Eminent Supreme Court lawyer Ram Jethmalani on Monday joined defence veterans protesting over delay in One Rank One Pension at Jantar Mantar in New Delhi. Ex-servicemen have been protesting for 78 days with 10 being on fast-unto-death and many on relay hunger strike.

The Former Bharatiya Janata Party leader has been at loggerheads with the Modi government for some time. He had been critical about the government's efforts in tackling black money.

Jethmalani was very critical of Finance Minister Arun Jaitley. "Finance Minister is your enemy and the enemy of the nation. They might go to court against me."

Jethmalani said, "I have come here to assure you all support and help you on your cause. I want to fight the evil forces that have entered into our political system. I've no other ambition left in life except to return love and affection. The politicians unfortunately have let down the entire nation."

One Rank One Pension scheme has been a long-standing demand of nearly 3 million ex-servicemen and war widows in the country. It seeks to ensure that a uniform pension is paid to defence personnel who retire at the same rank with the same length of service, irrespective of their date of retirement.

Till now, nine war veterans and a father of a martyr are on fast-unto-death. Colonel Pushpender Singh, Havaldar Major Singh, Havaldar Ashok Chauhan, Havaldar Sahib Singh, Major Piar Chand Rana, Naik Uday Singh, Commander AK Sharma, Vijay Singh Yadav, SWR Keshav Singh and Samwal Ram Yadav, father of martyr Sunil Kumar Yadav are on fast-unto-death.

source : http://www.ibnlive.com/

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Over the past two days, the Centre has offered to make at least two changes in its position on the proposed One Rank One Pension (OROP) scheme. It has showed willingness to change the base year of pension implementation and to allow pension equalisation every five years. The protesting ex-servicemen, however, have rejected both the offers.

The veterans were apprised of the offers by Army Chief General Dalbir Singh and Principal Secretary to PM Nripendra Mishra during meetings on Tuesday and Wednesday. However, they refused to budge from four demands—no dilution in the definition of OROP approved by Parliament, retrospective date of implementation from April 1, 2014, base year of 2013-14 for calculating pension and a raise every year to match the annual increments.

“We are demanding that 2013-14 be considered the base year for calculating pension. The government has asked us if 2012 could be considered the base year. Earlier, they said 2011 would be considered… Secondly, we are demanding that pension be equalised every year… The government had earlier proposed that the equalisation be done every 10 years as per Pay Commission recommendations…On Tuesday, they proposed the revision could be done every five years,” Group Captain V K Gandhi, general secretary of Indian Ex-Servicemen Movement said

Source : Indian Express

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R Jagannathan  Aug 24, 2015|  If there is a worse way to handle a sensitive issue like OROP - one-rank-one-pension for the defence forces - I am yet to hear about it. The BJP has messed up big time on an issue that is not only very close to its own heart, but one that is long overdue.

Morally, politically and economically, Narendra Modi is making a serious mistake by unconscionably delaying OROP. Most arguments used against OROP are misleading, if not plain wrong.

First, when the previous government had already made a commitment on OROP and the then prime ministerial candidate had promised a full commitment to it in his election campaign, there was no way the decision could have been avoided. The only question that needed to be decided was when the scheme would be implemented and how OROP entitlements will be calculated. Two months was the maximum required after May 2014 for OROP to come into force.

Second, OROP affects the BJP's strongest constituency - the armed forces. As a nationalistic party, the BJP has drawn a disproportionate share of activists and politicians from the ex-servicemen's constituency - and this constituency is huge. The defence forces have 1.3 million serving personnel, another 1.2 million reservists, and many millions of ex-servicemen. And we are not even talking of other paramilitary forces like the NSG, the Assam Rifles, the Special Frontier Force and armed central policing forces like the CRPF, which has over 230 battalions of its own. Add them all and the numbers will surely double at least to around six million.

If we assume an average household size of five people per serving or retired defence jawan or officer, we are talking of close to 25-30 million people who will gain from OROP now or in the future. Can the BJP mess around with the futures of such a large constituency?

Third, there is the economic argument. The finance ministry under Arun Jaitley would surely have argued that the fiscal deficit will go for a toss if OROP is implemented this year. But the cost of OROP is reckoned at anything between Rs 8,000-12,000 crore, depending on who you include and how you calculate the rate of pension. This amount would be less than one-tenth the food subsidy, where in fact 40 percent goes to the wrong people. It needs the government to only reduce food subsidy wastage by 10 percent to pay for OROP.

Even assuming the real payout will be twice as large, assuming we include all military and paramilitary personnel, including CRPF, we are talking Rs 25,000 crore. A big amount, no doubt, but not unaffordable to a government committed to cleaning up the wasteful subsidy system. Half the savings have already accrued from cleaning up the LPG subsidy system with the direct cash payments scheme.

An honest approach to the problem of fiscal deficit would have been a simple statement from the government that OROP will be implemented in two stages, with 50 percent of the target -ex-servicemen (the lowest-paid) being eligible from this year, and the other from next year. Alternatively, we could have covered all people upto 75 percent of OROP entitlements this year and 100 percent next year.

To have ex-servicemen on hunger-strike and a minister and former army chief's daughter backing their cause is a public relations disaster for the Prime Minister.

In any case, if the real issue is only the impact on central finances, there is also the counter-argument: when consumption demand in the economy is weak and business is not investing, a higher payment to ex-servicemen may be just the pep consumption demand needs.

It is an established fact that whenever public sector pay rises after the implementation of pay commission recommendations (the next pay commission's recommendations will have to be implemented from next year), consumer demand picks up and growth revives. In an economy that wants to raise its growth momentum and jobs, what can be better than an additional Rs 10,000-20,000 crore in the hands of consumers, thanks to OROP? And remember, higher demand leads to higher tax revenues from increased economic activity and hence lowers the fiscal deficit after a lag.

The economic argument against accepting OROP is thus weak. On the contrary, by sanctioning OROP our defence personnel will not only be defending our border better but also our economy.

The Prime Minister is probably getting bad advice from his finance ministry on OROP. He should over-rule them and announce OROP before Rahul Gandhi turns up at an ex-serviceman's home and offers fake sympathies.

Read at First Post Business

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Minister of state for external affairs and former army chief General (Retired) VK Singh's daughter joined the ongoing ex-servicemen's protest for implementation of the one rank one pension at Janta Mantar in New Delhi on Sunday. 

One Rank, One Pension (OROP), or same pension, for same rank and for the same length of service, irrespective of the date of retirement was the basis for determining the pension and benefits of Indian Armed Forces till 1973. 

In 1973, the Congress Government headed by then prime minister Indira Gandhi, following the Third Central Pay Commission's recommendations,, in an "ex-parte" decision terminated OROP.

The termination of OROP has caused a lot disquiet in the armed forces and been a cause of public protests by armed forces veterans. 

The Koshyari Committee examined the issue of grant of OROP and submitted its report on December 19, 2011 and unanimously found merit in OROP and strongly recommended its implementation, 

"Government should implement OROP in the defence forces across the board at the earliest and further that for future, the pay, allowances, pension, family pension, etc in respect of the defence personnel should be determined by a separate commission so that their peculiar terms" are properly taken into account," it said. 

The Koshyari Committee had then blamed bureaucratic resistance and apathy for the failure to implement OROP. 

In the run up to the general election of 2014, OROP became a political issue. 

It was an integral part of the election manifesto of many political parties, including the Congress and the BJP. Leaders of both made repeated commitments to implement OROP if elected. 

On June 15 this year, angered by the government's delay, the ex-servicemen organizations launched nation-wide protests, including hunger strikes this month. 

On August 14, 2015, on the eve of India's 69th Independence Day, Delhi Police physically evicted the ex-servicemen, wives of servicemen, many in their eighties, from the Jantar Mantar protest site. 

The eviction was apparently done without proper supervision and resulted in the government being accused of high handedness by the public.

Source : TOI

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For the past several weeks, retired defence personnel have been protesting to get their long-standing demand for one rank, one pension implemented. Many expected Prime Minister Narendra Modi to announce it during his Independence Day address, but he stopped short of doing so. Former defence secretary Yogendra Narain speaks to Veenu Sandhu about the complications in implementing the system and the possible solution

What is the background of the dispute over one rank, one pension? And how justified is this demand?

The armed forces are very rank conscious, so their demand for one rank, one pension is quite justified given the environment they exist in during their service career. They want to keep that rank consciousness and I would fully endorse that demand. Before 1973, for the armed forces the pension was 70 per cent of the last pay drawn. And civilians got 30 per cent as pension of the last pay drawn. Then the new (third) pay commission thought it fit to bring them at par - that is, make it 50 per cent for both the civilians and the defence forces. That was the change that took place in 1973.

What is keeping political parties from implementing this system?

The opposition is not political as much as practical because two things happened over the passage of time as the defence forces repeated their demand. Paramilitary forces, like the Border Security Force, which is doing very similar duties on the border with Pakistan and Bangladesh, Indo-Tibetan Border Police and the Central Reserve Police Force, also raised this demand. The one rank, one pension demand spread to all other forces. In fact, recently the paramilitary forces made a combined representation asking to be treated on parity with the defence forces.

Two, this demand for one rank, one pension has gone through various stages. Today, there is no unanimity on what exactly the concept is. There is division about its understanding even among the defence forces. Some say that it should be one rank, one pension only for the soldiers, the jawans who enter the service at the age of 18 and retire at 35 because traditionally it is presumed that after that they are not fighting fit. Jawans get their pension as 50 per cent of the highest amount in the pay scale they are working in, whereas all others - civilians, paramilitary forces and officers of the defence forces - get 50 per cent of the initial starting of the revised pay scale or the pension they are already drawing, whichever is higher. And then, of course, they get their dearness allowance.

Then the third change came with the demand that the pension should be the same for retired personnel having the same rank and the same length of service, irrespective of the date of retirement. This can be done but it will take a long time to calculate this for all the retired personnel who are still alive.

Somebody suggested a formula that instead of years of service, let's take the average of the years of service. For example, if a brigadier retired anytime between one and seven years of service, let's take the average of, say, three-and-a-half years.

That is what has been confusing the government. The political masters have taken the decision that one rank, one pension has to be implemented, but the difficulty is in deciding what the concept of this system is.

But isn't it true that an officer who retires today gets higher pension than the officer of the same rank who has retired some years earlier? 

Yes, there is this perception in the forces. A new pay commission comes in every 10 years. And then every officer of a particular rank gets 50 per cent of the starting of the revised pay scale. A serving officer of the same rank also keeps getting increments on his salary every year. So when he retires, he gets as pension 50 per cent of his last pay drawn. Those who are serving will always get higher because of the increments they have earned in the new pay scale. So in that sense, there is that gap. This gap gets levelled out only when the next pay commission sits.

Is the financial implication of implementing one rank, one pension also a concern?

There is no financial problem. The government can easily afford this. There is no such feeling that we can't pay Rs 8,400 crore or whatever amount it will take to implement this. That is not an issue at all. Finances are not an issue. This is a practical problem.

So what is the solution?

The actual demand, understanding, perception and conception of one rank, one pension should be clarified first. The simplest way would be to increase the pension from 50 per cent to 60 per cent and add uniformity to it. This mean, they would get 60 per cent of the starting of the revised pay scale. And that's all. So, they will get more than the civilians. It would also mean some restoration of what they were getting prior to 1973. That will be more practical and easy to implement. And let this also be done for the paramilitary forces.

Source : Business Standard

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I've been meaning to blog about the Armed Forces as a part of my series on government HR policies (IPS, IAS) and now is as good a time as any, especially in the context of One-Rank-One-Pension (OROP).

How does pension work for central government retirees?
Currently, all civilian retirees (recruited before 2004) and all military retirees earn a monthly pension for life that is based on their pay at the end of their service and years of service. This monthly amount has a fixed component called basic pension (typically 50% of last drawn basic pay) and an inflation-indexed component called Dearness Allowance (DA). Also, every 10 years, there is a government-wide pay increase (called the pay commission), during which salaries of all government servants are increased substantially. Retirees' basic pension is also increased during pay commission reviews, though not by the same percentage as salaries. 

E.g. Consider a Deputy Commissioner of Income Tax who retired in 2008 after 35 years of service with a basic pay of 35,000. Let's call him Ram. Ram's basic pension would be 17,500. In 2008, the central government's dearness allowance was 16% of basic pay, and so he would have earned a total pension of 1.16 x 17,500 = ~20,000 per month in 2008. By 2015, the Dearness Allowance (roughly an inflation index) has been gradually raised to 110%, and so he will now receive 2.1 x 17,500 = ~37,000. In addition, in 2018, if there is another pay commission, his basic pension will also be adjusted up significantly! In other words, he will on average, have at least ~5-7% year-on-year increase through DA plus a major increment every 10 years in his retired life.

What is OROP?
One-rank-one-pension is a concept in which 2 people retiring with the same length of service at the same rank will earn the same pension, even if they retired years apart. Currently, since basic pension isn't increased by the same percentage as salaries in a pay commission, past retirees do not earn the same as new retirees of the same rank and length of service.

E.g. Consider a DCIT who retired in 1998 with 35 years of service. Let's call him Shyam. Shyam would have last earned a monthly salary of ~ Rs. 14,000 in 1998. His basic pension would have been ~7,000 in 1998. By 2008, the pay commission would have increased his basic pension to ~15,500. In 2015, he would receive around ~32,500, as opposed to ~37,000 that is received by Ram. With OROP, both would receive around ~37,000.

Why don't we have OROP?
Pension is extremely expensive. In fact, the Central government's pension budget (~2% of GDP) is about the same as the central government's defence budget! In other words, it already costs the government just as much to pay its pensioners as it does to pay all currently serving soldiers and maintain all the weapons and bases that guard our borders!

The reason for this is simple - the pension bill keeps ballooning each year for various reasons:
1) Every year, the total number of pensioners increases as new people retire
2) Every year, all pensioners get a DA adjustment, and once in 10 years, they get a huge raise!
3) Widow(er)s of pensioners also get a partial pension post the death of the pensioner

The Indian pension plan is already exceptionally generous because of point #2. In comparison, most countries use a pension scheme that's based on a simple annuity (i.e. fixed amount), which would be terrible in a high-inflation economy like India. This article explains how there is a ~100% incremental cost between a simple annuity and an inflation-linked annuity!

E.g. In our example, with OROP, Shyam (1998 retiree) alone will cost the government an additional 50,000 per year or approximately ~15% more than he does now! Imagine this delta of ~15% across all retirees from before 2008 and it will be an additional cost in 10,000s of crores per year. The government simply cannot afford OROP for all employees, especially its civilians, who comprise of 75+% of pensioners.

Why is there merit in armed forces personnel wanting OROP?
Armed forces personnel want OROP for 2 interlinked reasons:
1) Forced early retirement for armed forces personnel leading to lower years of service
2) Lower pay at retirement than civilian counterparts, who are assured promotions

These are genuine issues. Almost 80% of armed forced personnel are separated before they are 40 with 13-20 years of service, and another 19% are separated by age 54, as opposed to 60 for civilian officers.

E.g. Let's consider Ram again. He probably joined as an Income Tax Officer in 1973 at the age of 25. At the same time, let's assume Vikram, another 25 year old, joined the Army as a 2nd Lt (which is a higher rank with higher pay than the ITO, but let's let it pass). Vikram would most likely have been separated with 20 years of service at the rank of Lt. Col. in 1993, while Ram was gainfully employed till 2008. Vikram's salary at the time of separation would be have been 2 pay commissions prior to Ram's, and his basic pay would have been somewhere around 5,000! Vikram's basic pension in 1993 would have been a mere 2,500, which would have been increased by the 2 subsequent pay commissions to ~14,500! Including current DA, Vikram would now be receiving ~30,000 against Ram's 37,000 and Shyam's 32,500. This is not the only place where Vikram has lost out, but more on that later. Thus, without OROP, Vikram ends up making far less than his civil service junior because he was discharged early.

Why are armed forces personnel discharged early?
Unlike civilian jobs, most military jobs require a high level of fitness, especially in the junior ranks. They also need a clear distinction between enlisted (non-officer) and officer ranks to maintain discipline. Thus, unlike in civilian roles, junior non-officer personnel cannot grow into gazetted/ commissioned roles over time. This requires separation of enlisted (i.e. non-officers) very early - many by the time they are 40.

Plus, almost every army follows a tried-and-tested structure (platoon-company-battalion-brigade-division) that cannot be broken. Around the world, each command position in this structure has a clear officer rank associated with it.

E.g. a battalion of ~1,000 troops needs only 1 Lt. Col. (Col. in India) and a Company of ~120 troops needs only 1 Capt. (Major in India). A 50 year old is probably not going to be fit enough to lead from the front a company, a small unit that needs to deploy rapidly, but can be useful in a more strategic role as a battalion commander. However, no army in the world can promote all their company commanders to battalion commanders as there are typically 5 - 7 companies per battalion! Similarly, not all battalion commanders can become brigade/ divisional commanders as there are 3 - 5 battalions per brigade! So, every army tries to separate officers at various levels well ahead of the nominal retirement age of 60.

E.g. In the US Army, 20% of officers commissioned into the military are released in 8 years, another 30% in 20 years. This is over and above their voluntary separations!

How else do armed forces personnel lose out against civilian counterparts when they get discharged early?
From a monetary standpoint, military officers who are discharged in their 40s and 50s lose out on at least 1/2 their earnings (Pay minus Pension) every month till they are 60. This is a huge sum, especially considering the time value of money! E.g. between 1993, when Vikram retired, and 2008, when Ram retired, Ram would have earned at least 20 Lacs more than Vikram in 2008 Rupees!

Of course, there is the argument that Vikram would have been able-bodied in 1993 and should have found a second job. However, it is not easy in India to switch careers - even for fresh graduates of top MBA programs. For a mid-career soldier, it is beyond difficult, as unlike any corporate or government employee, he has no connection to the private sector. Government jobs are also primarily focused on hiring entry-level candidates, beyond cursory quotas for ex-servicemen (which by the way, come with a significant pay-cut and demotion in rank.)

The enlisted ranks have it the worst. Unlike officers, who could still use their education and leadership experience to at least take on security/ administration roles in private companies, the enlisted have neither the education nor very transferable skills (if they have primarily had a combat role) to bank on.

So, OROP seems like the least we can do for armed forces retirees. Why not do it?
Short answer - OROP is not enough. It is unforgivable that people who have spent their youth defending this country will have to embrace the austere life of a retiree so early in life. It is unconscionable that the Government of India feels no sense of duty to ensure that they have a career post their military service. OROP is a band-aid on a broken arm. It may drive a placebo effect or at best provide extremely expensive temporary relief, but it does nothing to help the fundamental flaws in the system.

What should be done instead?

There needs to be an overhaul of recruitment, resettlement and retirement polices for the armed forces to ensure that every single soldier and officer has the ability to serve the government till he is 60, if he so wishes.

Recruitment: 

The current policy of recruiting career officers is not in sync with the fact that a majority of officer roles are at the company level, which an average officer will outgrow in (at max) 12 years. The default recruitment policy should be a Short-Service Commission with a commitment of 8 years of service. This would allow 3 years of training and 5 years of service at company leadership levels. Junior Commissioned Officers such as Subedars can fill any gaps at the platoon leadership level, as they do in the Central Armed Police Forces. Post these initial 8 years, the government should confirm employment till 60 years of age (not exactly in the military) for all officers whom it chooses to keep.

A 8 year Short Service Commission has several benefits - 1) it enables those who want a career in the Army to do so without (a) worrying about being stuck in it for life if they don't like it, and (b) being asked to leave 15 years down the line, when they have fewer options in life, and 2) it ensures that those with the potential to be battalion commanders are picked up and are given the right opportunities to move up. 

E.g. US Army/ Marine companies are led by Captains, a rank that is attained after 3.5 years of service. Many Captains choose to leave before they turn 30 to take up additional education and corporate jobs.

For enlisted ranks, a 10 year enlistment with similar rules enables that the best years of youth can be utilized, and barring those in whom there is a potential to move on to NCO/ JCO roles, the rest can move on to another career early in life.

Resettlement: 

Enlisted ranks should be given two options upon completing their 10 years - either a career (till 58/60) in the armed police (either Central Armed Police Forces or state Provincial Armed Constabulary) or an opportunity attend a college of their choice (provided they can get in), fully funded by the Defence Ministry. (The US GI bill does exactly the latter.) While many may choose to go to college, the former will also have more than enough takers from those who wish to serve the country. With hundreds of battalions, CISF, BSF and CRPF alone can absorb almost all enlisted discharged. In fact, these can be veteran-only forces, with Sr. NCOs/ JCOs also entering laterally from the armed forces into Inspector/ AC roles. 

Officers who do not pass the 8 year filter should be given an option to pursue a 2 year advanced degree/ MBA/ secondment in a PSU/willing corporates (with full pay) to learn and to develop lateral skills to set them up for life. 

In addition, since there is a natural filter between battalion commander and general officer roles, Lt. Col.'s should be cross-trained and cross-posted with CAPF personnel so that they can be permanently absorbed into the senior leadership cadres of CAPFs. Similarly, they can be absorbed into civilian roles in the Defense ministry and in allied departments at the Director-level. This will ensure that those Cols who do not make Brigadier or more can have a fulfilling career on par with their civilian (gazetted) peers. This way, every officer who crosses the 8 year threshold should be able to get to a Director level position, and every soldier who crosses the 10 year threshold should be able to get to a Group B position by the time they end their careers.

Retirement: 

Retirement benefits should kick in at the age of 60 for all veterans who passed the 8/10 year filter. Those who choose to stay in government service post their discharge should be able to earn a pension based on their last government salary, even if it were a civilian salary. This will ensure that all forces personnel get their well-deserved pension (on par with/ better than their civilian counterparts.)

How much will it cost?

I have not done the math, but this should lead to a cost reduction from the status quo for the central government! This is because every single Central Armed Police Force is spending money in recruiting, training and employing fresh civilians, while people who have those exact same skills are being paid to be retirees! The government can eliminate this waste with next to no effort. In addition, the government will also save by deferring gratuity and other lumpsum payments by 15-20 years for those who choose to remain in civilian service. A hidden benefit is that an actually short SSC will attract enough qualified young men to plug the officer shortage in the Indian military.

In summary, OROP is a burden on the exchequer and does nothing to address the fundamental issues with the HR policies of the Indian armed forces. India's veterans deserve more. 

Note: Corrected civilian pension figures basis retirement with Grade Pay of 7,600 (12000-350-16500 Pre-revised), which is more realistic for an ITO recruit with 35 years of service. Revised Lt. Col. pension based on 4th & 5th Pay Commission report.

Source : http://subfusced.blogspot.in/2015/08/indias-veterans-deserve-more-than-orop.html

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