Pension

Difference between Index of Rationalisation and Fitment Factor of 2.57

Difference between Index of Rationalisation and Fitment Factor of 2.57

Dear Sir,

1. Our veterans keep recirculating old articles and this leads to many queries from members. I have received few mails / SMSs/ telephone calls from members of TSEWA about a clarification issued by AGs Branch, Army HQ on IOR and Fitment table. The clarification is self-explanatory yet I find it rather amusing why our officer members have to seek my clarification. Anyway, I am giving the clarification on this subject.

Index of Rationalisation (IOR).

2. IOR is a figure which reflects the degree of responsibility, accountability and span of control in 7th CPC. A Sepoy has less degree of responsibility and accountability. He has almost no span of control. Sub Maj of a battalion has all the responsibility, accountability and span of control over the JCOs and OR of the entire battalion. Therefore the 7th CPC in their wisdom fixed IOR at different values for different ranks. This is so for Central Govt Civilian Employees. A Joint Secretary to Govt of India has much higher degree of responsibility than a Desk Officer. Hence Joint Secretary to Govt of India has much higher IOR.

3.  Construction of Def Pay Matrix. The 7th CPC constructed Def Pay Matrix using two terms viz IOR and Entry Pay. Entry pay is dependent upon the basic pay in 6th CPC and varies for each rank from Sepoy to Lt Gen (HAG+). The first row in Def pay matrix is made for all ranks from Sepoy to Lt Gen (HAG+)  by multiplying IOR with Entry Pay for each rank. The Entry pay of Colonel was Rs 48,914 and IOR was earlier fixed at 2.57. The first row of Colonel in the Def pay matrix = 2.57 x 48914 = Rs 1,25,709. When the three Service HQs noticed that the IOR of civilian counterparts of Lt Col to Brig was 2.67, a case was taken up and Govt of India enhanced IOR of Lt Col to Brig from 2.57 to 2.67. They issued new Def pay matrix. The pay of Colonel in first row of Def Pay matrix is 2.67 x 49814 = Rs 1,30,600. Because of this increase in IOR to 2.67, the pay of Colonels promoted to that rank in Jan 2016 went up from Rs 1,25,709 to Rs 1,30,600. The increment is 3% of previous row. With IOR of 2.57 the increment is Rs 3,771 and with IOR of 2.67 it went up to Rs 3,918. IOR therefore plays an important role in fixing pay of serving personnel who moved into 7th CPC period. IOR benefits only pensioners who retired in the period 2013 to 2015 whose pension is higher by notional pay method. IOR has no relevance to all Pre – 2013 pensioners for whom Notional Pay Method is not beneficial.

Fitment Factor.

4.  Fitment Factor is arrived by 7th CPC by dividing the new minimum pay in 7th CPC of Rs 18000 with minim pay of 6th CPC of Rs 7000 i.e. 18000 / 7000 = 2.57. The fitment factor is used to fix pay of all serving employees and pensioners as on Jan 2016. This needs a bit of explanation.

5.  Let us take few examples to understand how and where Fitment factor is used.

6.  JCOs / OR. Hav A retires in Nov 2010 in Group – Y (Group – B at the time attestation) with basic pay of Rs 12,290 with 26 years’ service. His pension by both the methods (2.57 method or Notional Pay Method) is to be worked out and whichever method gives him higher pension w.e.f. Jan 2016, he will be fixed pension by that method.

Pension by Notional Pay Method w.e.f. Jan 2016

Basic Data
Rank Havildar
Name AK Singh
Date of Retirement 30-Nov-2010
Basic Pay (BP) 12290
Group B to Y
Qualifying Service in Years 26
Class for 4th CPC & till 09 Oct 1997 1
Pension in OROP 7995
 

Transition to 7th CPC

Concordance Table Havildar, B to Y; page 168
Basic Pay Located in Row – 18, Col – 12 of Concordance Table
BP in 4th CPC NA
BP in 5th CPC till 09 Oct 1997 NA
BP in 5th CPC from 10 Oct 1997 to 31 Dec 2005 NA
Notional Basic Pay in 6th CPC 31,900
Notional Last Drawn Emoluments = NP + MSP 37,100
Pension by Notional Pay Method = 0.50 x (NP + MSP) 18,550
Pension in OROP 7,598
Pension by 2.57 Method 19,527
Method Beneficial 2.57 Method
Arrears Nil

7.  Beneficial Method. Havildar gets higher pension by 2.57 method w.e.f. Jan 2016

Officers

8.  Let us take an example for Officers. Colonel’s pay in pay band (PIPB) is say Rs 50,000 and his grade pay (GP) is Rs 8700 in 6th CPC. His pay in Jan 2016 is Fitment Factor x (PIPB + GP). This is 2.57 x (50000+8700) = Rs 1,50,859. But it cannot be lower than IOR x Entry pay of Def Pay Matrix. One has to see where does Rs 1,50,859 figures in the Def Pay Matrix (with IOR of 2.67). You find Rs 1,51,400 in the Def Pay Matrix is closest and higher than Rs 1,50,859. Therefore, his last drawn emoluments is Rs 151,400 + MSP of Rs 15500 = Rs 1,66,900. In 2017, his Matrix pay will be enhanced by 3% which is given in row one below than row containing figure of Rs 1,51,400. The pay in 2017 of this Colonel is Rs 155900 +15500 = Rs 1,71,400 pm. The results are shown in the table.

Pension by Notional Pay Method w.e.f. Jan 2016

Basic Data
Rank Colonel
Name MK Singh
Date of Retirement 31-Dec-2011
Basic Pay (BP) 58,700
Group NA
Qualifying Service in Years 30
Class for 4th CPC & till 09 Oct 1997 NA
Pension in OROP 36,130
   

Transition to 7th CPC

Concordance Table Colonel, Table 7, page 192
Basic Pay Located in NA
BP in 4th CPC NA
BP in 5th CPC till 09 Oct 1997 NA
BP in 5th CPC from 10 Oct 1997 to 31 Dec 2005 NA
Notional Basic Pay in 6th CPC 1,51,400
Notional Last Drawn Emoluments = NP + MSP =1,66,900
Pension by Notional Pay Method = 0.50 x (NP + MSP) 83,450
Pension in OROP 36,130
Pension by 2.57 Method 92,854
Method Beneficial 2.57 Method
Arrears Nil

9.  Pension of Pre – 2013 Pensioners. For all those who are getting pension due to OROP, the pension w.e.f Jan 2016 is OROP x 2.57. For Colonel with service of 29.5 to 33 years’ service is Rs 36,130. The pension of such Colonels w.e.f Jan 2016 is Rs 36130 x 2.57 = Rs 92,854 + DR. It is seen Pre – 2013 pensioners get higher pension by 2.57 method and Notional Pay is NOT beneficial to them.

10.  Pension of Post – 2016 Pensioners.  All the pensioners who retired in the year 2013 to 2015 may get higher pension w.e.f. Jan 2016 by the Notional Pay method. Take the case of Brigadier with 35 years’ service, retired in May 2014. His PIPB is Rs 63,150 and Grade Pay is Rs 8,900. His pension by both methods has been worked out by Min of Def vide their letter dated 05 Sep 2017. The same is shown below.

Pension by Notional Pay Method w.e.f. Jan 2016

Basic Data
Rank Brigadier
Name XYZ Singh
Date of Retirement 31-May-2014
Basic Pay (BP) 72,050
Group NA
Qualifying Service in Years 35
Class for 4th CPC & till 09 Oct 1997 NA
Pension in OROP 37,570
   

Transition to 7th CPC

Concordance Table Brigadier, Table No: 8, Page No: 194
Basic Pay Located in NA
BP in 4th CPC NA
BP in 5th CPC NA
BP in 6th CPC 72,050
Notional Pay in Jan 2016 1,87,700
Notional Last Drawn Emoluments = NP + MSP 2,03,200
Pension by Notional Pay Method = 0.50 x (NP + MSP) 1,01,600
Pension in OROP 37,570
Pension by 2.57 Method 96,555
Method Beneficial 2.57 Method
Arrears 5,045

11.  Beneficial Method. For this Brigadier, the Notional pay method is more beneficial than 2.57 method. He was paid pension from Jan 2016 by 2.57 method which is Rs 96,555. By Notional Pay method his pension comes to Rs 1,01,600. His arrears is Rs 5,045 per month (=101600 -96555). The arrears are from Jan 2016 to Dec 2018 and come to Rs 1,83,244.

12.  Enhancement of Pension of those Who got OROP. For all Pre – 2013 pensioners, the pension will continue to be OROP x 2.57 (fitment factor) till Jun 2019. With OROP – 2018, the pension will be then enhanced to the Average of Pension of those who retired with same length of service and same rank in calendar year 2018.

Conclusion

13.  I hope with this long explanation with examples of how to work out pension by 2.57 method and Notional pay method, everyone understands the difference between IOR and Fitment factor of 2.57.

Warm regards,

Brig CS Vidyasagar (Rtd)
TSEWA- 140

1 Comment

  1. In view of the latest Concordance table for Pension fixation of pre 2013 pensioners, AFT case being filed by TSEWA for notional pension fixation becomes redundant. Please clarify for the knowledge of affected pensioners. Dte Gen of Manpower MP5(b) AG’s Br,IHQof MoD(Army) in a recent letter to PCDA(P) Allahabad has asked the latter to take necessary action/give a suitable reply to affected officers who had petitioned to the MoD . Copy of this letter had been endorsed to affected officers including me was written sometime in Jul 2018.

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