "re-phraseology", from the adversely impacted sections.

The Hazards Of Ignoring The Non-One-ness Of "One" in OROP

When one sets out to remove disparities and inequities involving groups and individuals, clarity on and comprehension of all issues, having a bearing on the matter, become critical pre-requisites if one's attempts to right wrongs are not to end up resulting in some other form of discrimination, giving rise to acrimony, dissatisfaction and litigation.

OROP appears to be nearing finalisation, even though it would be foolhardy to dismiss, out of hand, probability of application of the old adage about there being many a slip 'twixt the cup and the lip. Presently, the discussions appear to be centered on the cut off date and the figure to which older pensions will get bench-marked.

Neglect of a few issues would lead to any resolution arrived at compromised with the taint of discrimination.

The basis of that hazard is easy to understand if one approaches OROP at the most fundamental level. OP is clearer to grasp, though there are several issues about that as well. But, let us see what OR of OROP denotes.

"One Rank"! 

Is that a basis for ensuring justice, parity and equity? What is this "One" rank?

What are the most basic constants over the decades that ought, to any reasonable mind, form the basis for parity of present-day pensions of ESM who retired in the distant past? These would be the nature of Commission or Enrolment, the cadre, the years of service put in. Surely, the first two would appear to be the basis for all ongoing discussions, proposals and views. When it comes to "years of service", some discussions center on years spent in a rank vis-a-vis total years of service. This is an issue that would not be difficult to resolve.

But, the real issue is, the constant of "years of service", that ought to be the primary determinant of a pensionary award, has been made subservient to a variable.

The variable is "Rank".

When people speak of One Rank One Pension, they need to understand there is no such thing as "One" Rank when one factors in different service conditions across the decades.

What determines a "Rank" is not how it is spelt or pronounced. There are so many factors involved in the definition of a "Rank". In the case of "select ranks" the variables could be the process for selection, the gradings required to attain the rank, the nature of duties assigned to the rank or the posts that would be filled by a person holding the rank. In other words, it would be virtually impossible to establish equivalence between erstwhile and current "Ranks" obtained through selection.

It's a totally different matter when one considers time-bound promotions. A Major rank used to be obtained after 14 years of service in the 70s. Today, one is automatically a Major after 6 years. The Lt Col rank is given after 13 years of service. When it comes to determining pension parities, should the 70s Major, if he had served for more than 21 years, be clubbed with a "current" Major or Lt Col? The constant here is the "years of service" and the attributes of the rank have changed, rendering it a 'variable'.

The 70s Major and the current Major don't have "One rank", just one that has the same spelling.

Let us take the case of a Lt Col. In the 70s, it was a "select rank". Should we say pension of Officers who retired as Lt Col with more than 26 years of service in the 70s need to be considered only on the basis of that "rank"? An Officer with the same years of service is automatically Col(TS) at present. For the same years of actual service rendered in the same cadre, with the same commission, are the two Officers to be treated differently by pegging their pensions on the basis of a "variable"?

In all such cases, the pensions of earlier retirees need to be at par with current retirees in ranks nowadays automatically obtained with the same years of service as the earlier retirees.

Now these issues would apply whatever cut-off date applies and whichever parameter (maximum, mean, median or mode) as pension level is chosen while implementing OROP.

The logic underlying the need to factor in pension parity on constants, as well as the "denomination nomenclature" of the rank, is one that could help to obtain an OROP implementation which is based on genuine principles of parity.

This specific issue, now that the implementation of OROP appears close, deserves a fresh consideration along with views on the subject expressed elsewhere on this blog. 

OROP : 01 January 2006 Or 01 April 2014

As the announced deadline for implementation of the much awaited and discussed OROP draws close, an exponential increase in buzz on the blogosphere, related to the subject, is inevitable.

Blogs that choose to contribute to participative opinion building of the responsible variety, have featured meaningful inputs and long discussions on the current status of the implementation process, reported stances of stake-holders in the decision making bodies and the likely modalities of implementation.

It would be exceedingly rash to resort to "table / chart making" at this stage. Besides there is a large, some would say 'too large', Government machinery meant only for preparing tables and churning them out in copious numbers with standards of alignment, orientation and legibility that we have now come to expect as the norm from our Government machinery. It may be imprudent to address a task or process which is under the ownership of clerical staff, supervisors and higher level officials of the Government.

At the present moment, clarity has just begun to emerge on a number of issues that can be listed as follows :

• OROP is likely to be an "inter CPC" model with the only difference being, it could be implemented across a cut-off date of 01 April 2014 as against the date of 01 Jan 2006 which would've applied to a true "Inter CPC" basis as speculated on, amongst other possible ways of implementing OROP, in my previous blog post.

• The basis of parity of pensions of pensioners who retired before the OROP cut-off date, 01 Jan 2006 or 01 Apr 2014, would be the pension applicable to a retiree, with the same years of service and in the same rank, retiring immediately after the cut off date i.e. the pension fixed for the month Jan 2006 or April 2014, as the case may be. The differences in pensions calculated using the two different dates would be significant. An example would be the pension of a Lt Col with 20 years of service who might have retired prior to the cut off date could be less by approximately Rs. 3000 to 4000 per month  if pegged to pensions of the earlier date. Some rough calculations were made in this regard in this discussion. {Edit: Unfortunately, owing to the deletion of previous comments on the Aerial View blog, those discussions are no longer viewable}.

• In this context, it may be useful to mention that pensions of retirees who retired between 01 Jan 2006 and 01 March 2014 would not go up by as much as the pensions of pre 01 Jan 2006 retirees if the cut off date of 01 April 2014 is chosen. The pensions of post 01 Jan 2006 retirees would not change at all if the cut off date of 01 Jan 2006 is chosen, unless of course, some mechanism is implemented for periodically upgrading all past pensions for keeping them "uniform" with the pensions applicable for the same rank and service in the "current" month i.e. in any month in future. This, presently, does not appear to be part of the way OROP is likely to be implemented, but then, one never knows.

• The present implementation may not take into account various other concerns voiced repeatedly about the anomalies that have crept in over time due to cadre reviews and changes in time-frames required to attain time-scale ranks which all have a direct bearing on pension parity. Though some representations have been made, notably by RDOA as recorded in this blog post, the current status of such efforts is not known. If these matters remain unresolved one can foresee more strife and litigation on several such issues.

Ultimately, it needs to be seen, and kept in mind, that even if pensions are not kept "uniform" after once equalising the pensions on 01 April 2014, the differences in past (pre 01 Apr 2014) and present (post 01 Apr 2014) pensions may not be significant as it is already May 2014. If the bench-marking date of 01 Apr 2014 is chosen for pension parity and if pensions of present day pensioners vary only on account of increments in their monthly pay, then there would be only one two more increments, the ones due on 01 Jan Jul 2014 and 01 Jul 2015, that could affect pension parities to some extent.

Recommendations of a new CPC would take effect from 01 Jan 2016. It would be the task of VII CPC to examine the requirement for periodically enhancing older pensions to keep pace with the current ones in tune with the principles underlying OROP.

 

Models For A Probable Contour Of The OROP Format

{Edit: The contents of this blog post have been cut and pasted on this Yahoo! Group Post of a group located at Bangalore without my permission or attribution to me and without any link back to this post. This manner of reproduction is in infringement of my rights. Could a reader in touch with the group induce them to post this material with due link back and attribution? Thanks and regards}

It is not that the issue of Pension Parity on the lines of OROP has not been attempted to be addressed by CPCs in the past. Everyone affected would already be aware that pensions of pre VI CPC retirees are fixed at 50% of pay in the revised pay-band. This is modified parity of the kind V CPC had introduced for post 01 Jan 86 retirees whilst giving full parity to pre 1986 retirees.

This can lead to the query whether the Govt is envisaging some form of "full" parity in the case of armed forces under the OROP scheme.

How did "full" parity work after V CPC? It brought the notional pay of pre 1986 retirees at the same level as those serving as on 01 Jan 86. Therefore pre and post 01 Jan 86 retirees were at the "same level" (not including the post 01 Jan 96 retirees). At the same time, the pre and post 01 Jan 96 retirees had modified parity, the pre 01 Jan 96 retirees getting, in words of the CPC, "consolidated pension (shall) be not less than 50% of the minimum pay of the post as revised by V CPC, held by the pensioner at the time of retirement".

In the context of OROP, one can ask whether the same sort of idea with "variations upon a theme" is now sought to be implemented as OROP.

This essentially means examining the nature of OROP. Is it intended to be an inter CPC exercise or whether it will operate intra-CPC as well?

As an example, Circular 500 fixes the pension of a pre VI CPC retiree in the rank of Colonel and with 20 years of service at Rs. 22742/- on the "minimum pay in revised pay band" principle. If OROP is purely inter CPC in nature, it could imply that full parity would be restored on a similar fixed-pension basis for pre VI CPC retirees.

Such a full parity working on only "inter-CPC-retirees" basis could mean one of several things:

* Pension of a pre 01 Jan 2006 Col retiree with 20 years of service would be a fixed amount equal to the pension of a Col retiring on 31 Jan 2006 with 20 years of service.

OR

* Pension of a pre 01 Jan 2006 Col retiree with 20 years of service would be a fixed amount equal to the pension of a Col with 20 years of service as given in the table based on post VI CPC  pay-band viz., 31755/-

OR

* Pension of a pre 01 Jan 2006 Col retiree with 20 years of service would not be a fixed amount but would be periodically adjusted with the "current" (at the time of periodic adjustment) pension of a Col retiree with 20 years of service.

In such a (pre-only) format, the pensions of post CPC retirees would be calculated as per the current norms and would not be changed as per the process outlined above.

But the intra CPC implementation {Edit : Ideally, this should be called an "Inter-cum-Intra CPC parity} would essentially mean that all pensions as on "the periodic adjustment date" must be equal for all current and past retirees in the same rank and with the same pension service.

In the periodic adjustment model, the pensions may or may not be as per the table I have provided a link to above. It is again repeated, for the benefit of those with a tendency to gravitate towards cognitive impressions of colored columns of a table rather than to the underlying idea in drawing up of a chart or table, the table only indicates the pension of a Col with 20 years of service would have been 31755/- if he'd picked up the Col rank with 15 years of service as on 01 Jan 2006 and retired 5 years later  as on 31 Jan 2011 with 20 years of service. For all other cases, the post VI CPC pensions of a post VI CPC Col retiree with 20 years of service would be fixed based on the level at which his basic pay was fixed as on 01 Jan 2006. There would be variations.

This is merely to underline the impression that while it ought to be of interest to everyone to attempt to draw some rough contours of the form OROP might take, it would be rash to see an "illustrative" table and jump to erroneous conclusions.

Extending the OROP Estimations To Pre VI CPC Colonel Retirees

It increasingly appears that OROP may not turn out to be a simple issue as far as implementation goes. My personal view gets firmer in my mind that "OROP" is an apt "platform" for obtaining equity and parity in terms of pensionary benefits. But it needs careful thought in devising and then implementing such a parity. Principles need to be kept in mind at the "design stage" itself for minimising anomalies in post implementation phase.

I'd again like to emphasise "minimising" over "eliminating" as it would be unrealistic to assume that unforeseen anomalies would not arise and these, if and when they do appear, would need to be tackled post implementation. But the foreseen ones need to be certainly taken care of prior to implementation of a wide-ranging concept such as OROP.

There have been some fairly extensive on-line attempts to make comprehensive tables for pensions under OROP. To my mind, the basic flaw in approaches I have seen is a tendency to attempt an adaptation of Circular 500. Those sorts of tables are static. Pension once fixed for past (read, pre CPC) retirees at a certain level, stays fixed. The very thrust of OROP would however mean a variation in pensions for previous retirees  in the same rank and with the same length of service. How can there be "One Rank One Pension", for the same length of service, if the "One Pension" does not keep changing to stay at the current level of pension of a current retiree in that rank with the same length of service?

It is to be borne in mind the pension of a current retiree in a specific rank with a certain length of service would be more, on account of increments in pay, as compared to the pension of another, also post CPC, retiree in the same rank with the same length of service who might have retired a year or two previously. So, OROP automatically implies that even pensions of past retirees would need to be incrementally upgraded each time a person retires in the present after receiving an annual increment in pay. How else would pension be "One Pension"?

Having considered the possibility of OROP involving some form of an increment system, perhaps it is time to rationalise some of the doubts that have arisen over the multitude of tables and spread-sheets that have sprung up. I have now attached a table as it pertains to the rank of Colonel. To clarify, the COS re-fixed the pension of pre VI-CPC Col retirees at Rs. 27795/- based on minimum of pay in post VI CPC pay-band. A reverse calculation would then appear to suggest that the minimum pay of Col, post VI CPC, in PB IV was Rs. 40890/-. Based on this, a table can be drawn up.

The table does not imply that a Colonel retiring, after 01 Jan 2006, at 20 years of service would get Rs. 31755/- as pension. What the table means is that if an Officer gets promoted to Col at 15 years of service as on 01 Jan 2006, 5 years later at a service length of 20 years, he would get a pension of Rs. 31755/- after factoring in the increments in basic pay.

For most cases, the pension of a Col retiring after 01 Jan 2006 would be determined by the level his pay was fixed at as on 01 Jan 2006. For a Col retiring today with a service of, say, 25 years, we'd have to determine at what level his basic pay was fixed as on 01 Jan 2006, 8 years ago, when he had a service of 16 years. Then we'd need to apply increments on the same lines as shown in the table for a person who became Col with 15 years of service as on 01 Jan 2006 with a pay fixation of 40890. The basic of the Col with 16 years of service, the one who will be retiring now with a service of 25 years, would probably be higher.

So, whatever the Col with 25 years of service gets as pension after retiring on 31 March, so must all the previous Colonels who retired previously also with 25 years of service. Now, if that is not OROP, it is high time a clarification was obtained from the Govt as to what it really is.

Feedback is invited in respect of the table and the contents of this blog post.

{Edit 1}: The table is now embedded. For a larger size view please click on the hyperlink in the the text of the blog post above.

{Edit 2}: For a fuller context, reference may please be made to previous blog-posts by following the hyperlink.