SCPC: Military Pensions Screwed Beyond Comprehension

Dear Brig Kamboj,
In an idle reverie, I worked out the total terminal benefits received by two Cols who had put in identical lengths of service. Of them one retired in Dec 2005 and the other was luckier and served one month longer. The difference in their take home packages is a whopping nineteen lacs of rupees, tax free. Some friends tell me that this kind of anomalies have occurred during the previous pay commissions also. True. But the magnitude this time is far greater.
As far as I can see it, the hard feelings this time are unlikely to die out in a hurry. The legal eagles tell me that the government is pretty sure that they can hold their ground in the court of law. Indeed they may be able to make the case drag on for years on end, but I doubt that they can ever face the veterans face to face.
I do not see this 'movement' dying in a hurry!
The worksheet is given for those who care for figures.
Regards,
Maj Gen Surjit Singh (Retd)

Daylight Robbery which can haunt the Pre 2006 Retirees till doomsday
The typical military officer retiring these days is a Col or Col (TS). At the time of superannuating, he receives some terminal benefits, apart from his pension. I took the case of two such colonels one of whom retired in Dec 2005 and the other in January 2006, for the sake of comparison.

Benefits/ Jan 2006/ Dec 2005
Gratuity/ 10,00,000/ 3,50,000
Leave encashment/ 6,96,000/ 4,14,000
Commutation/ 18,91000/ 9,40,000
Total/ 35,87,000/ 17,04,000

The monthly pension is as under:
Full pension/ 31,200/ 26,050
Commuted portion/ 15,600/ 6,509
Residual pension +DA-CV(Jul 09)/ 24,024/ 26,574

With each passing year, Jan 2006 retiree will get a greater sum, because his DA will accrue on a larger ‘basic’ pension, and by 2012, his monthly pension will also be higher.

The Bottom Line
It is evident that the officer who retired just one month later gets about nineteen lac rupees more than his colleague who went home just one month earlier. The difference in their dates of birth could be just one day! (And this amount is tax free). Even at a conservative 10% rate of interest, this can yield a monthly income of Rs 16,000 per month, with the capital intact. The officer born just one day later therefore becomes that much richer.