One Rank One Pension Issue

SC backs Centre’s OROP scheme

Note4Students

From UPSC perspective, the following things are important :

Prelims level : One rank one pension Scheme

Mains level : OROP Policy

The Supreme Court has upheld the Centre’s one rank, one pension (OROP) scheme for the armed forces.

What is the news?

  • The Supreme Court has ruled that there was “no constitutional infirmity” in the way the government had introduced ‘one rank, one pension’ (OROP) among ex-service personnel.
  • The scheme, notified by the Defence Ministry on November 7, 2015, was challenged by Indian Ex-Service Movement, an association of retired defence personnel.

What is OROP Scheme?

  • OROP means that any two military personnel retiring at the same rank, with the same years of service, must get an equal pension.
  • While this might appear almost obvious, there are several reasons why two military personnel who may have retired at the same rank with the same years of service, may get different pensions.

Need for the scheme

Military personnel across the three services fall under two categories, the officers and the other ranks.

  • Early age of retirement: The other ranks, which are soldiers, usually retire at age 35.
  • No benefits from pay commissions: Unlike government employees who retire close to 60, soldiers can thus miss out on the benefits from subsequent pay commissions.
  • Salary based pension: And since pensions are based on the last drawn salary, pensions too are impacted adversely.
  • Ranks based discrimination: The age when officers in the military retire depends upon their ranks. The lower the rank, the earlier they superannuate.
  • Liability against the sacrifice: It was argued that early retirement should not become an adverse element for what a soldier earns as pension, compared with those who retire later.

Earlier pension mechanism

  • From 1950 to 1973, there was a concept known as the Standard Rate of Pension, which was similar to OROP.
  • In 1974, when the 3rd Pay Commission came into force, certain changes were effected in terms of weightage, additional years of notion service, etc., with regard to pensions.
  • In 1986, the 4th Pay Commission’s report brought further changes.
  • What ultimately happened was that the benefits of the successive pay commissions were not passed to servicemen who had retired earlier.
  • Pensions differed for those who had retired at the same rank, with the same years of service, but years apart.

Demand for OROP

  • Ex-servicemen demanded OROP to correct the discrepancy.
  • Over the decades, several committees looked into it.
  • The Brig K P Singh Deo committee in 1983 recommended a system similar to Standard Rate of Pension, as did Parliament’s standing committees on defence.
  • The Narendra Modi government notified the current OROP scheme in November 2015, and it was made applicable from July 1, 2014.

Issues with OROP

  • During the OROP protests of 2013-15, it was argued repeatedly that meeting the demand would be financially unsustainable.
  • Because soldiers retire early and remain eligible for pension for much longer than other employees, the Defence Ministry’s pension budget is very large, impacting capital expenditure.
  • The total defence pensioners are 32.9 lakh, but that includes 6.14 lakh defence civilian pensioners.
  • The actual expenditure of the Defence Ministry on pensions was Rs 1.18 lakh crore in 2019-2020.
  • The Defence Ministry’s pension-to-budget ratio is the highest among all ministries, and pensions are more than one-fifth of the total defence budget.
  • When the late Manohar Parrikar was Defence Minister, it was estimated that a one-time payout of Rs 83,000 crore would be needed to clear all past issues.

Challenge to OROP

  • The petitioners contended that the principle of OROP had been replaced by ‘one rank multiple pensions’ for persons with the same length of service.
  • They submitted that the government had altered the initial definition of OROP and, instead of an automatic revision of the rates of pension.
  • Under this, any future raising of pension rates would be passed on to past pensioners — the revision would now take place at periodic intervals.
  • According to the petitioners, this was arbitrary and unconstitutional under Articles 14 and 21.

What has the SC ruled now?

  • The court did not agree with the argument that the government’s 2015 policy communication contradicted the original decision to implement OROP.
  • It said that “while a decision to implement OROP was taken in principle, the modalities for implementation were yet to be chalked out.
  • The court also said that while the Koshyari Committee report furnishes the historical background of the demand, and its own view on it, it cannot be construed as embodying a statement of governmental policy.
  • It held that the OROP policy “may only be challenged on the ground that it is manifestly arbitrary or capricious”.

 

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