Weak finances may lead to deferment of OROP scheme

The center’s weak finances may force it to defer the implementation of the One Rank,One Pension, scheme for the armed forces to the next financial year.

Under OROP, a uniform pension will be paid to armed forces personnel, who retire at the same rank after the same length of service, regardless of the date of their retirement.Additionally, the government announced that these benefits would be given retrospectively from July 1, 2014, with arrears to be paid in four half yearly instalments, with pensions re-fixed after every five years.

The OROP scheme will add to the governments fiscal burden due to a higher pension outgo. It estimated that the one off- hit due to arrears could be Rs.10,000= to 12,000=crore in FY 2016, if the scheme is implemented this year.The recurring annual additional cost will be in the region of Rs.8,000–10,000=crore, and could increase in the future after pay structure is revised based on the award of 7th pay commission. The pay commission report, which is due by December end, would reset the salaries and pensions of central government employees.

The government has not yet set up a one member judicial committee to examine the interests of retirees of different periods. The panel is supposed to give its report in six months.