Aerial View : The Red Herring of 3% annual increment in Pension

It is reliably learnt that a certain meeting taken by the Defence Minister where representatives of Service HQ as well as members of the governing/executive committee of ESM organisations were present, the following was made clear and obvious and approved by the Defence Minister: -

1. There isn’t an annual increment of pension because increment is for every additional year of service rendered to the Nation either as Services personnel or as civilian Govt employee.

Elucidation A: - Increments are paid for every subsequent year in service i.e pay of a serving personnel A with 25 years service will be 3% lesser than the pay of a serving personnel B with 26 years of service.

Elucidation B: - Pension is paid on the basis of the last pay drawn for the number of years of service rendered. In the above example, A will get a pension for 25 years of service and B will get a pension for 26 years of service. An increment will mean that A will get the pension of B, who has rendered 26 years of service and pension of B will have to be incremented and become pension for 27 years of service.

[Please see tables below]

The Origin of the 3% (Annual) Increment demand in Pensions

2. However from a summary of the minutes of the first meeting (of the Joint Working Group on OROP) it is well worth noting that it appears that the seeds of the mischief of an increment were sown in the incorrect recording of minutes of this meeting compiled by O/o CGDA in the following manner: -

2.1. At Para 4 (c) of the minutes, O/o CGDA recorded the minutes as follows: -

As future enhancements have to be automatically passed on to the pensioners, Services proposal for incremental increase in pension on 1^st July every year shall be considered.

2.2. The mischief was corrected by Rear Admiral P Joshi, Chairman PARC & Naval Pay Commission Cell when he deleted the above and inserted and initialled in the margin in his own handwriting before he signed the minutes of the JWG: -

As future enhancements have to be automatically passed on to the pensioners, Service proposal for annual revision of OROP tables should be considered.

Therefore, there is no basis as reported in the media for projecting a 3% increment attributed to leader(s) of a particular ESM organisation.

3. There would, however, be an annual review in OROP tables. This is to remove one or more of the following anomalies: -

3.1. If C retires in a certain rank with 20 years service on 30 June of that year will draw less than D who retires with 20 years of service on 31^st July of the same year because D gets the benefit of 3% increment on 1^st July.

3.2. Bunching effect of 4 years in 4^th CPC, 3 years in 5^th CPC and 2 years in 6^th CPC

3.3. Implementation of AVSC Phase I w.e.f 16^th December 2004. It has resulted in officers being promoted to say Select rank of Lt Col in the 18^th year but those after 16^th December 2004 being promoted in the 14^th year.

4. Perusal of the modified/enhanced parity tables [Circulars 500 and 501 on PCDA (P) website] indicate a pension of Rs 7065 for a Sepoy in the 20 to 27 years service bracket and increased to Rs 7175 if the Sepoy served 27.5 years or more. Similar cap will occur for all personnel within a time frame of 5 years. Therefore, alarm bells rung by vitiated persons are based on lack of information or mala-fide misunderstanding of the issue of OROP

5. It has been calculated and revalidated with data that for the period of 5 years the financial effect is estimated to be 0.85% or Rs 185 crore.

6. The first annual review was scheduled to take place on 1st Jul 2015 if OROP was implemented in Apr 2015 and the next annual review was to take place on 1^st January 2016, when the recommendations of the 7^th CPC kick in. Thereafter all annual reviews would be effective from 1^st January of that year.

7. It is understood that the 7^th CPC is very clear about the differences between Civilian pension and Military pension. Due to the Civilian Govt employees serving till the age of 60 years, 7^th CPC has termed civilian pensions as mature pension. Because Services personnel retire at younger ages, Military pension has been termed “aborted” pension, deserving a different method of being dealt with by 7^th CPC.

8. It is also understood that the ESM present at the meeting (Lt Gen Balbir Singh, Maj Gen Satbir Singh, Brig Katara, Gp Capt Gandhi etc) had vouched for the DGL prepared for OROP by Services HQ and their arguments in favour of matters cited in above paragraphs.

9. To clear the mis-statement of a very senior Lt Gen that there are two increments in the 6^th CPC, I reproduce gist of the Govt Resolution 1/I/S/2008 which approved the recommendations of the 6^th CPC with certain modifications: -

9.1. Para 1, Note 1: The edge presently accorded to Indian Administrative Service and Indian Foreign Service at three grades STS, JAG and SG will continue in the form of two additional increments @ 3% each which will be adjusted in the pay band (emphasis supplied).

Interpretation: The 3% increments are for IAS & Indian Foreign Service for the 3 grades and it will be absorbed in the Pay Bands of the 6^th CPC. There isn’t anything for Armed Forces like the Lt Gen (retd) believes.

9.2. Annex I (VII) – Annual increment states 3% across the board except for high performers who will get 4% increments in certain grades.

9.3. SAI (and SNI/SAFI) No. 1 and 2/S/2008 also do not (Repeat) do not contain any mention of two increments of 3%.

10. Therefore, the 3% annual increase quoted is nothing but a red herring. Is that why we have ESM on fast unto death believing that 3% increment has to be part of OROP?

Now some data

11. Up to the rank of Major (and equivalents) who are in service will have lower pay in Apr 2014 than say Apr 2007 effect of AVSC which was effective from 16 Dec 2004 .

12. Similarly, in higher ranks there is no guarantee that a Col with 28 years service in Apr 2014 will draw a lower pay and pension than a Col in the 28^th year completed in Apr 2015 or Apr 2016, simply due to the fact of higher fixation to 2014 retiree in January 2006. In fact most cells in the DGL tables (re-produced below) will not change every year.

Major/Lt Cdr/Sqn Ldr

In service in Apr 2007

Year	QS	Pay in Pay Band	GP	MSP	Increment in Jul	Total 3+4+5	Pension	Pension in 17 Jan 13 letter
1	2	3	4	5	-	6	7	8
01 Jan 06	7	23810	6600	6000	920	36410	18205
01 Jan 07	8	24730			940	37330	18665
01 Jan 08	9	25670			970	38270	19135
01 Jan 09	10	26640			1000	39240	19620	9930
01 Jan 10	11	27640			1030	40240	20120	10482
01 Jan 11	12	28670			1060	41270	20635	11034
01 Jan 12	13	29370			1090	42330	21165	11585
01 Jan 13	14	30820			1130	43420	21710	12317
01 Jan 14	15	31950			1160	44550	22275	12689
01 Jan 15	16	33110			1200	45710	22855	13240

In service Apr 2014

Year	QS	Pay in Pay Band	GP	MSP	Increment in Jul	Total 3+4+5	Pension	Pension in 17 Jan 13 letter
1	2	3	4	5	-	6	7	8
01 Jan 06	7	21630	6600	6000	850	34230	17115
01 Jan 07	8	22480			880	35080	17540
01 Jan 08	9	23360			900	35960	17980
01 Jan 09	10	24260			930	36860	18430	9930
01 Jan 10	11	25190			960	37790	18895	10482
01 Jan 11	12	26150			990	38750	19375	11034
01 Jan 12	13	27140			1020	39740	19870	11585
01 Jan 13	14	28160			1050	40760	20380	12317
01 Jan 14	15	29210			1080	41810	20905	12689
01 Jan 15	16	30290			1110	42890	21445	13240

Lt Col/Cdr/Wg Cdr

Year	QS	Pay in Pay Band	GP	MSP	Increment in Jul	Total 3+4+5	Pension	Pension in 17 Jan 13 letter
1	2	3	4	5	-	6	7	8
01 Jan 09	14	37400	8000	6000	1370	51400	25700	16716
01 Jan 10	15	38770			1410	52770	26385	17510
01 Jan 11	16	40180			1450	54180	27090	18306
01 Jan 12	17	41630			1490	55630	27815	19102
01 Jan 13	18	43120			1540	57120	28560	19898
01 Jan 14	19	44660			1580	58660	29330	20894
01 Jan 15	20	46240			1630	60240	30120	21490
01 Jan 16	21	47870			1680	61870	30395	22286
01 Jan 17	22	49550			1730	63550	31775	23082
01 Jan 18	23	51280			1780	65280	32640	23878
Year	QS	Pay in Pay Band	GP	MSP	Increment in Jul	Total 3+4+5	Pension	Pension in 17 Jan 13 letter
1	2	3	4	6	-	6	7	8
01 Jan 11	14	37400	8000	6000	1370	51400	25700	16716
01 Jan 12	15	38770			1410	52770	26385	17510
01 Jan 13	16	40180			1450	54180	27090	18306
01 Jan 14	17	41630			1490	55630	27815	19102
01 Jan 15	18	43120			1540	57120	28560	19898
01 Jan 16	19	44660			1580	58660	29330	20894
01 Jan 17	20	46240			1630	60240	30120	21490
01 Jan 18	21	47870			1680	61870	30395	22286
01 Jan 19	22	49550			1730	63550	31775	23082
01 Jan 20	23	51280			1780	65280	32640	23878

Colonel/Captain/Group Captain

Year	QS	Pay in Pay Band	GP	MSP	Increment in Jul	Total 3+4+5	Pension	Pension in 17 Jan 13 letter
1	2	3	4	5	-	6	7	8
01 Jan 09	18	43120	8700	6000	1560	57820	28910	21057
01 Jan 10	19	44680			1610	59380	29690	21900
01 Jan 11	20	46290			1650	60990	30495	22742
01 Jan 12	21	47940			1700	62640	31320	23584
01 Jan 13	22	49640			1750	64340	32170	24426
01 Jan 14	23	51390			1810	66090	33045	25269
01 Jan 15	24	53200			1860	67900	33950	26111
01 Jan 16	25	55060			1920	69760	34880	26953
01 Jan 17	26	56980			1970	71680	35840	27795
01 Jan 18	27	58950			2030	73650	36825	27795

Year	QS	Pay in Pay Band	GP	MSP	Increment in Jul	Total 3+4+5	Pension	Pension in 17 Jan 13 letter
1	2	3	4	5	-	6	7	8
01 Jan 11	18	43120	8700	6000	1560	57820	28910	21057
01 Jan 12	19	44680			1610	59380	29690	21900
01 Jan 13	20	46290			1650	60990	30495	22742
01 Jan 14	21	47940			1700	62640	31320	23584
01 Jan 15	22	49640			1750	64340	32170	24426
01 Jan 16	23	51390			1810	66090	33045	25269
01 Jan 17	24	53200			1860	67900	33950	26111
01 Jan 18	25	55060			1920	69760	34880	26953
01 Jan 19	26	56980			1970	71680	35840	27795
01 Jan 20	27	58950			2030	73650	36825	27795

13. Conclusion: The above tables clearly show that in steady state, pension will not be revised every year.

Majors/Lt Colonels/Colonels promoted earlier will draw the same pay and pension as the one promoted after him.

Once pension is reset on 1.4.2014 thereafter no change will take place except on the implementation of the recommendations of the 7^th CPC.

For ORs and JCOs (retd) readers – tables are being prepared and will be posted ASAP. Please understand that there are factors such as Group X, Y and the erstwhile Z as well as maximum benefit etc and many JCOs having reached the top of the table on 17 Jan 2013.

14. I hope this clears the air and reduces the fog of mistrust and, consequent but inadvertent misinformation & misunderstanding of the red herring of 3% (annual) increment in pensions.

8 comments:

Justin N Christian29 August 2015 at 09:41
sir , the words used in the write up " Therefore, the 3% annual increase quoted by esteemed head of the ESM is nothing but a red herring. It also displays a callous disregard for lives because we have ESM on fast unto death believing that 3% increment has to be part of OROP." very strong presentation of situation and in right spirit.
Jayasurya29 August 2015 at 09:48
Sir, you are bang on. Infact, this confusion is being used by the vested interests to portray the veterans as greedy and begging for 'yearly' increment' in pension, which is not factual statement. Your observation that “Once pension is reset on 1.4.2014 thereafter no change will take place except on the implementation of the recommendations of the 7th CPC” aptly sums up this fact. The news items in Times of India in the last consecutive days (including ‘Times View’) conjectures that the veteran’s lust for money could cost the govt ADDITIONAL ten thousand crores every year', which is a absurd statement showing poor standards of journalism. The ESM organisations are to be impressed upon to clear the confusion about the 3% increment & stuff and counter the misinformation campaign unleashed by the vested interests. Otherwise, one sided news items like the ones appeared in TOI will belittle the genuine struggle of ours and dispel the public sympathy, which has been with us for long time. Is it possible to impress upon the ESM organisations to issue public statement on the issue, sir?.
bala29 August 2015 at 17:10
If the pts of base yr as 2014 and date of applicability from,1 .4 .2014 or 1 .6. 2014 ; the controversial pt of 3% can be given up ,since things would be revised on 1.1.2016. This effect is marginal and only small percentage is effected .Time is important ,since delayed for 17 months.

Thus,present situation is salvaged.Remaining , can be pursued after 7 CPC.
Implications and the technicalities of annual increments should have been delibered in these 17 months! Govt should have woken up early instead of sleeping for 17 months.
Unknown29 August 2015 at 18:59
Sir,
First I would like to say thanks. Great job. As per my opnion if it will be possible to published in print media as well discussion in electronic media to reach the exact information to our veterans as well as people's of india then it will be much benificial .
sl29 August 2015 at 22:06
Sir, apropos the view "Majors/Lt Colonels/Colonels promoted earlier will draw the same pay and pension as the one promoted after him", there is a handy device of a review in July of each year, after the cut off date for OROP, for confirming the highest pension in year of review (i.e. July 2014 to June 2015 and July 2015 to June 2016 and so on) for all ranks for different number of years of service as I have tried to outline in this comment. These checks would be performed against rock solid actual payments data and not against tables of pay or theoretical rates of enhancement over ten year periods.

If at all it is found the highest pension paid for a certain rank for a certain no. of years of service is different from the "steady state" pension, then upward adjustments could be made, otherwise not.

Such checks and reviews should not be difficult for highly computerized, audit oriented organisations under MOD.

In any case this vague 3% deadlock needs to be resolved at the earliest. It'd be grossly unfair for agitating ESMs to be made to continue to labor under wrong assumptions.
corona831 August 2015 at 11:00
Sir those tables are useful but they may not reflect the highest salary actually paid to any rank with certain amount of service as these appear to be based on scales and there is no way of being certain that these were the actual payments.

Also, the Major table does not go upto pensionable service of 20 years. Similarly, the Lt Col table does not have data beyond 23 years of service and the Col table beyond 27 years. There will certainly be veterans in those ranks with more service than what is given in the tables. Any decision on an important issue like OROP can be possible based on only complete data.
Unknown1 September 2015 at 11:16
Sir,
Your writeup and conclusion is absolutley correct. Now Mr. Jaitely is projecting as if we are all asking for yearly( sarcastically he says maybe monthly) review which s totally wrong and misleading.Once the pension has been fixed as mentioned by you, till such time as there is an official review " this pension stall stand".
Anyways, what I feel is that without splitting hairs we should accept the formula as suggested by you and stick to it.
This should be projected to our parleying authorities so that a speedy conclusion can be arrived at.
Ramani

Aerial View

Saturday, 29 August 2015

The Red Herring of 3% annual increment in Pension - Update

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