OROP; Request to Professor Mukul; Renowned Expert, For Advice

Dear veterans

A mail written by me to Professor Mukul of University of Singapore is given below. Prof Mukul is known expert of pensions including military and has advised many govts. he has written some good articles about Indian pension system.  He has kindly agreed to give his advice on the subject to help us understand its complexities. Please read the mail below which has been sent to him...

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Dear Professor

Thanks for your mail. As you are well versed with subject especially so about pension structure in India and worldwide in many countries, I shall straight come to issue.

In India, military pensions have been always a sore point. Veterans have been demanding One Rank One Pay (OROP). I am sure you are aware of the issue. Just to give you a gist of the problem, I am posting the following link:

http://www.niticentral.com/2015/06/14/one-rank-one-pay-orop-perspective-from-our-veterans-317866.html

To summarize it:

1. At time of independence military salary and pensions were curtailed drastically whereas civilian salary and pension were untouched.

2. Though first pay commission clearly gave out length of service and not rank as base to compare parity with civil but over a period of time it was always ignored. Govt order on it still holds ground but is not being followed and ignored by all subsequent pay commissions.

3. Third pay commission reduced military pension from 70% to 50% and money saved was used to increase pension of of civilian from 30% to 50%. The issue of military personal retiring young was ignored and no compensation was given for same.

4. Though constitution treats military distinctly under article 309 to 313 of Constitution but legally a separate status of military pension has not been defined under it and no laws as required under these articles, have been framed. Absence of such laws opens up grounds of Civilians, Para Military or Police Forces to demand parity with military salary and pensions. Govt is now considering creating a statute to pave it way.

5. In 2004-5 NPS was introduced for civilians and para military soldiers. Military was not given same on a plea taken that for military, Govt doesn't want to dilute an assured pension at rate of 50% whereas real reason was that as soldiers retire young and if same calculation as civilians is considered (based on NPV) then Govt will not able to afford their contribution to pension for soldiers. Under NPS for civilian itself Govt expenditure has risen from 1% of GDP to 2.5% of GDP. For soldiers it remains same as .3% of GDP as no NPS system was implemented for them. Now issue is that under NPS system civilian’s pension actually created more financial burden to govt and for soldiers based on NPV, govt couldn’t simply afford NPS for soldiers. Though under NPS system the equity returns shall be driven by market forces but trade unions forced govt to fix a minimum rate returns ( no limit for higher)  thus creating more financial burdens. It compromises the basic concept of NPS but assured more than 11/5 times benefits over then existing pension to civilians.

7. In 6Th pay commission, military system of time scale promotion was copied, modified and given to civilian in form of NFU at much enhanced scale. It resulted in a situation where in a police Constable draws 2.5-3 times more average career earning including pensions then soldiers. The system gave OROP indirectly to them where as soldier have been denied.

Now situation is critical. Sh Narendra Modi promised OROP to soldiers but when Def Ministry sent the proposal finance ministry is raising certain unexplained objections. Military veterans are agitating and in no mood to back down from their demand for justice. If this situation prevails for longer period and passions remain high it is likely to demoralized serving soldiers.

In view of above I request you to guide us on following issues?

1.    Legally what is system of military salary and pension worldwide specially so in democracies? Has any distinction been created and if so then what are accepted norms?

2.    How are parities between salaries and pension of military person with civilians created? Is the system of average salary and pension index and average career earnings including pension followed as a norm?

3.    Is there any norm to keep average career earnings including pension of military persons 10-20% more than civilians? If so then how is it assured?

4.    In India DB system of pension with Pay As You Go system is followed for military soldiers? How does it compare with NPS system? What are established trends worldwide?

5.    How is OROP assured for military? Is it based on length of service or length of service plus rank?

6.    In Indian context what is your advice on the dispute?

Professor it appears to me that even with OROP given to soldiers, their average career earning will still be lesser than civilians which will be against the established norms worldwide wherein 10-20% more average career earnings are assured to soldiers.

I request you for valuable guidance to help us veterans to understand the issue in depth so as to enable us in helping govt for creating a salary and pension system for military as per established norms worldwide. Frankly speaking, we have no trust on our bureaucracy which has always acted against interest of soldiers taking advantage of ignorance of politicians.

We understand the issue is complex and not so simple as it appears, but with your guidance we feel that we shall be able to tackle the misguiding inputs of  our bureaucracy.

We shall be grateful for your inputs.

Regards

Colonel Ashok Kumar Singh; veteran