Friday, September 4, 2009

Military Pension Parity: A logical and sound solution

Friday, 4 September, 2009 11:54:24 AM
Dear Brigadier Kamboj,
I am giving below a note about OROP that we discussed yesterday.
VK Singh
(Maj Gen VK Singh)

Before 1970, armed forces personnel were granted pension based only on the rank held by them when they retired. A soldier became eligible for pension after having served for the minimum period laid down. Extra service did not earn him more pension. This really meant One Rank One Pension (OROP).

The Third Pay Commission, set up in April 1970, equated military pension with the civil pension. Eligibility for pension was related to the civil service requirement of 33 years service. The Commission ignored the fact that soldiers rarely serve for 33 years, since the age of retirement is not uniform, but related to rank. The earlier inbuilt monetary compensation for a truncated career was dispensed with and in lieu a weightage in years of service was introduced. These measures effectively neutralised the prevailing edge that military pension had until then.

In 1985, Shri KP Singh Deo, the then RRM, suggested that OROP should mean ‘same rank same total length of service same pension’. (This needs to be verified). The guiding principle or logic was “No two soldiers holding the same rank and same total length of service to their credit shall draw different pensions.” Since then, OROP has come to mean just this, with a length of service forming part of the eligibility criteria, unlike the pre 1970 definition when only rank was considered.

Successive pay commissions have continued with this trend, revising pay and pensions of military personnel from a certain date. This has effectively made classes within each rank, nullifying the principle given above ie soldiers holding the same rank and same length of service should get the same pension. This also contrary to the judgment of the Constitution Bench of the Supreme Court of 17 December 1982 that stated: “by introducing an arbitrary eligibility, being in service and retiring subsequent to the specified date, or being eligible for the regularised pension scheme and thereby dividing a homogeneous class, these classifications being not based on any discernible rational principle ... are unconstitutional and are struck down."

The Problem
The constraints at present stems from the recommendations of the 6th Pay Commission, which has decided to fix the pension based on pay bands, instead of rank. The concept of clubbing several ranks in one pay band is illogical, especially in the military, which has distinct ranks. These pay bands are applicable from a particular date, leading to a differential in the pensions of persons of the same rank retiring before 1997, between 1997 and 2006, and after 2006.

The Solutions
The ideal solution would be to revert to the pre 1970 concept of one rank one pension, without taking into account the length of service. This solution is simple, logical and would be permanent. This provision can be incorporated in Defence Service Regulations and approved by Parliament. It would not be subject to debate and protests after every pay commission.

Another solution would be to fix the pensions in line with the latest Supreme Court judgment of September 2008 in the Major Generals’ case, which directed that “the pay of all pensioners ----- be notionally fixed at the rate given to similar officers of the same rank after the revision of pay scales ------, and, thereafter, to compute their pensionary benefits on such basis”. This solution appears to be logical, but would result in the pay of every retiree being fixed, notionally, into the new pay scale/ band, requiring issue of fresh individual PPOs – a herculean task. This exercise would have to be repeated every ten years or so, when a new pay commission is constituted.

There is a view that the truncated service of a soldier should not viewed as a loss which has to be compensated. A soldier who retires at the age of 45 with full pension is able to start a new career, where he earns a salary. In addition, he gets his pension. Civil servants who retire at the age of 60 are too old to start a new career, and have to make do with the pension only. There is merit in the argument. An out of the box solution would be to ensure that all government servants, including soldiers, retire at the age of 60. It is possible, as explained below.

Due to the peculiar demands of military service, soldiers cannot serve beyond a certain age in the Armed Forces. Then how does he serve up to the age of 60? By side stepping to a non military government job. This need not be only in the para military forces, but in any government department, such as forests, irrigation, education, agriculture, horticulture, electricity boards, telecom, PSUs and so on. The second career will be treated as a continuation of his service in the military, and he will start getting his pension only after his superannuation at the age of 60.

Consider the advantages. Every soldier will be assured of a government job till the age of 60. This will do wonders to his morale.. The induction of trained and disciplined personnel will gradually improve the motivation and discipline of the government work force, which is at present lacking these attributes. The State will save a lot of money. Today, a soldier gets a salary for 20 years and then draws a pension for 40 years, assuming he lives up to the age of 80. If he was to be side stepped to a government job, he would serve for 40 years and draw a pension for only 20 years. The pension bill for the Armed Forces would be reduced by almost half! The major objection to grant of OROP is that it will cost a lot of money.

Once we suggest a solution that saves money, how can anyone object? At least the Finance Minister should jump at it.
Maj Gen VK Singh (Retd)

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