The VII CPC Approach To Inter-Temporal Equity In Respect Of Pensions Of Lt Col / Wg Cdr / Cdr

The previous blog-post had sought to examine the various ways in which pensions of Lt Col /Wg Cdr / Cdr could be fixed by following recommendations of VII CPC as well as ensuring OROP was made applicable. Judging from some of the responses received (one published with another one carrying a clarification), it seems the uncertainties inherent in complexity of applying the increment method to pre 01 Jan 2006 pensioners have not been fully understood.

The 7th Pay Commission, beginning at para 10.1.53 of its report, has devoted great attention to the issue of parities of pensions of pre and post CPC retirees. The report has underscored the importance of what it has called “inter-temporal equity” in the context of pensions.

The report also illustrates, in a very absorbing manner, the evolution of the concept of pension parities right from III CPC through VI CPC.

Under the modified parity concept, with effect from 01 january 2006 all pre 01 January 2006 retirees had their pensions fixed, after a number of legal cases and resulting amendments, at not less than “50% (fifty) of the pay in the pay band corresponding to minimum of prerevised pay scale as indicated under fitment tables” (quote from Circular 500).

With the introduction of OROP in its present form, the concept of parities has changed for armed forces pensioners to some extent from July 2014, but judging from the ongoing dialog between veteran associations and the Government, some more ground is sought to be covered by stakeholders.

However, the recommendations of VII CPC regarding pensions of both civilian and armed forces pensioners now take on the appearance of nearly full parity as against the modified parity put in place by V and VI CPC.

As recommended by VII CPC, all pre 01 Jan 2016 armed forces pensioners, to quote, “shall first be fixed in the Pay Matrix being recommended by this Commission, on the basis of the Pay Band and Grade Pay at which they retired, at the minimum of the corresponding level in the matrix”.

Let us take the case of a Lt Col/Wg Cdr/Cdr who retired prior to 01 Jan 2016. By getting “fixed” in the matrix in afore-mentioned manner, the pre Jan 2016 retiree will be getting “fixed” at that point, in the matrix level 12-A, which corresponds to a service of 13 years at which the level begins as Lt Col/Wg Cdr/Cdr rank is given at that many years of service.

Next, the VII CPC report recommends, “This amount shall be raised to arrive at the notional pay of the retiree by adding the number of increments he/she had earned in that level while in service, at the rate of three percent”.

This manner of calculation will work reasonably well for someone who retired in those ranks between 01 January 2006 and 31 December 2015. The number of increments earned for the same years of qualifying service, whether in the VI CPC pay-band PB-4 or Level 12 A of VII CPC matrix are the same. For retirees between 01 January 2006 and 31 December 2005 full parity with post 01 Jan 2016 retirees would appear to have been accomplished.

Let us see how such a parity would score over the manner in which OROP has been introduced from 01 July 2014:

* There will be no problem of determining average of minimum and maximum pensions of a Lt Col/Wg Cdr/Cdr retiring in 2016, 17, 18 or any other year.

* There will be no requirement for anyone with a particular number of years of service to have actually retired in some reference year for fixing the older retiree’s pension. There is a matrix level, then, there are the number of increments earned in pay-band at time of retirement and once the pension is fixed at that level in the new matrix, that retiree will always draw as much pension as any Lt Col/Wg Cdr/Cdr at any time after 01 Jan 2016 with equal service (no. of increments) would or potentially could.

* The requirement of a periodic review would diminish to a large extent, though not totally eliminated, as the effect of increments has already been taken into account. Some form of review could be necessitated in context of OROP if some major improvements were later introduced in benefits of serving officers in rank of Lt Col/Wg Cdr/Cdr that in turn affected pensions of those retiring after introduction of such improvements. But the absolute necessity of an annual review would disappear.

There could be other advantages, or disadvantages, but if 7 CPC recommendations are implemented as understood, there would indeed be full parity for those who retired between 01 Jan 2006 and 31 Dec 2015, and there would be no complaints of “one rank five pensions”.

But, how would Lt Cols/Wg Cdrs/Cdrs who retired before 01 Jan 2006 be treated by such a pension fixation?

The “number of increments” clause in recommendations of 7 CPC relating to fixation of pensions raises issues that need to be urgently resolved. For instance :

* Though a Lt Col/Wg Cdr/Cdr retiring between 01 jan 2006 and 31 December 2015 would be correctly placed in the 7 CPC matrix based on his increments in PB-IV, that would not be the case for someone who retired in those ranks before 01 Jan 2006. The first stage in PB IV of VI CPC and Level 12-A of VII CPC corresponds to a service of 13 years but the first payscale stage of a Lt Col/Wg Cdr/Cdr who retired before 01 Jan 2006 would correspond to a service of 18 years to 21 years, i.e. 5 to 8 years more than a retiree after 01 Jan 2006.

* The VII CPC recommendations speak of “number of increments he/she had earned in that level while in service, at the rate of three percent”. But those who retired before 01 jan 2006 did not receive increments at 3 % like those who retired after 01 Jan 2006. They had a fixed increment in the pay-scale 13500-400-17100. Also, in the fitment table, as given in SAFI 2/S/2008, the corresponding VI CPC range of pay-band corresponding to the un-revised V CPC pay-scale was from 38530 to 43390 with the number of increments in PB-IV being just four in the fitment table as against approximately twice that number in the V CPC pay-scale. The corresponding number of increments @ 3% fot a post 01 Jan 2006 retiree would be six, what’s more with these six increments the post 01 Jan 2006 retiree would have put in a service of approximately (13+6) i.e. 19 years as against a service of (18+9 to 18+11) i.e. 27 to 29 years of a pre 01 Jan 2006 retiree in the corresponding V CPC pay-scale 13500-400-17100.

* Therefore going by the “number of increments” method, as it has been defined, the pre 01 Jan 2006 Lt Col/Wg Cdr/Cdr with 27 to 29 years of service could have his pension fixed at four increments corresponding to the VI CPC pay band fitment table which would correspond to a post VI CPC Officer retiring with just 19/20 years of service.

Another tabular presentation can give a better idea if answers to the following questions can be obtained :

• With which column of increments do pre 01 Jan 2006 Lt Col/Wg Cdr/Cdr need to check their pension fixation, as per number of increments, Col II or col IV?

• Or will these pensioners have the number of increments fixed as given in column VIII corresponding to their years of service equal to those in column VI applicable to post 01 Jan 2006 retirees?

With the three sets of increments, readers can again go back to the previous blog post to ascertain various values for their post VII CPC pensions

Approximate Comparison Of Increments Earned And No. Of Years Of Service For Lt Col/ Wg Cdr / Cdr Before And After 01 January 2006 (Table is to illustrate contents of this blog-post and data needs to be cross-checked for accuracy)

I	II	III	IV	V	VI	VII	VIII
V CPC Pay Scale	No. Of Increments In V CPC Pay Scale	Equivalent Pay Stages In Fitment Table For VI CPC PB-4 As Per SAFI 2/S/2008	No. Of Corresponding Increments In Fitment Table For VI CPC PB-4 As Per SAFI 2/S/2008	Approximate Service In Years Of Lt Col/Wg Cdr/Cdr serving/retiring before 01 Jan 2006	Approximate Service In Years Of Lt Col/Wg Cdr/Cdr serving/retiring in VI CPC PB -4 after 01 Jan 2006	VI CPC PB-4 With Rounded Of Increments @ 3%	No. Of Increments Earned By Those Serving / Retiring After 01 January 2006
					13	37400
13500		38530		18 to 20
13900	1	38530		19 to 21
					14	38770	1
14300	2	39690	1	20 to 22
14700	3	39690		21 to 23
					15	40180	2
15100	4	40890	2	22 to 24
15500	5	40890		23 to 25
					16	41630	3
15900	6	42120	3	24 to 26
16300	7	42120		25 to 27
					17	43120	4
16700	8	43390	4	26 to 28
17100	9	43390		27 to 29
					18	44660	5
17500	10	44700	5	28 to 30
17900	11	44700		29 to 31
18300	12	46050	6	30 to 32
					19	46240	6
					20	47870	7
					21	49550	8
					22	51280	9
					23	53060	10
					24	54900	11
					25	56790	12
					26	58740	13
					27	60750	14
					28	62820	15
					29	64950	16
					30	67140	17