Military & Aerospace

The Truth about Rising Defence Pensions
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Issue Net Edition | Date : 19 Feb , 2020

There is considerable commotion in media over the rising defence pension outlay which has touched Rs 1.33 lakh crore.  There are headlines like “General Rawat Favours Pension Cut, Colonial Bungalows to go Away” as if the two are connected and auction of colonial bungalows will supplement pension bill, defence budget or money for managing cantonments – which will never happen as proceeds will go into union coffers as clarified by the defence minister, now heading Ministry of Finance (MoF). That being a separate issue, rising defence pension outlay no doubt is cause for serious concern.

The hullabaloo is more because of OROP. Not only was OROP granted in 2014 actually a one-time increment in pensions, the BJP-government has gone back on its promise of revision after five years, which was due in 2019. Grounds are being prepared to deny OROP altogether because the Supreme Court has set March 24 for final decision on OROP. Government has been portraying OROP as officer related issue which is obfuscation in the extreme. But what is the truth about rising defence pension outlay?

Ever wondered why the pension bill of civilian-defence employees is not mentioned separately in successive annual demands by the Ministry of Defence (MoD) and eventual allocation? The reason is deliberate – share of civilian-defence pensioners is very high despite smaller numbers compared to military veterans. In MoD’s annual Revenue Budget demands, salaries of Service Personal, Auxiliary TA and civilians are shown separately, but under Pensions, all categories are deliberately clubbed together. More ambiguity is created by stating civilian defence employees are on Natioanl Pension System (NPS).

NPS was to be implemented for civilian-defence employees from 2004 but there is large number pensioner who retired before 2004. Contribution during service remains 10% for NPS but government contribution was hiked from 10% to 14% of employee pay plus dearness allowance in July 2017 – GoI F No. 20/07/2017-PR signed by Under Secretary Abhay Garg in his letter to All India Defence Employees Federation dated March 18, 2019. The same letter of July 2017 also promised: payment of compensation for non-deposit of NPS contribution during 2004-2012; providing tax deduction to contributions made under Tier-II NPS up to 1.5 lakhs, and; increase in tax exemption for lump-sum withdrawal on exit from 40% to 60% making total withdrawal exempt from IT.

Civilian-defence employees have continued to enjoy NFU and those retiring before 2004 also received OROP with annual actualization, while military is denied both. All this meant higher pay and pensions for civilian-defence employees and larger government contribution in NPS, in addition to faster promotions. But expansion and upgrades were also engineered with cunning  

Restructuring of AFHQ-CS under MoD was done by misrepresenting facts to  government; posts of seven new principal directors, in addition to the four existing ones, and 36 new directors were sanctioned without any functional requirement expressed by the military. Army representation saying, “Creation of these unwanted/surplus posts is not only a violation of PMO’s directive on ‘minimum government and maximum governance’, but also a drain on public funds and recurring loss to the state” was ignored despite the restructuring also creating functional problems.  

Defence Estate (DE), whose disbandment was recommended by CGDA in 2010 citing it most corrupt part of MoD, was empowered further and granted NFU with retrospect from 2016 by Defence Minister (now FM) Nirmala Sitharaman concurrent to her drive to take over defence land. Section Officer (SO) Entry was stopped by government in Central Secretariat Group B cadre in 2003 based on recommendations of a government-appointed committee. AFHQ-CS instead of discontinuing SO Entry, increased intake from 20% to 50% with AFHQ-CS officers attending meetings with DoPT and UPSC officials stating SO Entry is required by Service HQ without Service HQ even knowing about it.  There were also reports that in these meetings sone AFHQ-CS officers faked as military officers.

41 Ordnance Factories have 200 plus Joint Secretary-level officers (Major General equivalent) while civilians in MES have 11 HAG-grade officers (Lieutenant General equivalent). Against 14.5 lakh Armed Forces personnel, there are 5.85 lakh civilian-defence employees – ridiculous ratio of 1:4 and on an average one serving or retired civilian-defence employee costs five times that of their military counterparts. MoD is loathe to reveal pension share of civilian-defence employees but considering the foregoing civilian-defence employees are likely consuming anything from 40% to 42% of overall defence pensions – civilian-defence pensioners being about 22% compared to some 78% military pensioners. MoD even spends more than Rs 1000 crore annually on pay and allowances of attached MoF personnel.

Yet the military is painted the villain and focus is on culling military veterans – even attacking categories of disability pensions while the CAPF, civil-defence employees and other government services continue to receive the same. The CDS is talking of increasing the service age to 58 which at best is stopgap with attendant pros and cons but who is to address the bloating civilian-defence budget?     

Despite successive Central Pay Commissions and Parliament recommending transfer and absorption of military  personnel after their military service into government organizations and departments where their unique skills, training, discipline and strengths can be optimally used, government has lacked the will due dependence on bureaucracy and obstruction by vested lobbies. The Defence Minister needs to take a call on this and alternatively examine establishing aan exclusive military veteran organization (MVO) for specific tasks. At the same time the Defence Minister would do well to examine this ridiculous ratio of 1:4 – 14.5 lakh military personnel against 5.85 lakh civilian-defence employees.

Combatizing civilian-defence employees is one option, the other being retiring military personnel at young age be given the option of TA-isation and serve in lieu of civilian-defence employees. MoF personnel attached with MoD earn deputation allowance and should be paid salary/ pension from MoF, not MoD. Moving the Department of Defence Production (DoPD) from MoD to the Ministry of Commerce and Industry has been projected by many scholars in the past. This has not happened because of the nexus between the MoD bureaucrats with the DRDO-DPSUs-OFB, because of which the governmental defence-industrial sector is in the current state with patchy success. Moving DoPD out would reduce the strain on the defence budget and improve efficiency. Similarly, with the CDS talking about veterans every second day, the Department of Ex-Servicemen (DESW) should be downsized and merged in the Department of Military Affairs.

The Defence Minister needs to stand up for the military for inclusion in Group ‘A’ services, NFU, allowances gone lower than CAPF, OROP and disability pensions. The belief that there will be no war has made the government look askance at the military. The J&K Allowance for military is far below that of CAPF and police. Same is the case of other allowances including the Siachen allowance vis-à-vis hazard allowance for CAPF/police at Leh or Guwahati – giving the impression that Armed Forces are considered necessary evil. Demonizing officers is downright idiotic given their proven record of sacrifices. Either NFU should be granted to Armed Forces or discontinued for other government services.

Recall in December 2017, Army Chief (now CDS) General Bipin Rawat had expressed alarm at apparent politicization of the Army saying that military should be kept away from politics. His statement held significance as 91.5% of officers engaged in counter-insurgency operations cited disgust for corrupt polity as a major reason for the slumping morale. The study ‘Psychological Aspects of Counter-Insurgency Operations’ published in the Armed Forces Medical Journal’ also said that 61.4% non-commissioned officers and soldiers cited the same reason for their low morale.

Veteran Major General Samay Ram writes in his book ‘Stress, Suicides and Fratricides in the Army’ that the “Army has to shoulder the main burden of not only containing the militancy but also of carrying out development work since the civil administration is either defunct or unwilling/reluctant to play its part of (sic) carrying out developmental work.”

Bearing down for cutting down on military’s pension must also be viewed in the backdrop of the move to hike pay 4-5 times of lower judiciary and the Prime Minister announcement in July 2019 of a Rs 3000 monthly pension benefiting three crore shopkeepers and traders who never retire and never cease to make profit many fold. Little wonder a former Army Chief publicly stated that army is no more the preferred option for youth. Ignoring the ground truth would be tragic notwithstanding the rhetoric of a reporter asking a commander how is the josh and get the reply on expected lines that everything is tickety-boo.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Lt Gen Prakash Katoch

is Former Director General of Information Systems and A Special Forces Veteran, Indian Army.

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30 thoughts on “The Truth about Rising Defence Pensions

  1. These facts are alarming. These facts and many more would be available with Army policy makers. A strong NO for pension cut is needed from Army Chief. He should not be betraying bhis men.

    The quotq of defence civilainas should be shown separately. Specially to those bureaucrats who are against every benefit for army.
    Hard areas for extra allowances are different for civil servants. Why?
    Have heard an interview a few years back when these bureaucrats were after cutting down kerosene quota for glaciers. None of them had been there.
    One of the IAS officer had arguesd.. “People know the facts of mife and death in army before joining. They join armybto die what is th fuss about ” and still they would get better pension benefits. Govt should just try once to raise a finger on their pensions and see the cry.
    PM is celebrating Diwami with troops and planning Diwala for them. What nerve.
    The present proposal would also affect the exit policy by retaining the personnel.
    Promotion policies and lack of vacancies aee never talked about. To retain skilled manpower in force a good promotion policy is needed.
    Army Chief need to step in to just disregard the proposal. Whats the leadership about afterall!!

  2. Very systematically explained facts which is bound to bring down the morale of Defence forces. Govt is on cut down path for military service undermining the other joint facts as defence civilian clubbed with defence budget, for every 3 defence person there is 1 civilian who is enjoying NFU and orop in each pay commission. Also allowances in hard area are much less than civilians and para military personnel.
    In but shell, with disgruntled military, nation will pay heavily on its boarder resulting terrific loss on country’s economy and image world around.

  3. All these points must be put forward in newspaper editorial time and again .And also before the Supreme Court.
    Previous chiefs must put such points during their talks on sagging morale of the army.

  4. A very incisive article deserving cognizance at the highest level. Young profile of the services is a necessity for the nation and so is looking after the life of soldiers post retirement if the nation has to maintain national integrity or even to emphasize its will where ever. To that extent pension bill has to be considered as cost of security of the nation.
    Ratio of 4:1 soldiers and defense civilians is alarming. Suggestion given of lateral absorption is very valid and nit new. An orientation capsule towards the end of service will help in reducing dual pension bill as well also bring in efficiency. Mr Nitin Gadkari rightly lashed out at the inordinate delay in construction NHAI building and called upon attracting talent from prestigious institutions and the same can be incorporated by making serving defense forces attractive. So far measures suggested have been of mundane nature and innovative. Definitely polty has to subdue bureaucracy for national welfare. Decisiveness without prejudice to a particular service is a must.
    My compliments Sir, for such a succinct article.

  5. I personally do not know why any serving general never ever raises any issues with what their boss(es) is saying? Surely they are rated highest on Courage of conviction in their CRs. My use of a ‘g’ instead of a ‘G’ in the spelling is deliberate. Most of them are just generals. Others choose to look the other way since it does not affect them. Still wondering if a serving general will ever speak the truth to his boss. Somehow I refuse to believe that all of them agree with him. All of them cant forget the Credo all at once.

    More so, the Indian Army is already attracting mediocres from the population. The bright ones dont even consider it as a career option. SSBs have had to drop standards simply to fill the seats in academies, and still failing because the candidates dont even meet the dropped standards. This damage is longer lasting. Instead of making the career option lucrative, all one is offering is crap.

    This issue about the bureaucrats and civilian defence employees is the result of larger incompetence of Army Officers. It has happened right under the noses of the most elite officers in the Army headquarters. Were they sleeping? Or they did not give a fish because they still got good CRs?

    I am sure anyone who ever wants any opinion from me about joining the forces, I will advise them against it. In the corporate, at least they dont make you a fool after promising you the moon, and even if they do, at least you can say bye the very next day. The Army doesnt even allow that. Its like Bad Debt.

  6. Time for generals admirals and marshals not to engage troops officers in foolhardy life-threatening combat situations . Since the armed forces have been reduced to class 2 services and a mere employment Avenue keep training , play golf work 9 to 5 and enjoy like Babu’s do . The burden of safeguarding the country must also be shared by the Netas cunning Babu’s and businessmen for whom the forces are the golden Geete which lay gooden eggs , supply substandard arms ammunition clothing food combat gear and employment to their near and dear ones in companies supplying equipment .

  7. Sir, your Observations and Recommendations are commendable and based on detailed research. There is NO ‘Other Way’ to arrest the screeching downside in Indian Armed Forces’ morale and lowering the MoD’s Pension Budget, unless the following steps are implemented:-

    1. 4 Years prior Army Service made compulsory for all Govt Employees, in order to reduce the Defence Pension Allocation.

    2. Department of Defence Production to be moved out to Ministry of Industry.

    3. NFU of Pay be granted to all Armed Forces officers at par with IPS / IFS officers with immediate effect, without effecting any change in military ranks.

    4. All officers who get direct commission should be engineering graduates/ post graduates in any subject. After 10 years of military service, they should be sent on deputation service to other Ministries for two tenures of Five Years each, in order to broaden their expertise and employability.

    5. Remaining Civilian Staff strength under the MoD has to be cut down by 50%, in three years time, by redeployment to other Ministries.

    6. 100% of retiring Armed Forces personnel have to be given re-employment in their respective States upto 60 years of age, drawing the last salary while in active service, as Home Guards, Forests & Environment Protection Force etc.

  8. Taxing DP was step to reduce the pension bill, but this may be a drop in the ocean.
    Have we considered family pension to widows who the pensioners married after retirement. They will probably draw pension for almost 40-50 years after the pensioner’s demise. Data available would be interesting.
    Disability pension is entitled only if attributable/ aggravated by military service. Similarly, only a marriage while in service should be considered for family pension.
    Many old pensioners take on young wives where they actually need attendants/ caretakers, with lifelong pension being attractive.

  9. The ratio of Servicemen vs Civilians is NOT 1:4, as quoted erroneously multiple times !!
    For a civilian strength of 5.85 Lacs vs Faujis being 14.5 Lac, the ratio works to be *Even less then 1:3,* which is much moreAlarming.

    Similarly, it has NOT been highlighted that on joining Defence Forces on same day at same level, a Fauji Jawan retires at much younger અંગે ( max 20-30 yrs of serviceand with much lower LAST PAY DRAWN, which gets him a miserly Pension,
    as compared to his civilian counterpart, who retires after OVER 40 years of service, and hence at much higher rank with at least 2-3 EXTRA Pay Commissions and the great NFU – – all this leading to an ASTRONOMICAL Pensions for him !!

    And we are not even talking about the SkyHigh Termination benefits, which are many folds MORE, besides having Full Salary right upto ripe old age of 60 years !!

    NO wonder that the Govt is deliberately HIDING this dirty TRUTH.

    BUT, what on earth are the 3 Great Chiefs and the CDS doing ?? Do they Not know even this basic and fundamental fact – if YES, why are they lumping this scam, and if NOT, then they are not worth their posts.

    Either way, these 4 Top brass, are doing a great injustice to our Braveheart Veterans – of which they themselves will also be a part soon.

  10. Can the new CDS not take all non functional org like CGDA,OFB.DRDO,DEO,etc not come under his ambit.Even DESE should also be under CDS.
    CDS needs to undertake a study to curtail the civilians in MOD so that a lot of money is saved instead of the faujid.
    Is it not a joke the civilians have ID similar faujis..Who allowed them this to implement?

  11. Sir, Very well articulated views on Military pension! Needs to be given wide publicity in print and visual media. Infact in all possible forums including social media. May I request you to appear on TV debates and at least approach some prominent newspapers! Expecting much resistance from comrades in Uniform is futile. It is obvious dissent will be crushed. OROP fructifying had much to do with the resistance movement by veterans in all forums including hitting the streets. Thanks for enlightening us with facts and figures about the mischief we always knew existed!!!

  12. Sir
    The civilian employees who have entered government service after 01 Jan 04 are covered under NPS and hence the civilian employees will continue to get pension benefits under old rules for atleast another twenty years plus.
    The civilian employees retired after 2004 and upto now are drawing pension from defence pension outlays.
    Maj Gen R C Padhi

  13. Dear General,
    When the OROP was implemented, the pension of ICO Captains was tagged with the pension of Honorary Commission Captains. This was done because no data for the rank of Capt was available since officers do not retire in these days. The Captains were granted the the average of minimum and maximum pension of the JCOS granted Honorary commission. Thae anomaly was referred to OMJC the report is under examination since then. We have been drawing the pension @Rs 43716 while the Honorary Captains drawing pension @Rs 51450 as on today. The MOD and AHQ is not paying any heed and we are compelled to draw lower rank’s average pension. On the other hand those Honorary Captains were drawing pension above average their pension has been protected. Very sad and bad. Capt Gurdas Singh Bawa

  14. Gen Katoch has brought out the Military pension conundrum so succinctly. The Govt is deliberately playing in to the hands of the bureaucrats because it suits them. Govt’s aim is to keep the military in a perpetual state of pecuniary flux…make them beg for pay rises and then throw peanuts at them!
    Promises of OROP, five-yearly equalization and much more has been systematically denied while keeping the civil services of all shades and hues happy.

  15. All this ranting is not going to help. Military has to flex it’s muscle like other govt organisation and learn to get it’s pound of flesh. The events / records of past will reinforce my statement. Military brass must be more assertive.

  16. The General has brought so many facts; the nation will hang its head in shame. Will any politician of any party care to read this letter. Look at the shady hand of the Ministry of Defence into the whole affair. It is one ministry that is hell-bent in destroying their own armed forces. God save our nation!

  17. It is a henious crime which is being committed by every successive government. Nation is so treacherous, when it comes to make a respectable pay pack, to defence personnel, because they are not troubled at every xing for checks and then asking for bribes by the people guarding the borders.our people can make hollow promises. None from the families of such highly paid civilian beurocrats,or politician will ever join the noble force for noble cause. Country of ours full of selfish cowards will turn their begging bowl to people from defence forces,when their is flood, tsunami,or even the next door Babloo falls in a deep hole under the soil.Point to consider,why are we taming these civilian highly paid dogs ,who can’t even bark ,at the proper time. The nation is simply striving upon such devoted real nationalist force.Anyway I simply sympathize with our heroes,as me being from this background,can only understand the pain. We need senior officers like Sam,Kariappa and likes.

  18. The so called thick skinned political dispensation acts like a bunch of abject fools, intent only on extorting money from salaried sections. It often resorts to half truths and even outright lies and damaging obfuscations to treat the Indian military as a step son.Unless veterans have a political platform of their own, they will never count for much. The sooner they realize this the better it will be for future generations of faujis.

  19. Lt Gen Prakash Katoch should know that there is no other country in the world which gives out pensions to its defence services like what is being made to do in India. It a shame that the armed forces want money not just for their service but also because they have served the nation they wish to be paid for it. Doctors to serve the nation every minute so do others… This is the proof of deteriorating ethos in The Indian Armed Forces.

    • A very uninformed and mischievous comment. It is also contrary to the Honourable Supreme Court order. Is it ok for the state to renege on its commitment? Is India any different in paying pension to its Armed forces personnel? I would request you to kindly refrain from making irresponsible remarks.

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