Saturday 29 August 2015

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






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 1st 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 31st July of the same year because D gets the benefit of 3% increment on 1st July.
3.2.   Bunching effect of 4 years in 4th CPC, 3 years in 5th CPC and 2 years in 6th CPC
3.3.   Implementation of AVSC Phase I w.e.f 16th December 2004. It has resulted in officers being promoted to say Select rank of Lt Col in the 18th year but those after 16th December 2004 being promoted in the 14th 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 1st January 2016, when the recommendations of the 7th CPC kick in. Thereafter all annual reviews would be effective from 1st January of that year.

7.      It is understood that the 7th 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, 7th 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 7th 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 6th CPC, I reproduce gist of the Govt Resolution 1/I/S/2008 which approved the recommendations of the 6th 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 6th 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 28th 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 7th 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:

  1. 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.

    ReplyDelete
  2. 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?.

    ReplyDelete
  3. 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.

    ReplyDelete
    Replies
    1. That is again a valid point. But won't date of applicability be 01 April 2014, not 01 June 2014, as already decided?

      Also, to test a real case with those tables, can it be found what would be the pension after OROP for April 2014 of a Lt Col who retired with 29 years of service in 2003? How can it be found what the highest pension of a Lt Col retiree (post Jan 2006 retiree) with 29 years of service will be for April 2014? There would be no Lt Col with more than 26 years of service. He'd have been promoted to time bound rank of Col on completing 26 years of service. Also what would be the pension of a time bound Colonel retiree (post Dec 2004 retiree) with same years (29) of service?

      Delete
  4. 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 .

    ReplyDelete
  5. 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.

    ReplyDelete
  6. 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.

    ReplyDelete
  7. 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

    ReplyDelete