Rejoinder to Chetan Bhagat on OROP
This is in response to Chetan Bhagat's article on OROP published by Dainik Bhaskar on 19 September and ToI on 20 September 15.
In September 2011 Renuka Sane and Ajay Shah wrote a paper on Pensions on the portal of National Institute for Public Finance and Policy. This paper has a distinctly anti-military flavor. Hence I have taken data from this paper to refute or reply each of Chetan Bhagat's suppositions or assertions. So here we go!
Civil servant till 2004 were covered under defined benefit pension scheme. These employees, in normal course, would start retiring only in 2036. Their pensions gobbled up 2.31% of GDP in year 2004-05. They have far liberal terms of service. Each of these civilian employee is eligible for pension after 10 years service and get full pension after 33 years service. Their pension is computed at 50% of average of last 10 month salary and 40% commutation is allowed, which is restored after 15 years. Budget for 2009-10 projected outgo for 3.5 million central government civilian pensioners at Rs. 484 billion or $10billion which equals 1% of GDP. Add 1003.5 billion for State Government pensioners. Total comes to 2.5% of GDP. Most importantly they are coveredby Equal Opportunities Act which safeguards their employment even if they suffer from a disease which leaves them bed-ridden.
Military pensioner are also covered by defined benefit pension scheme cost which cost .3% of GDP (one-third of central government civilian pensioners) in year 2010-11. By the way out of total 2.2 million defence pensioners .5 million are civilians paid out of defence estimates and 1.72 million are veterans. Soldier are eligible for pension after 15 years service and get full pension after 33 years service. Pension for a soldier, just like civilian, is computed at 50% of average of last 10 months salary. 45% commutation allowed, which is restored after 15 years. Budget for current year shows outgo of Rs. 540 billion on 2.2 million defence pensioners. The civilians, as brought out earlier, numbering .5 million will take away 220 billion from defence pension. Thus in reality 1.72 million veterans were to get Rs. 320 billion as pension in current year, which will rise to Rs. 400 Billion if OROP is implemented. By the way where did you get figure of additional Rs. 120 billion for OROP?
So , my friend the following can be deduced:-
A. Civilian government employee becomes eligible for pension on completing 10 years service compared to a soldier who can get pension only after 15 years of service.
B. 90% of soldiers are compulsorily retired at the age of 37 - 42 years compared to civilian employees who retire at 60 years of age, thereby serving 23 - 18 years more. This results in civilian employee earning three times more.
C. Because of early retirement the soldiers retire at lower end of pay bracket and thus earn less pension, while on the other hand civilian employees retire at higher end of their pay scale and thereby earn maximum possible pension.
D. Civilian employees get full protection of Equal Opportunities Act which allows even bed-ridden employee to remain in service, the soldiers are thrown out for lesser medical infirmities without pension too (if they have not reached pensionable service).
E. Because of early retirement stipulation a soldier can at best get one Assured Career Progression, that is he will become a Naik on the other hand a constable in CRPF/BSF will get three Assured Career progression and retire in pay scale of Assistant Sub Inspector.
F. Simple mathematic will show that per capita outgo on a civilian pensioner paid out of defence estimates is Rs.440000/- Per annum, while it is Rs. 186040/- on a soldier.
G. While I am unable get true figure for central government civilian pensioners, it is said their ratio to serving is .7:1, that is .7 pensioner for each employee. Hence safe to presume that their number would be 2.4 million. And if extrapolate figures of 2004 which Renuka and Ajay have cited then 1% of GDP now would be Rs. 970 billion, which would be the figure for civilian pensions now. Implying that per capita pension of civilian pensioner is Rs. 500000/- per annum. After adjusting for error of data, it can be safely taken as same as that of civilian pensioner paid out of defence estimates (refer F above).
Apparently a civilian pensioner on average is drawing 2.3 times ore pension than a soldier because of reasons explained in B and C above.
By the way I have not even mentioned that soldiering is the Only Unique Profession, wherein the employee, that is, soldier takes on to perform his duty onto death. Shouldn't you like to put a logic figure on this commitment too!
Thank you for patient reading. Now I look forward to a logical reply.
Best regards
Yogi
Sent from my iPad
In September 2011 Renuka Sane and Ajay Shah wrote a paper on Pensions on the portal of National Institute for Public Finance and Policy. This paper has a distinctly anti-military flavor. Hence I have taken data from this paper to refute or reply each of Chetan Bhagat's suppositions or assertions. So here we go!
Civil servant till 2004 were covered under defined benefit pension scheme. These employees, in normal course, would start retiring only in 2036. Their pensions gobbled up 2.31% of GDP in year 2004-05. They have far liberal terms of service. Each of these civilian employee is eligible for pension after 10 years service and get full pension after 33 years service. Their pension is computed at 50% of average of last 10 month salary and 40% commutation is allowed, which is restored after 15 years. Budget for 2009-10 projected outgo for 3.5 million central government civilian pensioners at Rs. 484 billion or $10billion which equals 1% of GDP. Add 1003.5 billion for State Government pensioners. Total comes to 2.5% of GDP. Most importantly they are coveredby Equal Opportunities Act which safeguards their employment even if they suffer from a disease which leaves them bed-ridden.
Military pensioner are also covered by defined benefit pension scheme cost which cost .3% of GDP (one-third of central government civilian pensioners) in year 2010-11. By the way out of total 2.2 million defence pensioners .5 million are civilians paid out of defence estimates and 1.72 million are veterans. Soldier are eligible for pension after 15 years service and get full pension after 33 years service. Pension for a soldier, just like civilian, is computed at 50% of average of last 10 months salary. 45% commutation allowed, which is restored after 15 years. Budget for current year shows outgo of Rs. 540 billion on 2.2 million defence pensioners. The civilians, as brought out earlier, numbering .5 million will take away 220 billion from defence pension. Thus in reality 1.72 million veterans were to get Rs. 320 billion as pension in current year, which will rise to Rs. 400 Billion if OROP is implemented. By the way where did you get figure of additional Rs. 120 billion for OROP?
So , my friend the following can be deduced:-
A. Civilian government employee becomes eligible for pension on completing 10 years service compared to a soldier who can get pension only after 15 years of service.
B. 90% of soldiers are compulsorily retired at the age of 37 - 42 years compared to civilian employees who retire at 60 years of age, thereby serving 23 - 18 years more. This results in civilian employee earning three times more.
C. Because of early retirement the soldiers retire at lower end of pay bracket and thus earn less pension, while on the other hand civilian employees retire at higher end of their pay scale and thereby earn maximum possible pension.
D. Civilian employees get full protection of Equal Opportunities Act which allows even bed-ridden employee to remain in service, the soldiers are thrown out for lesser medical infirmities without pension too (if they have not reached pensionable service).
E. Because of early retirement stipulation a soldier can at best get one Assured Career Progression, that is he will become a Naik on the other hand a constable in CRPF/BSF will get three Assured Career progression and retire in pay scale of Assistant Sub Inspector.
F. Simple mathematic will show that per capita outgo on a civilian pensioner paid out of defence estimates is Rs.440000/- Per annum, while it is Rs. 186040/- on a soldier.
G. While I am unable get true figure for central government civilian pensioners, it is said their ratio to serving is .7:1, that is .7 pensioner for each employee. Hence safe to presume that their number would be 2.4 million. And if extrapolate figures of 2004 which Renuka and Ajay have cited then 1% of GDP now would be Rs. 970 billion, which would be the figure for civilian pensions now. Implying that per capita pension of civilian pensioner is Rs. 500000/- per annum. After adjusting for error of data, it can be safely taken as same as that of civilian pensioner paid out of defence estimates (refer F above).
Apparently a civilian pensioner on average is drawing 2.3 times ore pension than a soldier because of reasons explained in B and C above.
By the way I have not even mentioned that soldiering is the Only Unique Profession, wherein the employee, that is, soldier takes on to perform his duty onto death. Shouldn't you like to put a logic figure on this commitment too!
Thank you for patient reading. Now I look forward to a logical reply.
Best regards
Yogi
Sent from my iPad
posted by Yogi at 9:43 AM
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