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21 March 2023: One Rank One Pension

Why in the news?

The Supreme Court directed the government to clear Rs. 28,000 crores in one-rank-one pension arrears by February 2024. Earlier, SC directed the Defense Ministry to give a note specifying the exact quantum of arrears due to be paid under the “one rank, one pension” scheme.

The budgetary outlay for the Ministry of Defence for 2022–2023 was Rs 5.85 lakh crore, of which Rs 1.32 lakh crore was for the planned expenditure for total pension disbursements during the year. The Rs 28000 crore in one-rank one pension arrears is for the period between 2019 and 2022, which is an additional component.

About One Rank, One Pension: It implies a uniform pension to personnel based on rank and length of service, irrespective of the date of retirement. The Rajya Sabha committee on petitions (the Koshyari Committee) recommended the OROP.

Military personnel across the 3 services fall into 2 categories: the officers and the other ranks (soldiers, who normally retire at the age of 35). so soldiers can thus miss out on the benefits from subsequent pay commissions. Because pensions are based on last-drawn salaries, ultimately pensions are also impacted.

Evolution: From 1950 to 1973, there was a concept called “standard rate of pension” ( similar to OROP). Later, the 3rd and 4th Pay Commissions made some changes, which means the benefits of successive pay commissions were not passed on to servicemen who had retired earlier. This means persons get different pensions even if they retired at the same rank with the same year of service. NDA (first term) notified the One Rank One Pension Scheme, which was applicable from July 1, 2014.

Is it financially viable?

Due to this scheme, there is an increase in the pension budget of the Defense Ministry, which impacts its capital expenditure. The Defense Ministry’s pension-to-budget ratio is the highest among all ministries, and pensions are more than one-fifth of the total defence budget. Retired defence personnel also have the largest share of pensions among all retired government employees. Every time a new pay commission came, it would lead to substantial payouts to achieve parity.

Stand of the Supreme Court-

The SC upheld “one rank, one pension for the defence forces and said that it doesn’t find any constitutional infirmity in the manner in which it is being implemented. As per the court, the OROP definition is not arbitrary, and the definition of OROP is uniformly applicable to all pensioners, irrespective of the date of retirement.

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