Indian Strategic Studies: OROP - Analysis of Conflicting Perceptions

Being Informed is the Best Weapon.

Friday, 9 October 2015

http://sharad10525.blogspot.in/2015/10/orop-analysis-of-conflicting-percpetions.html

Full disclosure:

1. Lt Gen V M Patil PVSM, AVSM (retd), President Akhil Bharatiya Poorva Sainik Seva Parishad (ABPSSP) facilitated a meeting with the Hon'ble Raksha Mantri.

2. This blog author presented the subsequent analysis based on facts & documents (sources as cited below) to the Hon'ble Raksha Mantri ((in hard copy) on 8th October 2015 at 8 am and it was discussed thoroughly. Further developments are awaited.

3. This blog author made the presentation in his personal capacity and not as a member of any ESM organisation.

One Rank One Pension (OROP) Issue

Analysis of Conflicting Perceptions & Suggestions for Resolution

References: -

(a) Koshiyari Committee Report of December 2011,

(b) MoD OM No. 17 (4)/2008 (2)/D (Pen/Pol) dated 12.11.2008,

(d) MoD Resolution No. 1 (E) dated 30.8.2008

(e) DP & PW OM F No. 38/37/08 – P & PW (A). Part II dated 3.10.2008 concerning revision of provisions regulating pension/gratuity/commutation of pension/family pension/disability pension/ex-gratia lump sum compensations,

(f) DP & PW OM No. 38/37/08 – P & PW (A). pt I dated 14.10.2008, - revised pension based on revised pay bands and grade pay for posts carrying present scales as per Sixth Central Pay Commission,

(g) Defence Pension Regulations 2008 and Rules for Army, Navy & Air Force available on the PCDA (P) Website,

h) Judgements of the Hon’ble Supreme Court in D. S. Nakara & Others Vs UoI (1982), UoI & Anr Vs Maj Gen S. P. S. Vains & Another (2009), A. N. Sachdeva (deceased) & Others Vs Maharishi Dayanand University (MDU) (August 2015),

(j) PCDA (P) Circular Nos 500, 501, 547 and 548,

(k) Speech of Defence Minister apropos One Rank One Pension (OROP) on 5th September 2015,

(l) Letter from Maj Gen Satbir Singh (retd) to Defence Minister dated 18th September 2015.

List of Appendices: -

A - Tables for Pay & Pension w.e.f 1.1.2006 for Officers (Annexure A of PCDA (P) Circular 500)

B- Tables for Pay & Pension w.e.f 1.1.2006 for ORs & JCOs (Tables from PCDA (P) Circular 501)

Full Disclosure on shortcomings of this paper: - This analysis ishandicapped from being completely objective due to non-availability of the following: -

(a) Minutes of meetings of Joint Working Group (JWG) constituted by the MoD on 24th April 2014 culminating with a presentation to then Defence-cum-Finance Minister on 12th June 2014, including the methodology adopted by CGDA to arrive at the cost of implementing OROP,

(b) Minutes of meetings that IESM, IESL and other ESM organisations had with the Govt and the decisions taken/consensus arrived at/differences of opinion recorded and placed in the public domain,

(c) Persistent denial of information on OROP by CPIO and by Appellate Authority, Deptt of Ex-Servicemens’ Welfare on the grounds that the information is sensitive/classified,

(d) Denial of information by CPIO, O/o CGDA on the grounds that MoD has ordered that the information is MOST CONFIDENTIAL and should not be disclosed, and

(e) MoD (D – Pay/Services and Deptt of Ex- Servicemen Welfare), MoF (Deptt of Expenditure) denying information on the Cabinet Secretary Committee Report of 2012 for recommending OROP (and NFU) to be referred to the 7th Central Pay Commission.

Basis & Aim for this paper

1. The Defence Minister’s announcement of 5th September 2015 on implementation of OROP vis-à-vis differences of opinion/perception/interpretation by Maj Gen Satbir Singh (retd) and Governing Body of IESM/UFESM is the basis of this paper/presentation. The aim is to provide a logical analysis, and practical solutions.

5 Yearly Review vis-à-vis Annual Review

2. IESM and others quote the Koshiyari Committee Report. Therein it is recorded

2.1. At Para 6.4 on Page 5 of the Report, the Army’s representative agreed to a 5 yearly enhancement, and included the family pensioners.

2.2. At Para 6.5 on Page 5, the Air Force representative agreed.

2.3. At Para 6.6 on Page 5, the Naval representative did not mention anything relevant to this point.

3. What is the aim for either a five yearly or an annual equalisation or review? Is it to ensure that past pensioners with the same rank and same number of years of service get the same pension with one retiring in 2014 or 2015 or 2016? And pension of ESM senior in rank, or with certain years of service is not lesser than a junior’s?

4. For this the Implementation Order has to be precisely worded. Then once in 5 years or annual Review or Equalisation will not be needed in a majority of cases. The few cases that would need rationalisation are, for example, of two course-mates commissioned on the same date (say 01 Jul 1980). Course-mate A retires on 30th June 2013 in the rank of Lt Col. He does not get the 3% increment, whereas another course-mate B retires in the rank of Lt Col on 31st July 2013 and gets the increment though both have retired in the same calendar year 2013. These kinds of cases will need review only if this aspect is not covered in the implementation order. If all, like the former (who retired one day before the increment was falling due), are given the benefit of the increment, it will have a financial effect of 0.85% or Rs 185 crore.

5. To emphasise the point, most importantly, since the uniform pension for the same rank and qualifying service criteria is to be fulfilled, the review and correction for all such ESM can be done at the initiation of the OROP scheme. It must be emphasised that the “5 yearly review means next in 2018, and we will miss 7th CPC recommendations” is the kind of canard spread by the ultracrepidarists (defined as habit of giving opinions & advice on matters outside one’s knowledge or competence) in the print and electronic media.

Analysis:

6. In a steady state there will not be changes in the tables below until the implementation of the 7th CPC recommendations as approved by the Govt. (Please refer to tables at Appendix A for Officer ESM, Appendix B for Other Than Officers ESM).

Officer ESM

7. The tables clearly show that

7.1. In a steady state (same rank, same years of qualifying service), pension need not be revised (equalised) every year.

7.2. For the same rank and same years of service, Officers promoted earlier will draw the same pay and pension as those promoted after them. So the apprehension that a junior ranked ESM or a same rank but lesser QS ESM will draw more in without basis, obviating the need for an annual review.

7.3. Once pension is reset on 1.7.2014 thereafter no change will take place except on the implementation of the recommendations of the 7th CPC.

Other than Officer ESM (without addition of Group X Pay where applicable)

8. In a steady state there will not be changes in the tables below until the implementation of the 7th CPC recommendations as approved by the Govt.

8.1. Subedar Majors/MCPOs-I/Master Warrant Officers will also have similar situation as for the Sub/MCPO-II/WO.

8.2. The current top of scale pension (in Circular 501) is higher than the pay and pension drawn by the current retirees. Therefore, JCOs and equivalents are already OROP compliant and may benefit minimally, if and when OROP is implemented.

8.3. Havildar/Petty Officer)Sargent current retirees are drawing higher last pay drawn, consequently higher pension than the top of the scale based pension.

8.4. However, the senior will continue to get higher pay and pension than all juniors who are promoted to this rank at a later date.

8.5. Thus, once pay is re-set on a date, say 01 Jul 2014, then there will not be any change in pension of this rank till the next pay commission

Suggested Solution (Please also read Average Pensions below): -

9. Using similar methodology as used to formulate Circulars 500 (for retired officers) and 501 (for retired JCOs & ORs) to work out the solutions to the issue above.

10. Include numerical illustrations in the Implementation Order similar to the ones in SAI (SNI, SAFI) of 2008 to make ESM understand why any review would only add to delays in implementing OROP at the earliest.

Effective Date 01 Jul 2014 vis-à-vis 01 Apr 2014

11. ESM would have to be placed at the levels of pension that any retiree with the same (uniform) service and same rank would draw on 01 Jul 2013, which was the date of last increment. For example (amounts used are for illustrative purposes only: -

Particulars

w.e.f 01 Apr 2014

w.e.f to 01 Jul 2014

Rank Lt Col

20 years service

Pay in the Pay Band (Rs)

45000

(includes 3% increment on 01 Jul 2013)

43410

Grade Pay (Rs)

8000

M S P (Rs)

6000

Increment

Nil - As already drawn on 01 Jul 2013

on 01 Jul 2014 1590

Total emoluments

59000

Pension

29500

12. Analysis: - Provide illustration/numerical examples in the implementation order.

Calendar Year 2013 vis-à-vis Financial Year 2013-4

13. The Govt has indicated that the base year for the purpose of OROP would be the calendar year 2013. This does not seem to be an unacceptable proposition. The reason is that after 01 Jul 13 the pension would include the increment of the year 2013.

14. The Services/ Ex-servicemen have demanded 01 Apr 2014 as the base date but pay, and pension does not change after taking into account the increment of 01 Jul 2013. To that extent base year commencing 01 Apr 14 should not make any material difference. The only aberration is, again, that of course mates retiring on two different days, one on 30 Jun 13 the other on 31 Jul 13 having a difference in pay and pension. But these odd cases, which may not be numerous to deserve too much attention for determining macro policy.

15. In the heat and dust, it is forgotten that all Central Pay Commission recommendations are made effective 1st January (1986, 1996, 2006) i.e beginning of the calendar year.

16. Analysis: - ESM will not be deprived of OROP because the increment due on 1st July 2013 will be effective and paid whether it is calendar year or financial year.

Average Pension vis-à-vis Top of the Scale (Average Pension vis-à-vis Actual Pay/Pension Drawn)

17. Average of pension will involve checking records of 30 lakh ESM & widows or NoK. Reasons are given below.

17.1. Till the 1.1.2006, the following weightages were provided for calculating pension benefits (MoD letter dated 3rd February 1998) for all retiring from the Defence Forces: -

Rank

Weightage Services

(years)

Weightage MNS

(years)

Lieutenant

Nil

Captain

Major

Lt Colonel (TS)

Lt Colonel (Select)

Brigadier

General Officers

Below Commissioned Rank

Sepoy

10 (+2 from 17.1.2013)

Naik

8 (+2 from 17.1.2013)

Havildar

6 (+2 from 17.1.2013 )

JCO

17.2. After the implementation of the 6th CPC, wherein the qualifying service for full pensions for officers was reduced to 20 years, the weightage was removed [Resolution No. 38/37/08-P & PW (A) dated 29th August 2008] for Officers, except for commissioned officers who retired or were invalided out of service between 1.1.2006 and 1.9.2008. On the other hand, weightage stands withdrawn for PBOR w.e.f 1.1.2006 (Para 5.1.3 of MoD No. 71(4)/2008(2)/Pen/Pol) dated 12th November 2008.

Note: Weightages for JCOs/ORs has been withdrawn for retirees from 1.1.2006 if they are drawing pension at last pay drawn. In case it is beneficial that pension at the notional top is higher, the same can be drawn and in such cases the weightage will apply.

17.3. Further, MoD letter No. 1(13)/2012/D (Pen/Pol) dated 17.1. 2013 (PCDA Circular 501) also states as follows: -

2……The Committee of Secretaries recommended

2.1. The pension of pre-1.1.2006 JCO/OR pensioners may be determined on the basis of notional maximum for the ranks and groups across the three Services, and

2.2. Current weightage in qualifying service of Sepoy, Naik and Havildar may be increased by 2 years.

18. Another factor that will come into consideration is at Para 2 and 3 of MoD letter No. 1(04)/2015 (II) – D (Pen/Pol) dated 3.9.2015 (PCDA Circular 547) which states:

……..2. Now, after the issue of GoI, Ministry of Personnel, PG & Pensioners, Department of Pensioners and Pensioners’ Welfare OM No. 38/37/08-P & PW (A) dated 30.7.2015, it is decided that with effect from 1.1.2006 pension/family pension of Pre-2006 JCOs/ORs Pensioners/family pensioners shall be determined as fifty and thirty percent respectively of the minimum of the fitment table for the rank in the revised pay band as indicated under fitment tables annexed with 1/S/2008…..

3. However, in case, the consolidated pension/family pension calculated as per Para 4.1. of this Ministry’s letter No. 17 (4)/2008 (1)/D (pen/Pol) dated 11.11.2008 is higher than the pension/family pension calculated in the manner indicated above, the same (higher consolidated pension/family pension) will continue to be treated as basic pension/family pension. However, where revised pension in terms of GoI, MoD letter No. PC -10 (1)/2009 – D (Pen/Pol) dated 8.3.2010 and No. 1 (13)/2012/D (Pen/Pol) dated 17.1.2013 is higher than the rate indicated in annexure attached with this letter then the same will continue to be treated as basic pension/family pension from 1.7.2007 and 24.9.2012.

19. Table below indicates the differences for some ranks and Qualifying Service: -

QS (X Gp)

Sepoy

Naik

Havildar

Naib Subedar

Circular No.

501

547

501

547

501

547

501

547

5961

4637

5961

4637

6374

4637

6976

5558

6441

5564

7065

5564

7760

5564

8720

6947

6441

5564

7606

5841

8868

6328

10464

8337

20. Under the circumstances, the proposed average pension for OROP is likely to be an administrative night mare. Reports that tenure in the rank tables will add to he nightmare as many promotions are based on vacancies arising out of higher rank due to promotions, pre-mature releases, medical unfitness, restoration of medical fitness for promotion from original date of being selected for promotion etc. No clarity on whether it will be a simple mean, a simple average, or a weighted mean (apropos till 1.1.2006 weightage was provided to Defence Personnel for pension purposes). There is no clarity on who will determine minimum and maximum pension for the calendar year 2013, with weightage and without. If determined, then who verifiescase by case.

21. The easier way is to tabulate the pay drawn for each rank in each year of qualifying service. The figure so determined divided by 2 will provide the amount of pension. This table is easy to comprehend and is in sync with the current table in vogue since 24 Sep 12 for pension. In any case if average method is applied the financial impact cannot be Rs 8296 Cr as those above the average do not benefit, and there will be no change for JCO’s, but only Havildars and equivalent would get an increase in pension amount due to notional top of the scale.

OROP Not Applicable for Pre-Mature Released Defence Forces Personnel vis-à-vis OROP applicable for all

22. Government of India has promulgated the definition of Ex-Servicemen issued on 4th October 2012 by DOP & T which states, inter alia

“(c) An ‘ex-serviceman’ means a person –

(i) Who has served in any rank whether as a combatant or non-combatant in the Regular Army, Navy and Air Force of the Indian Union, and

(a) Who either has been retired or relieved or discharged from such service whether at his own request or being relieved by the employer after earning his or her pension; or

(b) Who has been relieved from such service on medical grounds attributable to military service or circumstances beyond his control and awarded medical or other disability pension; or

23. Army, Navy, Air Force Pensions Regulations 2008 are statutory. These Regulations (separately for Army, Air Force, and Navy, in that order) are available on the PCDA (P) website. They are too voluminous to reproduce here. Suggested reading are

23.1. Part I- Containing Regulations regulating the pensionary awards of personnel of the Regular Army, the Defence Security Corps, Emergency/Short Service Commissioned Officer and the Territorial Army, especially

Section 1 – Para 4 – Definitions;

Para 5 – Types of Pensions;

Para 8 – Pension subject to future good conduct;

Section 2 – Para 17 and notes there under;

Para 19

23.2. Part II- Regulations relating to pension procedure affecting the personnel whose pensions are regulated by the Regulations in Part I.

24. The Constitution Bench of the Honourable Supreme Court in the D S Nakara case in 1982 averred, inter alia,

“In the instant case, the petitioners do not challenge, but seek the benefit of the liberalised pension scheme. Their grievance is of the denial to them of the same by arbitrary introduction of words of limitation. ………………... If the event is certain but its occurrence at a point of time is considered wholly irrelevant and arbitrarily selected having an undesirable effect of dividing a homogeneous class and of introducing discrimination, the same can be easily severed and set aside. It is therefore just and proper that the words introducing the arbitrary fortuitous circumstance which are vulnerable as denying equality be severed and struck down.”

25. The Honourable Court ruled in the Maj Gen S P Vains case, inter alia,

“…..The case of the respondents however, was that in view of the Constitution Bench decision of this Court in D.S. Nakara and others vs. Union of India (1983) 1 SCC 305, the fixation of a cut-off date as a result of which equals were treated as unequals, was wholly arbitrary and had been rightly interfered with by the High Court. One of the questions posed in the aforesaid decision was whether a class of pensioners could be divided for the purpose of entitlement and payment of pension…… The question was answered by the Constitution Bench holding that such division being both arbitrary and unprincipled the classification did not stand the test of Article 14.

xxxx xxxx xxxx

26. The question regarding creation of different classes within the same cadre on the basis of the doctrine of intelligible differentia having nexus with the object to be achieved, has fallen for consideration at various intervals for the High Courts as well as this Court, over the years…… In the context of that case, which is similar to that of the instant case, it was held that Article 14 of the Constitution had been wholly violated, inasmuch as, the Pension Rules being statutory in character, the amended Rules, specifying a cut off date resulted in differential and discriminatory treatment of equals. ………… The division which classified pensioners into two classes was held to be artificial and arbitrary and not based on any rational principle and whatever principle, if there was any, had not only no nexus to the objects sought to be achieved by amending the Pension Rules, but was counter productive and ran counter to the very object of the pension scheme. It was ultimately held that the classification did not satisfy the test of Article 14 of the Constitution (emphasis supplied).

Suggestion Solution:

26. It would be advisable for the Government to delete the VRS/PMR clause unless the Government wishes to

26.1. Further mar its image as being anti – Armed Forces Veterans, and/or

26.2. Waste time of the Courts, Law Officers and itself in fighting and losing cases.

Govt’s Constitution of Single member Judicial Commission

Vis-à-vis IESM’s 5 member Committee

27. If proposal is to appoint a Commission of one member or a Committee of 3 to 5 members, one of the members should be from Finance and one an ESM unaffected by the OROP scheme. This will make the report of the Commission/Committee more likely to be acceptable and would invite far less strictures/observation then if the committee does not have any finance representative.

Jai Hind

* * * * *

Appendix A

(Refers to Para 6)

Officers

[* Amounts are taken from Annexure A of PCDA Circular No. 500 dated 17.1.2013.]

Majors/Lieutenant Commanders/Squadron Leaders

Qualifying

Service (QS)

Pay in Pay Band

MSP

Increment in Jul

Total

B+C+D

(add E for additional year of QS)

Pension

Pension drawn*

21630

6600

6000

850

34230

17115

22480

880

35080

17540

23360

900

35960

17980

24260

930

36860

18430

9930

25190

960

37790

18895

10482

26150

990

38750

19375

11034

27140

1020

39740

19870

11585

28160

1050

40760

20380

12317

29210

1080

41810

20905

12689

30290

1110

42890

21445

13240

Lt Colonels (Sel)/Commanders/Wing Commanders

Qualifying

Service

(QS)

Pay in Pay Band

MSP

Increment in Jul

Total

B+C+D

(add E for additional year of QS)

Pension

Pension drawn*

37400

8000

6000

1370

51400

25700

16716

38770

1410

52770

26385

17510

40180

1450

54180

27090

18306

41630

1490

55630

27815

19102

43120

1540

57120

28560

19898

44660

1580

58660

29330

20894

46240

1630

60240

30120

21490

47870

1680

61870

30395

22286

49550

1730

63550

31775

23082

51280

1780

65280

32640

23878

Colonels/Captains/Group Captains

Qualifying Service

Pay in Pay Band

MSP

Increment in Jul

Total

B+C+D

(add E for additional year of QS )

Pension

Pension drawn*

43120

8700

6000

1560

57820

28910

21057

44680

1610

59380

29690

21900

46290

1650

60990

30495

22742

47940

1700

62640

31320

23584

49640

1750

64340

32170

24426

51390

1810

66090

33045

25269

53200

1860

67900

33950

26111

55060

1920

69760

34880

26953

56980

1970

71680

35840

27795

58950

2030

73650

36825

27795

Brigadiers/Commodores/Air Commodores

Qualifying Service

(Years)

Pay in Pay Band

MSP

Increment in Jul

Total

B+C+D

(add E for additional year of QS )

Pension

Pension drawn*

53220

8900

6000

1870

68120

34060

27795

55090

1920

69990

34994

28262

57010

1980

71910

35955

29145

58990

2040

73890

36945

29145

61030

2100

75930

37965

29145

63130

2160

78030

39015

29145

65290

2230

80190

40095

29145

67000

2280

81900

40950

29145

67000

2280

81900

40950

29145

67000

2280

81900

40950

29145

Major Generals/Rear Admirals/Air Vice Marshals

Qualifying Service

(Years)

Pay in Pay Band

MSP

Increment in Jul

Total

B+C+D

(add E for additional year of QS )

Pension

Pension drawn*

61090

10000

Nil

2140

71090

35545

31250

63230

2200

73230

36615

31250

65430

2270

75430

37715

31250

67000

Nil

77000

38500

31250

67000

Nil

77000

38500

31250

67000

Nil

77000

38500

31250

67000

Nil

77000

38500

31250

67000

Nil

77000

38500

31250

[Note: - There are current cases shown above wherein Brigadiers & equivalents are earning PB 4+ GP + MSP = Rs 81900 and their pension is Rs 40950! Army Cdrs/VCOAS & equivalents are paid Rs 80000 (fixed) pm and their pension is Rs 40000 pm. Apex Scale??]

Appendix B

(Refers to Para 6)

Other Ranks

Notes: 1. ‘X’ Group Pay of Rs 1400 p.m is not added in arriving at total in Column F.

2. Column H indicates the pension for X Group.

3. Amounts indicated in Column H are from PCDA Circular No. 501 dated 17.1.2013.

Naik/Leading Seaman/Corporal

Pay in PB

MSP

Increment

Total

Pension

Pension drawn*

H (X Gp)

7650

2400

2000

290

11650

5825

7940

300

11940

5970

8240

310

12240

6120

8550

320

12550

6275

8870

330

12870

6435

9200

340

13200

6600

9540

350

13540

6770

9890

360

13890

6945

10250

370

14250

7125

10620

380

14620

7310

5961

11000

390

15000

7500

6182

11390

410

15390

7695

6402

11800

420

15800

7900

6623

12220

430

16220

8110

6844

12650

440

16650

8325

7065

13090

460

17090

8545

7271

13550

470

17550

8775

7506

Havildar/Petty Officer/Sergeant

Pay in PB

MSP

Increment

Total

Pension

Pension drawn*

9040

2800

2000

360

13480

6920

9400

370

14200

7100

6374

9770

380

14570

7285

6651

10150

390

14950

7475

6929

10540

400

15340

7670

7206

10940

420

15740

7870

7483

11360

430

16160

8080

7760

11790

440

16590

8295

8037

12230

450

17030

8515

8314

12680

470

17480

8740

8591

13150

480

17950

8975

8868

13630

500

18430

9215

8868

14130

510

18930

9465

8868

14640

530

19440

9720

8868

15170

540

19970

9985

9145

Naib Subedar (Nb Sub)/Chief Petty Officer (CPO)/Junior Warrant Officer (JWO)

Pay in PB

MSP

Increment

Total

Pension

Pension drawn*

10520

4200

2000

450

16720

8360

8371

10970

4200

2000

460

17170

8585

8720

11430

4200

2000

470

17630

8815

9089

11900

4200

2000

490

18100

9050

9418

12390

4200

2000

500

18590

9295

9787

12890

4200

2000

520

19090

9545

10115

13410

4200

2000

530

19610

9805

10464

13940

4200

2000

550

20140

10070

10813

14490

4200

2000

560

20690

10345

11336

15050

4200

2000

580

21250

10625

11510

Subedar/Master CPO II/Warrant Officer

Pay in PB

MSP

Increment

Total

Pension

Pension drawn*

12280

4600

2000

510

18880

9440

11517

12790

4600

2000

530

19390

9695

11914

13320

4600

2000

540

19920

9960

12510

13860

4600

2000

560

20460

10230

12708

14420

4600

2000

570

21020

10510

13105

14990

4600

2000

590

21590

10795

13105

15580

4600

2000

610

22180

11090

13105

16190

4600

2000

630

22790

11395

13105

16820

4600

2000

650

23420

11710

13105

17470

4600

2000

670

24070

12035

13105

Indian Strategic Studies

Pages

14 October 2015

OROP - Analysis of Conflicting Perceptions

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