7 CPC Pensions For Maj / Lt Col : Co-Relating Years Of Service Of Older Retirees With 7 CPC Matrix Increments

I had touched on some aspects of the 7 CPC matrix in the previous post. I have always tried to reason for establishing some equitable basis of pension parity for older retirees given the reduction in years of service required to attain the same time-bound ranks as compared to earlier times.

With the arrival of 7 CPC recommendations and the still far from clear outcome of the fixation process under OROP, it can't hurt to try an make sense out of the prevailing confusion.

For the purpose of this blog post, I have tried to focus on older retirees in the ranks of Maj and Lt Col as they are most affected amongst officer veterans by the reductions over the years in service required for getting promotions based on length of service, putting them at a severe dis-advantage to current retirees in their erstwhile cadres and streams.

I have tried to co-relate the years of service now required to attain ranks on time bound basis as against the increments specified in different levels of the 7 CPC matrix. It becomes apparent, the number of increments attained by currently serving Officers for the same years of service is much higher than older retirees. So, for the same length of service, an older retiree would have fewer increments in the same level.

If the pension of an older retiree is fixed on basis of increments given to him in the corresponding pay-band,when he was in service, his pension could be equal to that of a current retiree with much less service than him. This could run totally counter to what OROP is supposed to bring about.

Then there is the old aspect of pension parities required with current retirees, with equal servicewho get automatically migrated to higher Matrix levels, as compared to older retirees, due to faster time-based promotions (link to a previous blog-post introducing the need for pension parity points is placed at the bottom of this blog post). In this specific example, there is the issue of Majors who retired with more than 20 years of service and Maj/Lt Col who retired with more than 26 years of service. 

To put the whole matter in, and I must stress this, a hypothetical table, I have assumed that level 12 A 11 of the matrix applies to the rank of Major and the first increment would start at a service of 7 6 years; Lt Col would be governed by level 12A, his first increment stage in Matrix starting at a service of 13 years and level 13 for Col must be seen to have the first increment stage at 16 15 years.

With these assumptions we can attempt to build a first approximation of how pensions ought to or can get fixed as follows (Table can be enlarged or made to pop-out) (Edit: Table was amended based on feedback)

  

{Edit: Here is a link to a blog post that tries to explain the justification for pension parity points for older and current retirees based on equal service and reductions that have taken place in service required for attaining the same time-bound rank.}

LOOKING BACK AT 6 CPC PENSIONS THROUGH THE OROP AND 7 CPC PRISM

This blog post seeks to further examine hypothetical issues arising from a reference in the previous blog-post to some attempts apparently underway for a review of pensions of pre 01 Jan 2006 retirees as fixed by 6 CPC on the principle of minimum of pay for rank in pay-band and to get these fixed on basis of increments earned in the pay-scale corresponding to the appropriate 6 CPC pay-band.

It may come as a surprise to many that at this time, when everyone seems totally engrossed with OROP and 7 Central Pay Commission, such a retro approach of dealing with issues of 6 CPC should be on display. But, the whole matter of pensions and benefits is a continuum and CPC date markers do not provide for some rigid barriers that can't be crossed. Besides, what transpired at the time of implementation of 6 CPC will have a cascading effect on OROP and, in turn, on recommendations of 7 CPC.

As regards this issue of increments based 6 CPC pension fixation, I have very few details other than the rumour that it is based on some litigation involving veteran Major Generals who had their pensions fixed based on increments they had earned in their pay-scale and not on the principle of minimum pay for their rank in the pay-band.

Now assuming there is some basis to this analysis, we need to go back to the tables and fitments of SAI 2/S/08 as amended. To simplify and to illustrate the matter, on a purely hypothetical basis, a table can be derived from the SAI ibid and its subsequent amendments for consideration as follows :


TABLE RELEVANT TO A PRE 6 CPC LT COL RETIREE

  
5 CPC Pay As Laid Down In Amendment To 2/S/2008
6 CPC Basic Pay Corresponding To 5 CPC Pay Scale As Laid Down In Amendment To SAI 2/S/2008
6 CPC MSP
6 CPC Grade Pay
Total Revised Pay
50% Of Total Revised Pay
The Number Of Years Required Currently To Reach This Increment Stage
13500
38530
6000
8000
52530
26265
13
13900
38530
6000
8000
52530
26265
14
14300
39690
6000
8000
53690
26845
15
14700
39690
6000
8000
53690
26845
16
15100
40890
6000
8000
54890
27445
17
15500
40890
6000
8000
54890
27445
18
15900
42120
6000
8000
56120
28060
19
16300
42120
6000
8000
56120
28060
20
16700
43390
6000
8000
57390
28695
21
17100
43390
6000
8000
57390
28695
22
17500
44700
6000
8000
58700
29350
23
17900
44700
6000
8000
58700
29350
24
18300
46050
6000
8000
60050
30025
25
26
27
28
29
30
31
32































Granted, the corresponding 6 CPC basic pay column does not tally with the 6 CPC pay-band 4 starting at 37400/-, but that is how the pension for Lt Col rank was re-fixed at 26265/- as against the previously fixed 25700/- based on PB-4. Pay during 5 CPC, as actually earned, would logically have to be the basis for arriving at equivalent pensions for 6 CPC if at all the arguments for basing pensions on increments earned during 5 CPC are tenable.

In the case of a Lt Col retiree, of course, it would not be too hard to arrive at this hypothetical, re-fixed pension based on increments gained during 5 CPC. All he would have to do would be to take out his DND statement issued on the revision caused by the rank-pay case matter. From there, it would be a simple matter to read the revised pension as shown in the column titled "50% Of Total Revised Pay". A Lt Col who had earned increments in the DND statement so as to reach a basic pay of 17900/- would then, hypothetically, be eligible for a 6 CPC pension of Rs.29350/- and not the Rs.26265/- as fixed from 01 Jan 2006.

But, an important consideration arises here. Would basing the 6 CPC pensions based on increments earned during 5 CPC amount to OROP having been granted for all ex-servicemen during 6 CPC? It would certainly appear to be a case of full parity rather than a modified parity necessitated by the parallel, if one does exist, and that is a very big if, in the eumored litigation involving retirees in the rank of Maj Gen.

However, by having a similar increment based pension for pre 7 CPC retirees and terming it as OROP for all, the 7 CPC recommendations do confound the matter somewhat.

In the above example, true OROP would have resulted if the pension had been fixed for the Lt Col retiring in say 2003 at DND basic of 17900/- if his pension had been fixed equal to pension of another Lt Col with as many years of service retiring in say July 2006. This pension would have been a lot higher than the one based on increments earned during 5 CPC.

The last column in the table indicates how many years would be required during 2006 and later to reach the equivalent 6 CPC basic that a 5 CPC retiree would have retired at. In most cases there would be a significant difference between the years of service put in by a pre 01 Jan 2006 retiree to be at the same level of equivalent 6 CPC basic pay.

That appears to indicate that the manner of OROP based on increments as suggested by 7 CPC may not be the real OROP as we understand it. It also appears to suggest that the logic of obtaining an increment based re-fixation of 6 CPC pensions for 5 CPC and earlier retirees may not be that far fetched.

Increments Earned, Pensions And OROP

In the matter of VI CPC pensions fixed for pre 01 Jan 2006 retirees, circular 397 issued by PCDA states at para 6.1, "The consolidation of pension will further be subject to the provision that the consolidated pension, in no case shall be lower than 50% of the minimum of the pay in the pay band plus the grade pay, military service pay (MSP) and ‘X’ Group pay (where applicable) introduced from 01.01.2006 corresponding to the pre revised scale from which the pensioner had retired/discharged for 33 years qualifying service and for lesser qualifying service (including admissible weightage) it will be proportionately reduced".

This circular was amended vide Circular 500 subsequently to clarify, "...the minimum guaranteed pension and ordinary family pension in respect of Pre-2006 Commissioned officers, pensioners/ family pensioners has been determined as 50% (fifty) and 30% (thirty) percent respectively, of the pay in the pay band corresponding to minimum of prerevised pay scale as indicated under fitment tables annexed with SAI 2/S/2008 as amended and equivalent instructions for Navy & Air Force and SAI 4/S/2008, plus Grade pay corresponding to the pre-revised scale from which the pensioner had retired/ discharged/invalided out/died including Military Service Pay, wherever applicable. date of fixation of pensions (01 Jan 2006 as against the original..."


or as the accompanying MOD letter had stated,

"..minimum of the fitment table for the rank in the revised pay band as indicated under fitment tables annexed with SAI 2/S/2008 as amended and equivalent instructions for navy and Air Force and SAI 4/S/2008 plus the Grade pay corresponding to the pre-revised scale from which the pensioner had retired ...... including Military Service Pay..... ".

The Circular had fixed this minimum guaranteed pension wef 24 Sep 2012.

The date was subsequently changed to 01 Jan 2006 very recently.

In this season of talk of increments based pension fixation, fuelled by the new matrix put out by 7 CPC, it has come to light on the web that some stalwarts seem to suggest that fixation of the minimum guaranteed pension wef 01 Jan 2006 needs to take into account the increments actually earned in the "pre-revised pay-scales" by pre 01 Jan 2006 retirees. It is understood this is based on some judicial ruling applicable to retirees with Maj Gen rank in which increments earned are said to have been made a basis for determining the pensions of these affected Officers.

As details have not been shared, it can not be said with any certainty whether or not the context of litigation involving the Maj Gen retirees would also apply to other pensioners.

But it is an interesting development.

There would be a need to study where in the fitment tables would a particular pensioner stand after considering the increments he had earned in the pre-revised scale (pre 01 Jan 2006 pay-scale).

Then there would be the calculation and payment of arrears from 01 jan 2006.

But would that not affect the calculation methodology for OROP? It may become necessary for OROP calculation to be based on number of increments required to reach a certain number of years of service for a pay-band for a specific rank rather than on the "average of minimum and maximum pension in 2013", whatever that means.

Pay-Bands, Tables And Fitments For OROP

In the face of unknowns involved in a matter such as OROP, it may be a more prudent approach to first try and identify the type of variables one could come across rather than to attempt assigning values to those variables.

There is no need to be troubled here with the notion that for arriving at a OROP fixation one would have to apply some esoteric principle that an Operations Research boffin might have conjured up on one of his more productive days.

At the same time, I have always felt that before undertaking the churning out of tables for OROP estimates, with jubilant cries of "Viva Excel!", I might as well put in some system for validating guesstimates and opinions. Any time I had posted a table on what OROP or the rank pay revisions could involve, I tried to take pains to underline the fact that figures quoted were hypothetical, a means to illustrate a point, subject to validation and/or not for universal application.

However, some extremely useful information has recently been made available on the Aerial View blog by way of painstakingly compiled tables on what OROP could be, based on pay-bands applicable post 01 January 2006. In face of the marked silence from the Government and ESM associations on the subject, these tables are like a shining beacon, pointing towards where the reality would probably lie.

For the purpose of appreciating a need for validation, the following points might be of use
  • OROP is at a different plane altogether when compared to the modified parity principle of a pre/post CPC fixation of pensions for pre CPC retirees.
  • In the context of VI CPC, it needs to be remembered that fitments in the MOD letter dated 2008, and its amendments, centered around the concept of modified parity. That will not apply for OROP.
  • Circular 500 and its precursors were all geared towards the "minimum of pay for rank in pay-band" principle. OROP is an entirely different paradigm.
  • The concept of OROP can be seriously undermined if the process of calculation gets mired in the old concept of fitment tables that applied to pre/post VI CPC pay fixation.
  • OROP seeks total parity of pensions of older retirees with pensions of present retirees (for the time being, those retiring in 2013).
As an example, to be absolutely certain of what is implied in a table, which for the purpose of suggesting the OROP pension of a Major with QS of 13 years, states the pay of a Major is 29820/- at QS of 13 years, it needs to be clearly understood that a per the table the pay would be 29820/- in 2019 for a Major commissioned on 01 Jan 2006. 

As to what would the pay of a Maj with a QS of 13 years be in base year 2013, the answer would be based on a host of other parameters such as fixation of his pay from Jan 2006 and date of actual promotion, among others. Again, the very fact that QS of 13 years would not result in a pension, goes to show the hypothetical nature of such an estimate.

For that exact reason, for OROP, we need to have validation of estimates in pay-band tables against actual pay and pension data as applicable to personnel retiring in 2013.  For such validation, the focus should also be on actual pay/pension data as applicable in base year 2013. If there is no actual average pension data for 2013 in respect of a certain rank cum years-of-service combination, then pay actually being drawn in base year 2013 by serving personnel with that rank cum years-of-service combination can be a basis for arriving at the "potential average pension".

Sometimes, a blank table does help to point out what the missing variable values are and how these can be obtained. An absence of actual figures may not exactly seek to reinforce the "Less Is More" principle, but it can help in a clearer understanding of what the issues are or could be. In a previous blog-post I had sought to suggest such an approach. Now, in order to include the pay-band estimates currently available, I have updated the table-format in that blog-post as follows:

(By hovering the cursor on the table format it can be viewed with magnification)

OROP: Another Look At Issues Of Average Pensions And Pre-Mature Retirees

As details about Government thinking on OROP implementation have failed to emerge, there has been time on stake holders’ hands, permitting at least some of them to step back and examine all aspects of the matter in a more detached frame of mind.

To have a rational view, it cannot hurt to try and justify even extreme opinions diametrically opposite to one’s own by searching for principles that could possibly support them. In this manner, one can be a little surer of one’s own stand on issues and also arrive at a fuller understanding of what is involved.

In the context of the 5th September 2015 statement about OROP, two issues could be subjected to this process.

Average Of Pensions In Base Year:

It caused a bit of consternation in many quarters that OROP fixation would involve averaging of pensions in base year. Since the wording of the statement was so vague, and given past experiences of denial of dues based on phraseology (the “as on” vs “where is” example comes to mind), stake holders, like burnt children dreading fires, had forebodings of the worst kind.

*What if the average was to be taken of all pensions paid in base year, including the low pensions of pre 2006 retirees of same rank and same service?

*Why was an average required at all? Why could not the highest pension, for a certain rank with a certain number of years of service, be the basis for fixation of pensions of all previous retirees in the same rank and the same years of service?

Perhaps this "averaging" clause can be justified on the grounds that in the base year, serving personnel who retire in a certain rank and with the same number of years of service may not have the same pension. Their pensions would be based on last pay drawn and these could vary from one retiree to another, all retiring in the base year and in the same rank and with equal number of years of service. The last pay would be dependent on criteria other than years of service, such as date of promotion to the rank, hence service in that rank, as well as initial fixation of pay on the last promotion.

This in fact leads to what is being stated as the defining basis of OROP, viz., “same rank and equal years of service”.  Now, does that apply also to personnel who retired one year prior to OROP base year?

Take the example of a Colonel who earned a pension of Rs. 26111 33950/- in the year before base year on completing 24 years of service. What if another Colonel, also with 24 years of service, gets his pension fixed at Rs.26953 34880/- in the base year on account of the way the latter’s pay was fixed on promotion or the length of his service in the rank of Col? Would the former then be eligible for getting his pension upgraded to the level of the latter’s pension regardless of the last-pay-drawn principle? Let us not forget, both Colonels in the example are post VI CPC retirees.

Given this consideration, perhaps averaging of pensions in base year for the same rank and with same years of service could have some basis for fixing pensions of all previous retirees, keeping in mind no previously fixed pension would be brought to the level of the base year average if the average is lower.

But questions and doubts remain:

·  When Hon’ble Defence Minister mentioned "average of minimum and maximum pension in 2013", of all the doubts that sprang from that sentence, one of the most important was, and still is, were these to be the pensions actually paid/fixed in respect of those who retired in base year? Or is some calculation based on existing pay band to be the criteria?

·   What about the rank and years of service combinations for which there were no retirees in base year?

·     What about that old ambiguity, repeated ad nauseum, about older retirees who got their ranks based on time-bound promotions after putting in 20 to 29 years of service for which there would be no parallel in base year?

Till issues such as these get cleared up, it would be extremely rash to voice a firm opinion on how and why “averaging” could make sense.

Applicability Of OROP To Pre Mature Retirement Cases: This proved to be the most volatile of all issues after the statement was read out. How could excluding a premature retiree from benefits of OROP ever be justified? Let us be clear, a person who took pre-mature retirement after a service of 21 years in 1975, 2001 or 2007 would be entitled, under OROP, to the current pension of someone retiring in base year in the same rank with equal service. He would not get the OROP pension of someone retiring in the same rank but with more service, say 22 years or more. So what is the issue with that?

There is a clear basis for allowing someone to proceed on pre-mature retirement. If PR has been granted, then it is as per Service norms and a pension has been duly earned. That older pension would need to be equalised with current pension of a base year retiree in the same rank and with the same years of service. A pension is a pension is a pension. A pre mature retiree’s pension cannot be treated differently from the pension of someone who super-annuates from service, now not even in the matter of weightages.


Whether or not a pre-mature retiree takes up a lucrative second career, perhaps even with the help of DGR, would not seem to be a basis for a differential treatment of his duly granted pension in terms of parity with OROP pension fixed for his rank and years of service.