OROP - Analysis of Conflicting Perceptions - By Aerial View (Being Informed is the Best Weapon)

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, (c) SAI (SNI/SAFI) No. 1/S/2008 and 2/S/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) Speech of Defence Minister apropos One Rank One Pension (OROP) on 5th September 2015, (k) 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 B-Tables for Pay & Pension w.e.f 1.1.2006 for ORs & JCOs C-Tables for ORs & JCOs as given in PCDA Circular No. 547 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 5 Sep 15 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 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.Sgt & equivalents 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 20 years service Pay in the Pay Band (Rs) 45000 (includes 3% increment on 01 Jul 2013) 43410 Grade Pay (Rs) 8000 8000 M S P (Rs) 6000 6000 Increment Nil - As already drawn on 01 Jul 2013 on 01 Jul 2014 1590 Total emoluments 59000 59000 Pension 29500 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 9 Nil Captain 9 7 Major 8 7 Lt Colonel (TS) 5 - Lt Colonel (Select) 7 6 Brigadier 5 3 General Officers 3 3 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 5 - 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 15 5961 4637 5961 4637 6374 4637 6976 5558 20 6441 5564 7065 5564 7760 5564 8720 6947 25 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. 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 verifies. 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, hence there will be no change for JCO’s, but only Havildars and equivalent would get an increase in pension amount. 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 controland awarded medical or other disability pension; or (c) Who has been released from such service as a result of reduction in establishment;”……..(emphasis supplied) 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 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 GP MSP Increment in Jul Total B+C+D (add E for additional year of QS) Pension Pension drawn* A B C D E F G H 7 21630 6600 6000 850 34230 17115 8 22480 880 35080 17540 9 23360 900 35960 17980 10 24260 930 36860 18430 9930 11 25190 960 37790 18895 10482 12 26150 990 38750 19375 11034 13 27140 1020 39740 19870 11585 14 28160 1050 40760 20380 12317 15 29210 1080 41810 20905 12689 16 30290 1110 42890 21445 13240 Lt Colonels (Sel)/Commanders/Wing Commanders Qualifying Service (QS) Pay in Pay Band GP MSP Incre-ment in Jul Total B+C+D (add E for additional year of QS) Pension Pension drawn* A B C D E F G H 14 37400 8000 6000 1370 51400 25700 16716 15 38770 1410 52770 26385 17510 16 40180 1450 54180 27090 18306 17 41630 1490 55630 27815 19102 18 43120 1540 57120 28560 19898 19 44660 1580 58660 29330 20894 20 46240 1630 60240 30120 21490 21 47870 1680 61870 30395 22286 22 49550 1730 63550 31775 23082 23 51280 1780 65280 32640 23878 Colonels/Captains/Group Captains Qualifying Service Pay in Pay Band GP MSP Incre-ment in Jul Total B+C+D (add E for additional year of QS ) Pension Pension drawn* A B C D E F G H 18 43120 8700 6000 1560 57820 28910 21057 19 44680 1610 59380 29690 21900 20 46290 1650 60990 30495 22742 21 47940 1700 62640 31320 23584 22 49640 1750 64340 32170 24426 23 51390 1810 66090 33045 25269 24 53200 1860 67900 33950 26111 25 55060 1920 69760 34880 26953 26 56980 1970 71680 35840 27795 27 58950 2030 73650 36825 27795 Brigadiers/Commodores/Air Commodores Qualifying Service (Years) Pay in Pay Band GP MSP Increment in Jul Total B+C+D (add E for additional year of QS ) Pension Pension drawn* A B C D E F G H 26 53220 8900 6000 1870 68120 34060 27795 27 55090 1920 69990 34994 28262 28 57010 1980 71910 35955 29145 29 58990 2040 73890 36945 29145 30 61030 2100 75930 37965 29145 31 63130 2160 78030 39015 29145 32 65290 2230 80190 40095 29145 33 67000 2280 81900 40950 29145 34 67000 2280 81900 40950 29145 35 67000 2280 81900 40950 29145 Major Generals/Rear Admirals/Air Vice Marshals Qualifying Service (Years) Pay in Pay Band GP MSP Incre-ment in Jul Total B+C+D (add E for additional year of QS ) Pension Pension drawn* A B C D E F G H 30 61090 10000 Nil 2140 71090 35545 31250 31 63230 2200 73230 36615 31250 32 65430 2270 75430 37715 31250 33 67000 Nil 77000 38500 31250 34 67000 Nil 77000 38500 31250 35 67000 Nil 77000 38500 31250 36 67000 Nil 77000 38500 31250 37 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 Column F. 2.Column X 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 QS Pay in PB GP MSP Incre-ment Total Pension Pension drawn* A B C D E F G H (X Gp) 6 7650 2400 2000 290 11650 5825 - 7 7940 300 11940 5970 - 8 8240 310 12240 6120 - 9 8550 320 12550 6275 - 10 8870 330 12870 6435 - 11 9200 340 13200 6600 - 12 9540 350 13540 6770 - 13 9890 360 13890 6945 - 14 10250 370 14250 7125 - 15 10620 380 14620 7310 5961 16 11000 390 15000 7500 6182 17 11390 410 15390 7695 6402 18 11800 420 15800 7900 6623 19 12220 430 16220 8110 6844 20 12650 440 16650 8325 7065 21 13090 460 17090 8545 7271 22 13550 470 17550 8775 7506 Havildar/Petty Officer/Sergeant QS Pay in PB GP MSP Incre-ment Total Pension Pension drawn A B C D E F G H 14 9040 2800 2000 360 13480 6920 - 15 9400 370 14200 7100 6374 16 9770 380 14570 7285 6651 17 10150 390 14950 7475 6929 18 10540 400 15340 7670 7206 19 10940 420 15740 7870 7483 20 11360 430 16160 8080 7760 21 11790 440 16590 8295 8037 22 12230 450 17030 8515 8314 23 12680 470 17480 8740 8591 24 13150 480 17950 8975 8868 25 13630 500 18430 9215 8868 26 14130 510 18930 9465 8868 27 14640 530 19440 9720 8868 28 15170 540 19970 9985 9145 Naib Subedar (Nb Sub)/Chief Petty Officer (CPO)/Junior Warrant Officer (JWO) QS Pay in PB GP MSP Incre-ment Total Pension Pension drawn* A B C D E F G H 19 10520 4200 2000 450 16720 8360 8371 20 10970 4200 2000 460 17170 8585 8720 21 11430 4200 2000 470 17630 8815 9089 22 11900 4200 2000 490 18100 9050 9418 23 12390 4200 2000 500 18590 9295 9787 24 12890 4200 2000 520 19090 9545 10115 25 13410 4200 2000 530 19610 9805 10464 26 13940 4200 2000 550 20140 10070 10813 27 14490 4200 2000 560 20690 10345 11336 28 15050 4200 2000 580 21250 10625 11510 Subedar/Master CPO II/Warrant Officer QS Pay in PB GP MSP Increment Total Pension Pension drawn* A B C D E F G H 24 12280 4600 2000 510 18880 9440 11517 25 12790 4600 2000 530 19390 9695 11914 26 13320 4600 2000 540 19920 9960 12510 27 13860 4600 2000 560 20460 10230 12708 28 14420 4600 2000 570 21020 10510 13105 29 14990 4600 2000 590 21590 10795 13105 30 15580 4600 2000 610 22180 11090 13105 31 16190 4600 2000 630 22790 11395 13105 32 16820 4600 2000 650 23420 11710 13105 33 17470 4600 2000 670 24070 12035 13105