How the Negotiations on OROP are Reportedly going till 12 Jun 2014

Friday, 27 June 2014

Minutes of First meeting of the Working Group for implementation of

One Rank One Pension

          In order to discuss the modalities of implementation of One Rank One Pension (OROP), first meeting of Working Group constituted as per MoD’s decision dated 24^th April, 2014 was held on 2^nd May 2014 in the conference hall of CGDA’s office. The meeting was chaired by CGDA.

2.       Opening the discussion, CGDA welcomed the members and intimated the mandate given to the working group as per MoD ID dated 24^th April 2014. CGDA also stated that for implementation of OROP, the solution be practicable and implementable within the reasonable time frame. 

3.       Pr, CDA (P) Allahabad made a a presentation amplifying the definition of OROP and key terms used in the same. Pr. CDA(P) presented two options for consideration of the working group for implementation of OROP. Copy of presentation made by Pr. CDA (P) is attached herewith. After presenting the options, it was stated that working group may make a consensus on basic parameters viz. cut off date, definition of current and past pensioners, future enhancements etc to finalise the proposal in real terms. Pr. CDA (P) further opined that option – I which provides revision of pension based on arithmetical mean rates of pension of post-2006 pensioners having equal qualifying service, is practicable one and could be expeditiously implemented by Pension Disbursing agencies in a reasonable time frame.

4.       Reps of Services made following points for consideration of the working group: -

a)       Enhancement taken place during service of a personnel has been average down in Option –I.

b)      Cut-off date shall be taken as 1.4.2014 and pensioners retired prior to this date shall be treated as past pensioners. 

c)       As future enhancements have to be automatically passed on to the pensioners, Service proposal for annual revision of OROP tables could also be considered.

d)      Option projected by Pr. CDA (P) will just bridge the gap and will not establish OROP.

          e)       Benefits shall also be considered for JCO/OR.

5.       After detailed discussion, the following points were deliberated up on: -

i)        As mandate given to the working group is to establish parity in pensions, establishing pay parity is beyond its purview. 

ii)       In his Interim Budget speech for the years 2014-13 (attached as Annexure -2), the Hon’ble FM announced that Government has accepted the principle of OROP for Defence Forces ad thus decided to close the gap in pensions between Pre-2006 retirees and Post-2006 retirees. He also specifically mentioned that as a result of changes in pension rules applicable to defence Forces notified on three occasions in 2006, 2010 & 2013, the gap between Pre-2006 retirees and Post-2006 retirees has been closed in ranks – Havildar, Nb Subedar, Subedar and Subedar Major. The gap that exists in the ranks of sepoy, Naik, and in the ranks of Major & above is now proposed to be bridged by walking “the last mile and close the gap for all retirees in all ranks.” Based on this inference is drawn that Pre-2006 retirees shall be consideredPast retirees. Accordingly, those who have travelled in the regime of 6^th CPC and retired thereafter shall be treated asCurrent Retirees.     

iii)      Date of implementation of new recommendations shall be from 1.4.2014.

iv)      Annual incremental increase in pension as proposed by Services would lead to change in existing pension structure which is not in the domain of working group and also not practical one. Hence, further enhancements in pension shall be considered based on recommendations of Seventh Pay Commission recommendations.

6.       CGDA stressed on the need to understand the key terms used in the definition of OROP provided by MoD through the minutes of the meeting held on 26.2.2014, with greater clarity so as to arrive at the best possible solution. Reps of Services concluded that for better appreciation of the two options presented by Pr. CDA (P) during the meeting, they need a thorough examination and they will revert on the same. However, it was suggested to have formal discussion between reps of Services and reps of CGDA/Pr. CDA (P) to discuss some points of doubt. Keeping in view the time line given to the working group CGDA advised to have the discussions on the same day and views of Services shall be given to CGDA office positively by 5^th May 2014 to examine the same.

7.       Meeting ended with a vote of thanks to the chair.

Signed by all participants

Appendix –I

Points of discussion held between Reps of Services and reps of CGDA, PCDA (P) on 2^nd May 2014

The discussion was chaired by PCDA (P) Allahabad.

1.       Reps of Services intimated that they have gone through option-I and have the following points for consideration/clarification.

i) Anomaly in rated for pension for higher qualifying service vis-à-vis lower qualifying service in same rank shall be considered for removal.

ii) Anomaly in rates of pension for higher rank vis-à-vis lower rank in same qualifying service shall also be considered for removal.

iii) Methodology may be drawn for arriving at revised pension where there is no retiree available for any length of qualifying service.

          iv) Tables for rates of pension shall be prepared for less than 20/15 years       of qualifying service.       

          v) Same tables shall be prepared for Col (TS) and Col (S).

vi) Qualifying service shall be rounded off to one year due to change of increment policy in July each year for serving personnel. It will not make any change in the financial effect.

2.       After detailed discussion, issues at (i) & (ii) above were agreed to in principle subject to finding out a suitable method for achieving this. PCDA (P) suggested that further examination will be required to arrive at any decision for issues (iii), (iv) & (v) above. There was no consensus for the issues as at (vi) above.

3.       Reps of Services stated that they had not examined option-II presented to the working group – and their detailed comments will be provided to CGDA office as early as possible.

Signatures of participants

Record of discussions of  Second meeting of the Working Group for Implementation of One Rank One Pension

The second meeting of the Working Group constituted as per MoD’s decision dated 24^th April 2014 was held on 8^th May 2014 in the conference hall of CGDA’s office. The meeting was chaired by Addl CGDA.

2.       Opening the discussion, Addl CGDA welcomed the members of the Working Group and desired feedback from the Services on the proposals of Pr. CDA (P) presented during the first meeting of Working Group held on 2^nd May 2014.

3.       Reps of Services put forth following points for clarification by members of the working group: -

          a) From where the Terms of references of the Working Group have been taken

b) The aim is to grant OROP or is it one time increase to bridge the gap.

4.       Reps of Services further submitted that Terms of Reference should be taken from the suggestions/recommendations made in the Report of Rajya Sabha Committee on Petitions dated 19.12.2011 and subsequently re-iterated in the definition approved by Hon’ble RM and circulated by Ministry vide their ID dated 26.2.2014. Speech of Hon’ble FM is a reference point and not Act of parliament ad hence, it should be viewed in that light.   

5.       Pr CDA (P) stated that the Terms of Reference for the Working Group has been clearly spelt out by Ministry of Defence in order dated 24.4.2014 and there is no need for further elucidation. Pr. CDA (P) also intimated that the key terms have been taken in his last presentation held on 2^nd May 2014 read with Interim Budget Speech 2014-15 of Hon’ble Finance Minister. The later one is considered to elaborate the key terms which are silent in the definition circulated by MoD vide their ID dated 26.2.2014. 

6.       After discussion, it was considered that the points of disagreements may be recorded and referred to the Ministry. These points of disagreement recorded during the meeting are enclosed as Annx-2 to these minutes of meeting.

7.       Meeting ended with a vote of thanks to the chair.

Signature of participants

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 Points of Disagreement in the Second meeting of Working Group on OROP held on 8.5.2014 in the office of CGDA

Points of Differences: -

1.       Definition of OROP

     Definition of OROP should be drawn from the Hon’ble FM Interim Budget 2014-15 speech vide which the gap between pre-2006 retirees and post-2006 retirees for all ranks needs to be closed.

          As per Services, the definition of OROP is given by the Rajya Sabha Committee on Petitions presented on 19.12.20111 and re-iterated by the Hon’ble RM in his directions given in meeting held on 26.2.2014, which states that “One Rank One Pension implies that uniform pension be paid to the Armed Forces personnel retiring in the same rank with same length of service, irrespective of their date of retirement and any future enhancements in the rates of pension to be automatically passed on to the past pensioners.” Services also feel that essence of the Hon’ble FM speech in parliament is also the same. However, details emerge only from the OROP definition give above which has not cut-off date like 1.1.2006 as brought out in Para 3 of draft Government letter submitted by the Services. In other words, in the opinion of the Services there is no cut off date like 1.1.2006.   

2.     Interpretation of the term “Uniform Pension” in the OROP definition

          Uniform pension means pension under a uniform pay/pension structure i.e. under same pay scales with same qualifying service & pension calculation formula. It need not necessarily lead to same pension for all retiree (past & present) in the same rank and same qualifying service because of the annual increments being given to the serving personnel. 

          As per Services, uniform pension means ( as in the term OROP)/same/equal/identical pension amount for Armed Forces personnel retiring in the same rank and same length of service i.e. qualifying service ( as defined in Pension Regulations for the Army 2008) as per para 3 of the report of the Rajya Sabha Committee on Petitions presented on 19.12.2011. There is no intention of introducing annual increments for pensioners. 

3.    Interpretation of the term “Length of Service” in the OROP definition

         The term “Length of Service” in the OROP definition (i.e. same pension for same rank for same length of service) is to be treated as number of years of service put in by the pensioner in the rank last held. Alternately, if total qualifying service is to be treated for the purpose of OROP then qualitative aspects relating to length of service in terms of numbers of years rendered in each rank the service person has served before the retirement in the rank last held, need to be taken cognisance of. While this will be difficult to implement in practice, appropriate mechanism which is workable and implementable, can be worked out to implement the spirit of OROP so as to bridge the gap in pension of pre & post 2006 pensioners.   

    Whereas Services feel that length of service and qualifying service are synonymous and any other interpretation gives rise to certain anomalies viz. reduction or no benefits in pension on promotion (one illustration was given). Services interpretation is based on Rule 19 of Pension Regs 2008 as also the precedence of MoD ltr No.1(11)/2012-D(Pen/Policy) d/d 17.1.2013 wherein qualifying service and length of service are synonymous for determining pension. The alternative interpretation of “Length of service” being the service only in the rank last held is not only violative of existing regulations but also near impossible to implement with existing format of PPOs only indicating the qualifying service.  

4.      Bridging the gap in the pension amount between current & past pensioner vis-à-vis extending the benefit of changes of improved service conditions of serving pensioners to past pensioners

          It is a considered that a method has to be worked out with a view to bridge the gap in pension amount between pre & post 2006 pensioners without extending the benefits of improved service conditions (viz. method of faster promotion applicable to the current personnel) to past pensioners.

          Services view is that OROP is not only bridging the gap but removing the gap with a view of granting same/equal pension to all retirees with same rank and same qualifying service with future enhancements to be passed to the past pensioners automatically as enunciated in the definition of OROP. It is also brought out that benefit of MSP and Grade Pay for calculation of pension has already been extended to past pensioners vide MoD letter No. 1(11)/2012-D (Pen/Policy) dated 17.1.2013. Similarly, other future benefits, if any, should be passed on to the past pensioners.  

5.   Modalities for automatically passing of the benefit of future enhancement in rate of pension

          As and when there is enhancement/changes in the basic rate of pension (either based on pay commission recommendations or Govt policy), the benefit is to be passed on to past pensioners.

        The Services endorse the above with the qualification that there will be a need for periodic review of OROP tables, say on a yearly basis wherein a few anomalies which may have emerged (junior drawing more pension than senior) will require to be addressed.

Signatures of Members

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Record of discussions of Third meeting of the Working Group for Implementation of One Rank One Pension

         In order to decide the modalities for implementation of OROP, the third meeting of Working Group constituted as per MoD’s decision dated 24^th April 2014 was held on 9^th May 2014 in the conference hall of CGDA’s office. The meeting was chaired by CGDA.

2.     Opening the discussion, CGDA welcomed the members of the Working Group. Addl CGDA briefed the development taken place in the last two meetings and sought views of reps of the Services on the average method proposed by PCDA (P) Allahabad. Reps of the Services stated that the period of span taken for calculating average is too big (1.1.2006 to 31.03.2014) and the Services felt that the period be restricted to one year i.e July 13 to March 14. Reps of Services further re-iterated that instead f taking average pension, maximum value of pension for each qualifying service should be taken for making OROP tables.

3.       Rep of MoD made a point that Maximum of Fitment table as done in the case of JCO/OR can be taken. Reps of Services were not agreeable on the proposal ad stated that rate of pension being drawn by a current pensioner (viz post 1.7.2013) should be allowed to the past pensioners in order to implement OROP in the true sense. On the issue of referring Report of RSCommittee of Petition for determining terms of reference, JS (E) pointed out that there are large no. of Parliament Committees whose findings/recommen-dations may or may not be accepted by the Government. As such, Terms of Reference derived from the FM speech made in Parliament or as per the definition provided by RM.    

4.    Services also put forth separate Model of calculation of pension which was a modification to the Model II presented by the PCDA (P) Allahabad vide his presentation on 2.5.2014. Reps of Services also agreed that extreme deviations in a range could be excluded to avoid undue/unintended benefits across the board.

5.     CGDA suggested that Services may provide a write up on their proposal with assumptions for examination. Addl CGDA also stated that Pr CDA (P)’s option-I may also be examined by the Services by considering mean or mode value in last one year data starting from 1^st July 2013 to 31^st March 2014. It was agreed upon that all the methods suggested to the Working Committee should be examined in detail with reference to the live data of three Services.

6.       Meeting ended with a vote of thanks to the chair.

Signatures of participants

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Record of discussion of Fourth meeting of the Working Group for Implementation of One Rank One Pension

     The 4th meeting of the Working Group constituted as per MoD’s decision dated 24^th April 2014 was held on 15^th of May 2014 in the conference hall of CGDA’s office. The meeting was chaired by Addl CGDA and list of participants is attached as Annx-I to this minutes.

2.       Opening the discussion, Addl CGDA welcome members and referred the discussion held on 9^th May 2014 in which the Services wanted to examine a revised proposal based on Mean, Mode, and Maximum value (after excluding extreme values) by taking data of last one year retirees starting from 1^st July 2013 to 31^st March 2014. Addl CGDA stated that the new methods suggested by the Services on 12^th May 2014 have been gone thorough and it is found that both the methods have some reservations as already pointed out on the Services initial proposal given to the working group by Ministry. The main issues highlighted were annual revision of pension, allowing maximum pension of post 1.7.2013 retiree, extending benefits of current promotion/service conditions to the past retirees, current & past pensioners etc.   

3.       Reps of Services made the following points for consideration of the working group: -

a)   Pension data for last one year as agreed to in last meeting was yet to be made available.

b)   Instead of taking maximum value amongst mean, median and mode, the Max function should be taken.

c)  The values of OROP tables based on maximum pension after removing extreme points shall approximately be same as proposed by Pr CDA (P) to determine pension on mean value. Fr this, different pension tables could be issued for different entry grades in JCO/OR as well as Officers. 

d)  On adopting ay other method for implementation of OROP, pension structure anomalies will continue. If maximum pension is taken, it will be conforming to the definition of OROP and would not generate grievances and litigations by ESM post implementation.

e)    The data available for the Air Force (all ranks) pensioners retired between 1.7.2013 to 31.3.2014 was made available to the Working Group for working their proposals across the three Services.

f)  As far as the issue of annual revision of pension is concerned, the Services emphasised that there is no intent to upgrade pensions annually. Only an annual review of OROP tables is envisaged to take care of any anomalies which may have crept in. It was also clarified that once steady state is achieved, there will be no requirement of annual review of OROP tables. 

g)   As far as extending benefits of current promotions/service conditions to the past retirees is concerned, the Services proposal does not envisage notional promotion to past retirees for the purpose of OROP.

4.  Reps of Ministry also made the following points for consideration of the working group: -

i)        Removal of 33 year conditionality for pre-2006 Defence pension is sub-judice and should not be considered by the Working Group.  

ii)       Post-2006 pensioners could not be equated with current retirees as benefit of OROP has to be considered only for pre-2006 pensioners.

iii)      As giving rates of pension maximum or otherwise has to be decided by Ministry of Finance, financial implication for all possible proposals should also be worked out.

5.       After detailed discussion, it was decided that Pr CDA (P) may check the difference in rates of pension working out revised pension on mean, median, mode and max function along with financial implication in each scenario. Pr CDA (P) may also provide data of last one year retirees of Army pensioners to reps of Services for their analysis.

6.       Meeting ended with a vote of thanks to the chair.

Signatures of participants

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