Detailed Explanation on Notional Pay Method of Pension Fixation w.e.f. Jan 2016.

Dear Veterans,

1.      Maj Gen Satbir Singh, SM of IESM spoke to me today, 01 Nov 2018 enquiring about TSEWA legal case AFT – 29 being filed in AFT Delhi in a day or two. The prayer of AFT – 29 that Concordance tables of Min of Def issued on 17 Oct 2018 is exactly same as for Central Govt Civilian employees and cannot be adopted mutatis mutandis to Pre – 2013 Pensioners of Armed Forces. The reason is civilians were not given any enhancement of pensions in 6th CPC whereas the faujis were given OROP. I explained how he as Pre – 2013 Maj Gen does not get any benefit in Notional pay method.

2.      Pension in Jan 2016 by Notional Pay Method.  Let us  see why he does not get benefit by Notional Pay method as is given in Concordance tables. His basic pay of Rs 22,400 in pay scale of Rs 18400 – 500 - 22400 at the time of retirement in year 2003 (5th CPC) comes to Rs 44,700 in 6th CPC vide Concordance Table No: 9 in page no 195. The Notional Pay in Defence Pay Matrix in column 7 of Concordance Table gives his Notional Pay in Def Pay Matrix of Rs 1,67,200 and his pension comes to Rs 91,350.

3.      Pension by 2.57 Method. But when his OROP pension of Rs 38,763 when multiplied with fitment factor of 2.57, his pension  comes to Rs 99,624 in Jan 2016. Therefore, he as Maj Gen will NOT get any benefit by Notional Pay method as is being followed by Min of Def.

4.      Pension by Notional Pay Method if Base Year is Taken as 2013.

The Notional pay method is based on Basic pay. The OROP pension has to be converted into basic pay by a simple method. It is shown below:-

OROP = 0.50 x (Pay in Pay Band (PIPB) + Grade Pay (GP) + MSP)

38763 = 0.50 x (PIPB + GP + MSP)

Basic Pay = PIPB + MSP = (2 x OROP) - MSP

Basic Pay in 2013 = (2 x 38763) - 6000

71,526

Notional Pay in Jan 2016 = Basic pay in 2013 x 2.57

1,83,822

Notional Pay in Def Pay Matrix closest to Rs 183822

1,88,200

Pension by Notional Pay Method with base year 2013 with MSP of Rs 15500

1,01,850

5.      Comparison of Pension of Pre – 2013 Maj Gen / R Adm / AVM.

pension by Notional Pay Method with Date of Retirement

91,350

Pension by 2.57 Method

99,621

Pension by Notional Pay Method with base year as 2013

1,01,850

6.      Deduction. Therefore, Notional Pay method is NOT beneficial not only for Pre – 2013 Maj Gens but all ranks from Sepoy to Lt Gen (HAG+),

7.      Base Year for Pre – 2013 Pensioners to be Taken as 2013. I explained why Pre – 2013 pensioners also should be given Notional Pay method considering their date of retirement as year 2013 for the following reasons: -

(a)     By sanctioning and implementing OROP the Government of India made date of retirement of all Pre – 2013 pensioners irrelevant. The date of retirement of all such pensioners should be considered as year 2013 as their pensions have been more or less same as pensions of their counterparts of same rank and same length of service who actually retired in calendar year 2013.

(b)     Meaning of OROP. OROP is Average pension of all those who actually retired in any rank in calendar year 2013. For example, the OROP of Maj Gens / R Adms / AVMs who put in 33 or more years of service is Rs 38,763 vide Table 1 of Circular 555 of PCDA (Pensions) Allahabad. There could be Maj Gens / R Adms / AVMs who could have got pension Rs 1,000 more than average of Rs 38,763 (say Rs 39,763) and some of them could have got pension Rs 1,000 less than average of Rs 38,763 (say Rs 37,763) when they actually retired in calendar year 2013. Therefore the Average pension of Maj Gens / R Adms / AVMs who actually retired in 2013 is = 0.50 x( 39763 +37763) = Rs 38,763. In Calendar year 2013, there are Maj Gens / R Adms / AVMs whose pension is less than OROP of Rs 38,763. The Government of India, so to say, in their magnanimity enhanced their pensions to average of Rs 38,763. Therefore, you can see Maj Gens / R Adms / AVMs who actually retired in calendar year with pension less than Average also got a hike in pensions thanks to OROP like Pre – 2013 pensioners. The  Pre – 2013 Maj Gens / R Adms / AVMs  were given hike by bringing their pension from Rs 30,350 in Jan 2006 to Rs 38,763. Therefore those Maj Gens whose pension is less than Rs 38,763 and the Pre – 2013 Maj Gens belong to same class of pensioners. Both these categories benefitted by OROP.

(c)     Types of Maj Gens in Calendar Year 2013.  You can see the Maj Gens / R Adms / AVMs drawing the following types of pensions belong to various categories: -

(i)      Category 1. Those actually retired in Calendar year 2013 drawing pension more than Rs 38,763. Their higher pension was protected.

(ii)     Category 2 (a). Those Maj Gens who actually retired in Calendar Year 2013 drawing pension less than Rs 38,763 but their pensions were hiked to Rs 38,763 giving them benefit of higher pension.

(iii)     Category 2(b). Pre – 2013 Maj Gens / R Adms / AVMs in a similar manner got a hike in pension from Rs 30,350 of Jan 2006 to Rs 38,763. Their status is that of Maj Gens in Category 2(a) i.e. those who actually retired in calendar year 2013 initially drawing pension less than average of Rs 38,763.

8.      Comparison of Pension by Notional Pay Method in Jan 2016 by Maj Gens of Category 2(a) and Category 2(b).

Ser
No

Details

Maj Gen Actually Retired in Year 2013with Less than Average of OROP

Pre - 2013

Maj Gen

1

Basic Pay

71,526

63,440(see Concordance Table Row 10, Col 7)

2

Notional Pay in Jan 2016 with fitment factor of 2.57

1,83,822

1,67,200

3

Notional Pay in Def Pay Matrix

1,88,200

1,67,200

4

Add MSP to get  Notional Last Drawn Emoluments

2,03,700

1,82,700

5

Pension by Notional Pay Method

1,01,850

91,350

Prayer of AFT – 29 of TSEWA.

9.      All those Maj Gens whether retired in calendar year 2013 or Pre – 2013 Maj Gens got enhanced pension in OROP belong to the same category of pensioners i.e. Category 2. They were drawing less pension than Rs 38,763 and their pensions have been hiked due to OROP. Therefore, the base year for Pre – 2013 Maj Gens / R Adms / AVMs for transition to Notional Pay of 2016 should be from year 2013 and NOT  from date of retirement which lost its relevance with OROP.

10.    Violation of Article 14 of the Constitution. If Pre – 2013 Maj Gens of Category 2(b) are NOT treated at par with those Maj Gens who retired in calendar year 2013 with pension less than Rs 38,763 of Category 2(a), then you have two different classes of pensioners in Jan 2016.

(a)   Those who actually retired in calendar year 2013 with pension less than Rs 38,763 drawing higher pension by Notional Pay method in Jan 2016 i.e Category 2(a).

(b)   Pre – 2013 Maj Gens in Category 2(b) whose also got pension hike due to OROP like Maj Gens  category 2(a) have to have same pension in Jan 2016 by any method i.e. Notional pay or 2.57 method.

(c)   Maj Gens of Category 2(a) and Category of 2(b) drew the same pension from Jun 2014 to Dec 2015. Then how can their pension in Jan 2016 be different by Notional Pay method?

(d)   If pension of all those whose pension was less than Rs 38,763 in the year 2013 to Dec 2015 are given different pensions in Jan 2016, then it amounts to violation of Art 14 of the Constitution.

(e)   Therefore, Govt of India should make Concordance tables differently for Pre – 2013 pensioners ensuring that the base year for transition of pension be taken as year 2013.

11.    I hope my long explanation Pre – 2013 pensioners of all ranks that they will NOT get any benefit by Notional pay method is convincing to you. Maj Gen Satbir Singh, SM (Retd) requested me to make a set of tables by which all ranks from Sepoy to Maj Gen are shown (a) pension in Jan 2016 by existing Notional Pay method (b) 2.57 method and (c) higher pension by Notional pay method if base year is taken as 2013 as propagated by TSEWA.

Part I: Notional Pay in Jan 2016 for all Pre – 2013 JCOs /OR

12.    Concordance tables for Army and IAF are from 4th CPC to 6th CPC. I will show you how to work out Notional Pay method of pension fixation for JCOs / OR. In Notional Pay method the following parameters are essential without which you cannot use Concordance tables.

(a)     Those who retired in 4th CPC & in 5th CPC from Jan 1996 to 09 Oct 1997.

(i)      Rank..

(ii)     Basic Pay at the time of retirement.

(iii)    Group A to E as pay scale is different for each group in any rank.

(iv)    Classification pay (class 4 to 1) up to the rank of Havildar only

(b)     Those who Retired in 5th CPC from 10 Oct 1997 onwards.

         (i)      Rank.

         (ii)     Basic Pay at the time of retirement.

         (iii)    Trade Group X, Y & Z.

(c)     Notional Pay method deals with only basic pay and pension has no connection.

13.    How Notional Pay fixes Pension as per Concordance Tables?

(a)     Concordance tables help you to arrive at Notional pay in Jan 2016 in Def Pay Matrix taking your basic pay at the time of retirement. If you retired in 4th CPC then basic pay is notionally enhanced to basic pay of 5th CPC (assuming you retired in Jan 1996), then enhance it from 5th CPC to 6th CPC and finally enhance it to 7th CPC.

(b)     The pay scale of JCOs / OR with different trade groups is different in different CPC periods. The tables for each rank are worked out in five trade groups as A, B, C, D, E. The tables are made like A to X, B to Y, C to Y, D to Y and E to Y till 09 Oct 1997 for all ranks of JCOs / OR. Thereafter from 10 Oct 1997, trade groups were reduced to 3 i.e. X, Y, Z. In 6th CPC the trade groups are further reduced to two i.e. X & Y. One has to select the correct table based on (a) rank (b) date of retirement (c) trade group and (d) Class 4 to 1 (for 4th CPC and 5th CPC till 09 Oct 1997).

(c)     I have taken JCOs / OR with various trade groups  A to E retired in CPCs from 4th to 6th CPC and classification pay 4 to 1.  You can Google and get Concordance tables issued by Min of Def on 17 Oct 2018. Unless you have Concordance tables with you, it is not possible for you to understand how I arrive at Notional Pay of various ranks, retiring in different CPC periods, with different classes 4 to 1. You do not have to do any calculations. All are worked out and are available in these Concordance tables.

14.    It is not possible for me to work out for each rank retiring in various CPCs, with varying trade groups A to E and varying classes from Class 4 to 1 and varying qualifying service (15 to 33 years). There are CPCs from 4th  to 6th , trade groups A to E, classes from 4 to 1. For a Sepoy who retired in 4th CPC & 5th CPC till 09 Oct 1997, the number of tables to be made  are as under  :-

(a)   Sepoy Group A, Class 1 to 4.         : 4

(b)   Sepoy Group B, Class 1 to 4          : 4

(c)   Sepoy Group C, Class 1 to 4         : 4

(d)   Sepoy Group D, Class 1 to 4         : 4

(e)   Sepoy Group E, Class 1 to 4 :        : 4

(f)    No of tables for Sepoy retired in 4th CPC : 20 tables

(g)   Sepoy retired in 5th CPC from Jan 1996 to 10 Oct 1997

: 20 tables

(h)   Sepoy retired in 5th CPC in the period 10 Oct 1997 to 31 Dec 2005 with Groups X to Z                    : 12 tables

(j)    Sepoy retired in 6th CPC with Groups X & Y : 2 tables

(k)   No of Tables for Sepoy alone         : 54 tables.

(l)    From Naik to Sub Maj                    : 270 tables.

(m)  Total No of Tables for JCOs / OR   : 324 tables.

(n)   If these tables have to be made for every half year from 15 to 33 then the number of tables I need to work out are : 37 x 324 = 11,988.

15.    JCOs and OR who retired in different CPCs with different trade groups, different  class  and with different basic pay at the time of retirement can work out their Notional Pay taking this article as a model. But you have to keep a copy of Concordance tables if you want to understand how I have worked out Notional Pay using the Concordance tables.

16.    I will take you step by step from 4th CPC to 7th CPC. This article is only for Army JCOs / OR. The basic data you need to work on Notional Pay method are :-

         (a)     Rank                            : Sepoy

         (b)     Group                          : C

         (c)     Date of Retirement       : 31 May 1987 (4th CPC)

         (d)     Class                           :  2

17.    Step 1 (for Sepoy, Group C, Retired in 4th CPC). First is select te correct table. Every JCO / OR has five tables. Here the Sepoy belongs to group C. Therefore you have to select table Sepoy C to Y (i.e. Trade C earlier is now merged with group Y). Go to Concordance Table C to Y, at page 159 of Concordance Tables. For Date of Retirement of 31 May 1987, Group – C, Basic Pay of Rs 1,080 & Class – 2, you can locate basic pay of Rs 1,080 in cell of Row 10,Column 1. This is his basic pay in 4th CPC (Jan 1986 to Dec 1995). Our aim to see what would be his Notional basic pay in 7th CPC. For this we have to see columns where basic pay for various CPCs from 5 to 7th are given in the Concordance tables.

18.    Step 2: Pension in Notional Pay in Jan 2016

(a)     Class 2 is given in column 4. Corresponding to basic pay of Rs 1,080 in 4th CPC, basic pay is enhanced to Rs 3,440 (Row 10,Col 4) in 5th CPC in the period Jan 1996 to 09 Oct 1997.

(b)     From 10 Oct 1997 to 31 Dec 2005 the number of trades got reduced to three i.e. X, Y & Z. Since the trade group of Sepoy was C, you will find his basic pay in this period of 10 Oct 1997 to 31 Dec 2005 of 5th CPC as Rs 3,460 (Row 10, Col 8).

(c)     In 6th CPC (Jan 2006 to Dec 2015) Pay in Pay Band (PIPB) is Rs 6,640 +  and Grade Pay (GP) is Rs 2,000 and MSP is Rs 2000. The basic pay in 6th CPC for Group Y is sum of PIPB and GP which comes to Rs 8,640.

(d)     Corresponding to basic pay of Rs 8,640, the Notional Pay in Def Pay Matrix of 7th CPC is Rs 22,400 in cell  of Row 2, Col15.

19.    Step 3: Pension in Jan 2016 by Notional Pay Method. The Notional Last Drawn Emoluments for JCOs / OR in 7th CPC is Notional Pay + MSP of Rs 5,200 + Rs 6,200 (X group diploma recognised by AICTE) or Rs 3,600 (Diploma NOT recognised by AICTE). Since the Sepoy is from C group (merged with Y Group in 6th CPC ), he is not entitled for X group pay. His pay for pension = Rs 22400 + 5200 = Rs 27,600. His pension by Notional Pay method is Rs 0.50 x 27600 = Rs 13,800 pm in Jan 2016.

20.    Step 4 : Pension by 2.57 Method. The OROP of Sepoy with 15 years’ service and of Group Y is Rs 6,665. Pension is Rs 6665 x 2.57 = Rs 17,129.

21.    Beneficial Method.  2.57 Method

22.    Comparison Between Notional Pay Method and 2.57 Method.

Rank

Date of Retirement

Basic Pay

(in Rs)

Trade Group

Pension by Notional Pay Method

(in Rs)

Pension by

2.57 Method (in Rs)

Sepoy

31 May 1987

(4th CPC)

1,080

C

13,800

17,129

23.    Notional Pay Method with Date of Retirement with Base Year 2013. If the base year is taken as 2013 like those Sepoys who actually retired in calendar year 2013 with pension less than average i.e. Rs 6,665, then the pension by Notional pay method will be beneficial. Notional pay method uses basic pay for calculations. But, OROP gives pension which is Average of those who actually retired in calendar year 2013. We have to obtain basic pay from pension of OROP and then multiply it with 2.57 to come to pension in Jan 2016. Then see the figure same or higher than this in Def Pay Matrix which becomes Notional Pay in Jan 2016.

Data

Result

OROP

Rs 6665

Pay in Pay Band (PIPB) + Grade Pay(GP) + MSP

2 x Pension

Basic Pay in 2013

PIBP + GP

Basic Pay in 2013

(2 x OROP) – MSP

= Rs 11,330

Basic Pay in Jan 2016

11330 x 2.57 = Rs 29,118

Notional Basic Pay in Def Pay Matrix

Rs 29,300

Pension by Notional Pay Method with Base year 2013

=0.50 x (29330 + 5200)

= Rs 17,265

24     Comparison of Pension by the Three Methods for Sepoy.

Rank

Pension by Notional Pay Method with Date of Retirement

Pension by 2.57 Method

Pension by Notional Pay Method with base year 2013

Sepoy, Gp C, Basic Pay Rs 1080

QS : 15 years

Date of Retirement: 31 May 1987

13,800

17,129

17,265

25.    Pension by Three Methods for Other Ranks of JCOs / OR.  Since the article is getting long, I shall reduce the detailed procedure of four steps mentioned for Sepoy to find out Notional pay method and show them in tables for the ranks of Naik, Havildar, Nb Sub, Subedar and Sub Maj. I have taken different ranks, different trade groups, different classes, different basic pays and different dates of retirement.

Ser No

Rank

Date of Retirement

Basic Pay
(in Rs)

Trade Group

1

Sepoy
Service: 15 Years

Class : 2

31/05/1987
4th CPC

1,080

C

2

Naik
Service : 22 Years

Class : 1

30/06/1988
4th CPC

1,280

B

3

Havildar
Service : 26 years

Class : 1

31/10/1998
5th CPC

4,950

X

4

Nb Sub
Service : 28 Years

28/02/2007
6th CPC

16,740

Y

5

Subedar
Service :   30 Years

31/07/1996
5th CPC

7,785

C

6

Sub Maj
Service : 33 Years

30 Sep 1986
4th CPC

2,980

D

26.    Summary of Pensions from Naik to Sub Maj in Jan 2016 by Various Methods. The tables are too many for each rank, for each type of method of pension fixation and do not fit in this article. The same are attached. Summary is shown here of pensions with three types of methods.

Rank

Notional Pay Method

2.57 Method

NP Method with Base Year 2013

Sepoy

13,800

17,129

17,250

Naik

15,750

18,427

18,750

Havildar

21,200

25,168

28,400

Nb Sub

24,400

27,607

27,850

Subedar

27,850

32,613

32,800

Sub Maj

31,900

33,526

33,700

Part II: Pre – 2013 Officers

27.    Sample Data.  Without much explanation, the three tables of pension w.e.f Jan 2016 for Pre – 2013 Officers for 33 years or more service are shown. I have taken basic data to work on Notional Pay (NP) method as under: -

Basic Data

Ser
No

Rank

Quali-fying Service

Basic Pay at the Time of Retirement

Date of Retirement

1

Lt

33 years or More

8,550

5th CPC

2

Capt

33 years or More

3,200

4th CPC

3

Major

33 years or More

4,800

4th CPC

4

Lt Col

33 years or More

4,950

4th CPC

5

Col (TS)

33 years or More

54,750

6th CPC

6

Col (SG)

33 years or More

5100 + 150

4th CPC

7

Brigadier

33 years or More

18050 + 450 

5th CPC

8

Maj Gen

33 years or More

22,400

5th CPC

9

Lt Gen (HAG)

33 years or More

77,080

6th CPC

10

Lt Gen (HAG+)

33 years or More

79,220

6th CPC

28.    Officers with other data can work out themselves the way I explained as to how to arrive at Notional Method of pension, 2.57 method (which all of you are quite well aware of) and NP method if base year is taken as 2013. I will explain all the three methods for pension w.e.f. Jan 2016 for Lt Col. Other officers can follow the same procedure.

Notional Pay Method of Pension w.e.f. Jan 2016

29.    Step1: 4th CPC. Go Concordance table at page no 191. The Officer retired in 4th CPC with basic pay of Rs 5100 in the integrated pay scale of Rs 2300 – 100 – 3900 – 150 – 5100. This can be seen at Row-9, Col – 1.

30.    Step 2: 5th CPC. Corresponding to Rs 5100 of 4th CPC, the Notional Basic Pay (NBP) in 5th CPC is Rs 15,500 in Row – 9, Col – 2.

31.    Step 3: 6th CPC. Corresponding to NBP of Rs 15,500 of 5th CPC, the NBP in 6th CPC is Rs 48,890 in the cell of Row – 9, Col 3.

32.    Step 4: Notional Pay in 7th CPC. Corresponding to NBP of Rs 48,890 of 6th CPC, the NBP of 7th CPC is Rs 1,28,500 in cell of Row – 9, Col 6. Concordance tables give you only Notional pay in Jan 2016. You have to work out your pension w.e.f. Jan 2016 from here onwards.

33.    Step 5: Notional Last Drawn Emoluments. Add MSP of Rs 15,500 to Notional Last Drawn Emoluments of Rs 1,28,500. The pension w.e.f Jan 2016 comes to Rs 0.50 x (128500 + 15500) =Rs 72,000

2.57 Method of Pension Fixation w.e.f Jan 2016

34.    The pension in OROP is Rs 34,765 given in Table 1 of Circular 555 of PCDA (Pensions) Allahabad.

30.    Pension w.e.f. Jan 2016 is = 34765 x 2.57 = Rs 89,346.

NP Method with Base Year as 2013

35.    Since all Pre – 2013 Officers have been sanctioned OROP, the base year for fixation of pension by NP method should be 2013. The OROP gives pension and this needs to be converted into basic pay in 2013. Once you do it then procedure for arriving at NP in Jan 2016 is same as shown in paras 24 to 28.

36.    Basic Pay in 2013. It is (2 x OROP) – MSP of Rs 6000 = (2 x 34765)-6000 = Rs 63,530.

37.    Notional Basic pay in Jan 2013. 63530 x 2.57 = Rs 1,63,272. This should not be less than what is given in Defence Pay Matrix with IOR of 2.67. This is Rs 1,67,700

38.    Pension by NP Method with Base Year as 2013. It is 0.50 x (167700 + MSP of Rs 15500) = Rs 91,600

35.    Summary for Lt Col Retired in 4th CPC.

NP Method with Date of Retirement

2.57 Method

NP Method with Base Year as 2013

Rs 72,000

Rs 89,346

Rs 91,600

The summary of pension by the three methods

Rank

OROP

Pension by 2.57 Method

Pension By NP Method with Date of Retirement

Pension by NP Method with Base Year 2013

Lt

16160

41,531

35,800

42,250

Capt

17010

43,716

42,250

44,350

Major

23815

61,205

54,350

61,850

Lt Col

34765

89,346

72,000

91,600

Col (TS)

36130

92,854

79,100

92,950

Col (SG)

36130

92,854

75,000

92,950

Brigadier

37570

96,555

77,000

98,850

Maj Gen

38763

99,621

96,450

1,01,850

Lt Gen (HAG)

39500

1,01,515

1,07,300

1,01,600

Lt Gen (HAG+)

40000

1,02,800

1,10,450

1,10,450

Conclusion

39.    Many JCOs / OR find it difficult to know the pension by Notional Pay method by going through various tables in the Concordance tables. One needs little more patience to understand how these tables have been constructed and how to use them. One has to go to the correct table for the rank, date of retirement, basic pay and class in case of those who retired in 3rd and 4th CPC (up to the rank of Havildar only as JCOs are not authorized Classification pay).

40.    Concordance tables are not made for those retirees of Army and IAF in 3rd CPC. But their basic pay can be taken as in 4th CPC.

24.    Concordance tables for JCOs / OR for Army and IAF are comparatively simple. But for JCOs / OR of Navy, the tables are very complex and too many tables have been made. These tables run from page 42 to 156. Unless you tell me to refer to which table and page no, I will not be able to work out Notional pay method of Naval JCOs / OR.

41.    The Notional Pay method is not beneficial to Pre – 2013 pensioner of any rank.

42.    There could be some arithmetical mistakes in this article. If you do find them, let me know so that I can correct them. This is my understanding of Notional Pay Fixation which is same as given in Min of Def letter dated 05 Sep 2017.

Warm Regards,

Brig CS Vidyasagar (Rtd)