pension

A Graphical Representation On VII CPC Pensions Fixed With The 2.57 X OROP Formula vs Index Based Pensions : Pre Jan 2016 Col(TS) / Lt Col/ Maj Pensioners

This matter has been touched on in various other forums as well as on this blog.

Now that the Govt. letter and PCDA Circular 570 have been finally issued for payment of VII CPC pensions to pre 01 Jan 2016 armed forces pensioners with the formula 2.57 X OROP {Option 1 i.e. 2nd method of calculation listed at 10.2.87(ii) of 7 CPC recommendations} it can be seen with the help of a graph how this 2.57 X OROP pension under VII CPC will fall short of the pension based on the index system of the VII CPC matrix.

This can be illustrated with the example of pension applicable to a Lt Col / Cdr / Wg Cdr who retired before January 2016 after putting in 25.5 years of service. In his case, the 7 CPC pension would equal 2.57 times his OROP pension, viz., 2.57×32813 = 84329.84 rounded off to 84330.

But, if the pension is calculated as per option 1 Option 2 [1st method of calculation vide 10.2.87 (i) of 7 CPC recommendations] viz., based on index numbers in level 12-A of the 7CPC matrix, it can be seen that a QS of 25.5 years would correspond to an index number of 13 in level 12-A, as Level 12-A commences at a QS of 13 years, i.e. Index No. 1 in Level 12-A of matrix is being assumed to correspond to a QS of 13 years. This gives rise to a 7 CPC pension of (166300+15500)/2 = 90900/-.

Assumptions For Co-relating Index Numbers With QS : As the 7 CPC Matrix does not directly mention QS, there is a need to make a few assumptions to establish the relationship:

  • In the case of current time bound ranks, such as Major and Lt Col, the index no. 1 in the respective matrix level (Level 11 for Major, 12-A for Lt Col) will correspond to the QS at which the level starts i.e. index No. 1 in level 11 should correspond to a QS of 6 years when time-bound promotion to rank of Major takes place; index No. 1 in level 12-A ought to correspoind to a QS of 13 years when an Officer is promoted to time bound rank of Lt Col.
  • Any additional increments that are given for clubbing, stagnation are presently not being taken into account. Index numbers for the present discussion relate to the bare minimum time-based increments that should take place in a level for a time-bound rank.
  • Due to the different QS at which promotions to select ranks take place in the different arms, branches of the services, the issue is a little more complicated in the case of matrix levels related to ranks given by selection, such as Col (Select) / Capt(IN) (Select) / Gp Capt (Select), Brig/Cmde/Air Cmde and so on. But for Col(TS), Capt(IN)(TS), Gp Capt(TS) level 13 can be assumed to start at a QS of 15 years, with index number 12 in level 13 corresponding to a QS of 26 years when Officers get those time-scale ranks.
  • The index numbers for those Officers who retired before Jan 2006 would have to be fixed at par with Officers of equal service and rank who retired after 01 Jan 2006. Before 01 Jan 2006 there were no pay-bands and grade pay. So, while a direct parallel can be established between post 01 Jan 2006 retirees and post 01 Jan 2016 retirees, that is not the case for veterans who retired prior to 01 Jan 2006.
  • The issue of parity of Maj pensions with Lt Col pensions at a service of 20 years and above and of Lt Col pensions with Col(TS) pensions at a service of of 26 years and above is an additional matter, over and above the issue of Options 1 and 2 as explained in the last line of this blog post.

Thus, based on above assumptions, the shortfall to a pre 2016 Wg Cdr pensioner with a QS of 25.5 years would be 90900-84329 = 6570/- per month.

The shortfall is seen to increase with Qualifying Service. The shortfall graph is now displayed within the larger chart. This would be true for all ranks, even for civilian pensioners as the 2.57x(31 Dec 2015 pension) would give rise to similar shortfalls, although these could be less severe for the civilian pensioners, especially in the case of Gp A Officers as they already enjoy NFU.

Therefore, the upward revision of pensions based on the increment system, as mentioned at para 19 of Circular 570 and para 21 of Government of India Letter of 29 October 2016, is of vital importance.

The variation of pensions under the two options and the shortfall as applicable to Lt Col / Cdr / Wg Cdr are illustrated as follows. Let me remind again, this is based on several assumptions, such as that Index No. 1 Level 12 A of VII CPC matrix corresponds to a QS of 13 years. Any feedback to point out errors would be welcome) [Please click on arrow mark in frame of graph to obtain a magnified view]: (In case the embedded chart is not viewable, readers can click on this link for viewing it)

An additional chart that compares Option 1 and 2 pensions for pre Jan 2016, especially pre 16 Dec 2004, Lt Col pensioners with and without parity with pensions of Col(TS) can be viewed by clicking to this link.

The impression of there being a shortfall gets further accentuated when a comparison is made as relating to the ranks of Maj and Col (TS) as in this chart [Please click on arrow mark in frame of graph to obtain a magnified view] :

The actual and higher requirement of ensuring parities for time-bound ranks was given here

{Update: With the release of a Press Note on 04 May 2017, Method 1 / Option 2 of CPC recommendations appears to have given way to a Modified Formulation }

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