Thursday, 3 November 2016

One Rank One Pension demand by Armed Forces personnel

One Rank One Pension demand by Armed Forces personnel

One Rank One Pension (OROP) has been a constant demand by hard working Armed Forces personnel over the past 40 years, yet governments have come and gone but OROP is still to see the light of day. But what exactly is OROP?

According to OROP, Armed Forces personnel retiring at the same rank with the same length of service should be eligible for the same pension regardless of their date of retirement. OROP would ensure that any changes in rates of pension afforded to Armed Forces personnel retiring in recent times will be relevant to all other retired Armed Forces personnel having same rank and length of experience. Hence, One Rank One Pension irrespective of date of retirement.

Importance of OROP
Since Armed Forces personnel retire at younger ages, with some retiring between 35-37 years of age and others between 54-56 years of age, they do not have the opportunity for further pay hikes afforded to civilians and therefore are reliant on their pension only. The Armed Forces of the country needs a young work force, but less youths will be inclined to join if they are not sure of their future financial security.

Hurdles In Adopting OROP
The OROP concept was applicable till 1973 when the pensions for Armed Forces and civilian employees was equalised, due to bureaucracy issues. Since then, one of the key issues has been the initial investment cost to launch OROP since typically pension is cut from the salary of a working person, however, for the base line year used by OROP the difference in pension would come directly from the pocket of the government. In addition, every time the pay commission announces a salary increase the governments direct expense will also increase.

Current Status
However, the concept of OROP was accepted but then the point of contention rose of which year pay scales should be taken as base year. While government wanted to use the 2011 pay scales as base year, the veterans wanted 2014. The difference of 3 years would make a difference in not only salary and pensions levels but also regarding the number of personnel eligible for OROP resulting in an additional cost of nearly Rs 4,000-Rs 6,000 crore. Finally the government consented to the 2014 base year date.
The Narendra Modi government agreed to adopt OROP with an estimated expense of Rs 1,000 crore which they have stated will be given in instalments due to the large value.

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