One Rank One Pension: 5 key things to know

One Rank One Pension: 5 key things to know

After promising to implement OROP, the government is probably realising that the cumulative pension burden will keep increasing year after year so a more feasible option needs to be worked out.

Take a look at the answers to 5 key questions regarding OROP...  

What is the demand for ‘One Rank One Pension’ all about? 

For several decades, ex-servicemen have been demanding, as a special dispensation to veterans, that no matter when an officer or jawan has retired from service, they should get equal pension. For example, an officer with 25 years of service who retired, say, in 1995 as a Colonel is currently getting pension based on his last salary drawn. While this is revised annually, his pension is pegged  to the 1995 Colonel salary.

However, veterans say retired officer should get a pension based on the salary that a Colonel with an equal number of years of service gets today. The rationale being that it is unjust for, say, a Maj Gen who retired 15 years ago to draw today less pension than a Colonel who retired a year ago. 

What is the financial implication? 

The finance ministry’s main argument is that the full OROP would prove to be a crushing burden on the economy. 

But veterans argue that by the government’s own calculation the ORP bill would be Rs 8,600 crore a year, which is not that major an addition to the Rs 54,500-crore defence pensions expenditure estimated for this financial year.  

What is the immediate provocation for mass protests? 

Unfortunately, the issue has become highly politicised. After almost a decade of continuously turning down the OROP demand, the UPA suddenly changed its stance as the 2014 general elections neared. It accepted the OROP demand after the personal intervention of Rahul Gandhi.

OROP also became a BJP election plank. After taking over, Modi too announced that OROP would be implemented. However, even after a year the issue appears no closer to resolution with the finance ministry taking a contrary stand on the OROP interpretation. This one year of uncertainty has led to fresh OROP protests. 

How old is this issue and why do veterans demand special treatment? 

While the matter has been festering for decades, it came out in the open only after the Sixth Pay Commission formally dismissed the OROP demand in 2008. Veterans protested, saying that a parliamentary committee had recommended its implementation in 2004.

They argued for special treatment citing the exceptional nature of their job and the fact that most soldiers are forced to retire before the age of 42, leaving them unemployable and in a state of penury. 

Why is the government perceived to be backing away? 

While OROP has been ‘accepted’ by government, the devil is in the details. The finance ministry has a different way of calculating OROP, saying that it is impossible to match pensions month after month whenever there is an increase in pay. It has suggested a benchmarking at 2011 levels.

Or a pay-band system that would give equal pension to soldiers over a broad, 10-year period. It has also pointed out that the sheer financial burden of pegging up pensions at regular intervals would be staggering.

Source : http://economictimes.indiatimes.com/