Amidst an ongoing protest by ex-servicemen demanding equal pension for similar ranks, the Narendra Modi government is reported to have accepted a formula for calculation of pension for defence personnel and is likely to announce the one-rank, one pension (OROP) package in a few days time.
The new pension formula will kick in from July 2014 ?and use 2013 as the base year for calculations, say reports.
But it will stick to its position on a five-year reset clause for veterans - as against 10 years for civilians - while factoring in the complications resulting from a quicker adjustment.
The ex-servicemen had demanded an annual adjustment.
The pension for veterans of the same rank and those who retire with full pensionable service, will be the average of the maximum and minimum paid. But to protect any retired servicemen from losing out, there will be an additional safeguard to ensure that those who are already drawing above the average would not be impacted.
Sources said the government is of the view that OROP should mean that an ex-servicemen of the same rank and with the same amount of service should receive the same pension, irrespective of the year of retirement.
"The principle is that any increase in pension should result in a similar enhancement for someone who retired earlier to ensure that the new and old pensioners are at the same level. This will be done through adjustments once every five years," explained an official.
The government is expected announce the package in the next two-three days.
The benefit of OROP would be available to war widows too but those who have opted for voluntary retirement would not be eligible.
The government is planning to pay the arrears from July 2014 in four installments spread over two years. In case of widows, however, it would be cleared in one shot.
Sources said implementing OROP would cost the government Rs8,000-10,000 crore annually. For the current fiscal year, the government has budgeted for defence pension of Rs 54,500 crore.
While the ex-servicemen were demanding that OROP should be implemented from April 2014, the government has opted for the July cut-off as the Modi administration took charge on May 26, 2014, explained an official.
The government is likely to brief President and commander-in-chief of the Indian armed forces Pranab Mukherjee before taking a final call.
To sort out any anomaly, the central government will set up a judicial commission, which will submit its report in six months. The government is also expected to announce a one-member judicial panel that will submit its report in six months.
The ex-servicemen are also reported to have made a climb-down saying they are agreeable to a two-year review of pension. The ex-servicemen had also recently written to the President, seeking his intervention in the issue.