Legal Brief for AFT – 29: Incorrect Fixation of Pension by Notional Pay Method for Pre – 2013 Defence Services Officers
- To quash Govt of India, Ministry of Defence letter No: 17(01)/2017/(02)ID(Pension/Policy) dated 05 Sep 2017 being unjust, discriminatory and illegal.
- To issue a revised letter on fixation of pension of Pre – 2013 Officers of Armed Forces by working out notional pay by taking it w.e.f. Jul 2014 (and not from Jan 2006) to Jan 2016 irrespective date of retirement due to implementation of One Rank One Pension (OROP).
- To work out arrears of pension by taking pension in Circular 555 of PCDA (Pensions) Allahabad and arrive at notional pay from Jan 2016 and pay the arrears of pre – 2013 Armed Forces Officer Pensioners as it is higher than present 2.57 method
- The UPA Government announced sanction of One Rank One Pension (hereinafter called OROP) to all defence sevices pensioners during interim budget to the hon’ble Parliament in Feb 2014.
- It was followed by NDA – II Government by approving the grant of OROP in their budget in Jul 2014. Pursuant to the commitment made in passing finance bill 2014, the Government of India, Ministry of Defence sanctioned OROP and issued letter No: 12(i)/2014/D( Pen/Policy)-Part II dated 07 Nov 2015which specifically mention the following:-
“ Para 2. OROP implies that uniform pension be paid to Defence Services personnel retiring in the same rank with same length of service regardless their date of retirement, which implies bridging the gap between the rates of pension of current pensioners and past pensioners at periodic intervals.
Para 3. Salient features of OROP are as follows:-
(i) To begin with pension of past pensioners would be re-fixed on the basis of the pension of retirees of calendar year 2013 and the benefit will be effective from 1.7.2014.
(ii) Pension will be refixed for all pensioners on the basis of average of minimum and maximum pension of personnel retired in 2013 in the same rank and in same length of service.
Para 6. Detailed instructions relating to implementation of OROP along with tables indicating revised pension for each rank and each category shall be issued separately for updation and payment of arrears directly by pension disbursing agencies”
- Accordingly Government of India, Ministry of Defence issued another letter bearing No: 12( 1)/2014/ D(Pen/Policy) – Part II dated 03 Feb 2016containing 101 tables showing pension of all pre – 2013 Defence Services pensioners whose pension has been fixed on the Average of Maximum and Minimum of their counter parts of same rank and same length of service who actually retired in 2013.
- Therefore, by implementing OROP, the Govt of India, Ministry of Defence treated all pre – 2013 pensioners of all ranks from Sepoy to Lt Gen HAG + as notionally retired in calendar year 2013. With this there are now only two category of pensioners i.e. 2013 pensioners and post – 2013 pensioners who drew more pension than what is given in OROP tables.
- Government of India, Ministry of Defence having accepted the recommendations of 7thCentral Pay Commission issued instructions on fixation of pensions for all pre – 2016 Defence Services Pensioners vide their letter No:17(01)/2017/(02)ID(Pension/Policy) dated 05 Sep 2017. This letter gives the modality of fixation of pension by two methods viz Notional Pay Method of Pension Fixation and 2.57 Method.
- 2.57 Method of Pension Fixation. It simply means the pension of all pre – 2016 pensioners is 2.57 x pension being drawn in the month of December 2015.
- Notional Pay Method.This method envisages the pay drawn at the time of retirement to be notionally worked out at each of the intervening Central Pay Commissions and finally come to 7th CPC period.
- Incorrect Implementation of Notional Pay Method.It is humbly submitted that all pre – 2013 pensioners having been treated as if they retired in calendar year 2013 by Government of India, Ministry of Defence vide their 12(i)/2014/D( Pen/Policy)-Part II dated 07 Nov 2015 has to fix pensions based on actual pension drawn in Jul 2014. The transiting to 7th CPC has to be carried out from Jul 2014 of all pre – 2013 pensioners irrespective of their date of retirement. But the Government of India, Ministry of Defence vide their 17(01)/2017/(02)ID(Pension/Policy) dated 05 Sep 2017 says
“ para 4. . The aforesaid Committee has submitted its report and the recommendations made by the Committee have been considered by the Government. Accordingly, it has been decided that revised pension/ family pension of all Armed Forces Personnel who retired/ died prior to 1.1.2016, shall be revised by notionally fixing their pay in the pay matrix recommended by the 7th CPC in the level corresponding to the pay in the pay scale/ pay band and grade pay at which they retired/ died. This will be done by notional pay fixation under each intervening Pay Commission based on the formula for revision of pay”.
In the illustrations given in the Annexure to above cited letter, the pay at the time of retirement of pensioners in 1976 have been taken into consideration, their notional pay in Jan 1986 has been worked out. This procedure was repeated till they arrived at Notional pay in Jan 2016.
When the same Govt of India, Ministry of Defence emphatically stated vide their letter implementing OROP in Nov 2015 that all pre – 2013 pensioners are deemed to have notionally retired in calendar year 2013 and their pensions have been enhanced to those of their counterparts of same rank and same length of service who actually retired in calendar year 2013, it is totally illogical, irrational and arbitrary to take the pay at the time of retirement and arrive at notional pay as has been done in the Ministry of Defence letter dated 05 Sep 2017.
- Notional Pay in Jul 2014.The pay of 2013 pensioner of Armed Forces personnel has been taken as sum of pay in pay band, grade pay and military service pay.
Notional Pay = Pay in pay band + Grade pay + MSP
Pay in pay band + MSP = (Notional pay – MSP)
Pay in pay band + MSP has been considered for calculating Notional pay in Jan 2016.
Notional pay = 2 x pension.
Pay in pay band + Grade pay = (2 x Pension) – MSP.
- Gain by Notional Pay Method.For any rank of officers of pre – 2013 vintage, notional pay method is better as shown in the table below:-
For Brig with 33 years of service, pension in OROP = Rs 37,570 (as per tables issued in Circular 555 of PCDA (Pensions) Allahabad
Notional pay in Jul 2014 = 2 x pension – MSP of Rs 6000
= (2 x 37570) – 6000 = Rs 69,140 pm
Notional pay in Jan 2016 = 2.57 x Notional pay in Jul 2014
= 2.57 x 69140 = Rs 1,77,690
Notional pay in Defence Pay Matrix given in Min of Def , Dept of Defence letter No: 1(6) /2016 / D(Pay /Services) dated 22 Jun 2017 is = Rs 1,82,200 pm + DR
Pension by Notional Pay Method = 0.50 x (Notional pay in Def pay matrix + MSP of Rs 15500)
Pension w.e.f. Jan 2016 = 0.50 x (1,82,200 + MSP of Rs 15500)
= Rs 98,850 + DR
Pension by 2.57 method = Rs 37570 x 2.57 = Rs 96,555
Gain by Notional Pay Method = Rs 98850 – Rs 96555
= Rs 2,295 + DR per month
- Notional Pay Method Adopted by Govt of India is Faulty.The notional pay method deliberately adopted by Govt of India, Ministry of Defence is to take the pay at the time of retirement and then arrive at notional pay in subsequent Central pay commission periods of 4th CPC, 5th CPC , 6th CPC and finally arrive at 7th CPC. This method of working out is absolutely correct for civilians. But it has no relevance for Pre – 2013 defence Services pensioners as all of them have been brought to the level of 2013 by OROP. These Defence Services pensioners have got their revised and higher pension w.e.f. Jul 2014. Therefore the method of working out notional pay is not from date of retirement but from Jul 2014 when OROP was implemented and all pre – 2013 pensioners physically received higher pension.
- Deliberate Denial of Enhancement of Higher Pension.It is respectfully submitted that lower level Accountants in the rank of SAOs in Defence Accounts Department (DAD) who furnish such incorrect methods to Ministry of Defence having known fully that pension of Pre – 2013 pensioners of Defence Services have been enhanced by OROP w.e.f. Jul 2014 but have adopted the method of civilians in Notional pay method. They fully well knew that the method adopted for civilians should not be adopted for Armed Forces who have been granted higher pension in July 2014 but have misled the Govt of India to adopt this faulty method just to deny higher pension howsoever small the higher pension may be.
- Notional Pay Method for Those Officers who Retired in Calendar Year 2013.The Govt of India, Ministry of Defence vide their letter dated 07 Nov 2015 mentioned that pension of all pre – 2013 pensioners is average of Maximum and Minimum of pension of officers of the same rank and same length of service who actually retired in calendar year 2013. The pension actually drawn by those officers who retired in calendar year 2013 will be seen and average of maximum and minimum pension shall be worked out and that pension known as OROP is given to all pre – 2013 retirees. In case the pension drawn by those officers who actually retired in calendar year 2013 is higher than OROP then that higher pension is protected. Their last pay drawn is multiplied by 2.57 and then see how it fits in Defence pay matrix given in Ministry of Defence letter dated 22 Jun 2017 and accordingly the pension w.ef. Jan 2016 is worked as explained in para 13 above.
- Violation of Article 14 of Constitution if Method of Pension Fixation of Pre – 2013 Defence Services Pensioners and of those who actually Retied in Calendar year 2013 is Different. The pension of post – 2013 pensioners and those who actually retired in calendar year 2013 is more or less same. Therefore the method adopted for fixation of pension of those who actually retired in calendar year 2013 has to be adopted for the pre – 2013 pensioners as pension drawn w.e.f. Jul 2014 is same. Otherwise it is violation of Art 14 of Constitution.
- Gain in Pension of Pre – 2013 Defence Services Pensioners by Notional Pay Method.Govt of India, Ministry of Defence vide their letter dated 05 Sep 2017 in their illustrations taken wrongly show that for pre – 2013 pensioners the Notional pay method is not beneficial. This is because the notional pay method was adopted from year of retirement and taken through all intervening Central Pay Commissions. The Ministry of Defence conveniently forgets that all pre – 2013 Pensioners have been brought to the level of calendar year 2013 as date of retirement though it is notional but pensions were revised on the higher side compared to Jan 2006. For example the pension of Brigadier with 33 years of service in Jan 2006 is Rs 29,145 whereas with OROP his pension in calendar year 2013 has been fixed and paid w.e.f at Rs 37,570. Therefore in the Notional Pay Method of pension fixation, the transiting of pay for all pre – 2013 Defence Services Officers has to be from Jul 2014 and not from Jan 2006. The benefit financially all pre – 2013 Officers is given in annexure to this legal brief.
Final Prayer. It is humbly submitted that Notional Pay Method of pension fixation for pre – 2013 Defence Services Officers from ranks of Lt to Maj Gen be fixed by taking their notional pay as in Jul 2014 and work out the notional pay in Jan 2016. Accordingly their pensions be fixed as shown in Ministry of Defence letter dated 05 Sep 2017. Taking the pay at the time of retirement has been made irrelevant by OROP when pensions of pre – 2013 pensioners has been enhanced w.e.f Jul 2014.
The Brief has the following Enclosures.
- Govt of India, Ministry of Defence Letter No: 17(01)/2017/(02)ID(Pension/Policy) dated 05 Sep 2017 .
- Government of India, Ministry of Defence issued letter No: 12(i)/2014/D( Pen/Policy)-Part II dated 07 Nov 2015.
- Government of India, Ministry of Defence issued another letter No: 12( 1)/2014/ D(Pen/Policy) – Part II dated 03 Feb 2016
- Min of Def , Dept of Defence letter No: 1(6) /2016 / D(Pay /Services) dated 22 Jun 2017
- Circular 555 of PCDA (Pensions) Allahabad.
- Tables showing gain by Notional Pay Method for Pre – 2013 Defence Services Officers.
Brig CS Vidyasagar (Rtd)
9493191380 (Mobile connectivity is very poor in my residential complex)