One rank One pension

Context:

The Supreme Court  ruled 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.

Relevance:

GS II- Government policies and Interventions

Dimensions of the Article:

1. About One rank, one pension
2. Issues with OROP
3. What has the SC ruled now?
4. Challenge to OROP

About One rank, one pension

• 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.
• Military personnel across the three services fall under two categories,
  • the officers
  • the other ranks
• The other ranks, which are soldiers, usually retire at age 35.
• Unlike government employees who retire close to 60, soldiers can thus miss out on the benefits from subsequent pay commissions.
• And since pensions are based on the last drawn salary, pensions too are impacted adversely.
• Similarly, the age when officers in the military retire depends upon their ranks.
• Uttar Pradesh and Punjab have the highest number of OROP beneficiaries.
• Armed Forces Personnel who had retired till 30th june 2014 are covered under it.
• The implementation of the scheme was based on recommendation of the Koshiyari committee.

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.

Issues with OROP

• It was constantly asserted during the OROP protests of 2013-15 that meeting the demand would be financially unsustainable.
• The Defence Ministry’s pension budget is quite big, affecting capital expenditure, because soldiers retire early and are entitled for pension for much longer than other employees.
• The total number of defence pensioners is 32.9 lakh, however that number includes 6.14 lakh civilian defence pensioners.
• In the fiscal year 2019-2020, the Defence Ministry spent Rs 1.18 lakh crore on pensions.
• The Defence Ministry has the largest pension-to-budget ratio of any ministry, with pensions accounting for more than one-fifth of the total defence budget.
• When Manohar Parrikar was the Defence Minister, it was projected that a one-time payment of Rs 83,000 crore would be required to resolve all outstanding concerns.

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”.

-Source: Indian Express