Defence Pensions

The total strength of the defence employees has risen from nearly 362,000 in 1960 to 1.3 million today. The defence pensions bill, which is over 50 percent of the central government’s pensions bill, has also risen exponentially since the 1960s. It has grown nearly tenfold from Rs. 1670 Crore in 1990-91 to Rs. 14,650 15,244 Crore in 2007-08; and is currently over two-thirds of the military salary expenses. The subterfuge of removing defence pensions expenditure from the overall military expenditure, in vogue since 1985, has turned the spotlight away from this issue.

More than three percent of defence employees retire every year. The bulk of this group is of soldiers, who constitute 85 percent of the defence forces. There is an average in-service death rate of 1.2 percent for the defence employees, largely due to counterinsurgency operations. Early induction age and early retirement age implies a younger age cohort for 90 percent of the defence employees compared to their civilian counterparts.

Due to early retirement, the defence employees do not fulfill the government criteria of 33 years service to earn a full pension. This ought to reduce the defence pensions bill significantly. However, the high ratio of 1.68 defence pensioners per defence employee implies an extended period of pension payments, which offsets the lower rates of defence pensions. The other civil departments, incidentally, have a ratio of 0.55 pensioners per employee.

Moreover, Indian population above 60 years of age is growing at a rapid pace, at an annual growth rate of 3.8 percent per annum in the period 1991-2001, as against the annual growth rate of 1.8% for the general population. The improved health care and increased life expectancy will skew the pensioners to employees ratio even further.

The recommendations of the Sixth Pay Commission are likely to push the defence pensions bill further northwards, if the example of Fifth Pay Commission is anything to go by. The implementation of Fifth Pay Commission recommendations had led to an increase in the defence pensions bill from 4947 Crore in 1997-98 to 10770 Crore in 2000-01.

It is believed that the defence pension bill has the potential to reach an unsustainable level, and perhaps even exceed the wage bill. This is borne out by the recent trends and is indicated by realistic assessment of such liabilities in the future years. The government has decided against introducing pension reforms in the defence services.

There is an immediate need to reduce the defence pension bill, which will otherwise continue to be a big drain on the national exchequer. This can be achieved by reducing the minimum military service requirements, pushing for early retirements with lateral absorption schemes and identifying a new model for defence pension reforms. These are desirable not only on the grounds of fiscal prudence and equity, but also to keep the military lean and young.

Cross posted at the Indian Economy Blog


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44 Responses to Defence Pensions

  1. Vikram February 19, 2008 at 9:42 am #

    Revealing statistics!

    In your recommendations you have missed out on VRS. PSUs quite successfully implemented VRS to shed the surplus manpower.

  2. PS February 20, 2008 at 6:25 am #

    1.The percentages refs requested.
    2.Lateral moves will be blocked as a billion others are in the Q. Sad Govt schemes like 100 day assured employment come to mind.
    3. Earlier retirements – would that create a much larger esp. rural pool of impoverished, post release ‘youth’ adequately trained in the fine arts of conflict ? Currently a 12 year old street smart peanut or veg vendor can earn more than a soldier and with less violent equations other than the mandatory haftawalla lathi.
    4. Sanjay Gandhi had the right simple 2 point solution for India – Grow more trees and the other.

  3. Pragmatic February 20, 2008 at 8:01 am #


    1. The three government studies on pension reform and the planning commission policy paper.

    2. If you don’t move laterally, you only go South — D for down.

    3. “Early retirements with lateral movement”; else likely to breed well-trained Naxals.

    4. The other one is needed before the trees.

  4. naveen March 26, 2008 at 3:50 pm #

    I want to know my pension at this time is Rs. 4200 according to 6th pay commission proposal how many rupees it will be incriase

  5. Venkatesh March 26, 2008 at 4:29 pm #

    There seems to be some confusion as to how the new pension will be calculated.There is a table given in annx which gives the new pension against the old pension.But as per the rule one’w notional pay has to be calculated & 50 % of that will be the pension.If any commutation is done that also has to be accounted for.As per the report dearness pension is not to be taken into account.Another issue is that the pension should be increased by 40 %.Hence one tends to get confused & will have to wait for clarifications from the implementation committee

  6. R.NATARAJAN March 29, 2008 at 6:11 pm #

    I was retired on 01 December 1990 as Hony Lt. My pension as on 01 Jan 2006, which includes 50 of DA was Rs 7875/-. What would be my revised pension as on 01 Jan 2006 as per the 6th Pay Commission Report.

  7. Brahm Dutt March 29, 2008 at 8:13 pm #

    I want to know how would I calculate my defence pension according to the 6th pay commission, if today I am getting 4192/- p.m.

  8. PS March 29, 2008 at 8:53 pm #

    @Brahm Dutt

    Copy of circular I received below. May help.

    ‘Below I give you the guidelines as to how to work out your pension on 01 Jan 2006 and how to work out your pension as on date, including the DA increase upto 01 Jan 2008.
    The calculations have been worked out based on the following Paras and Annexure of the 6th Pay Commission –
    A – Paras 5.1.46 and 5.1.47 on Pages 346 and 347 of The Report of 6th CPC.
    B – Annexure 5.1.1 on Pages 87 to 254 of The Report of 6th CPC.

    Let us assume the following –
    A – your pension on 01 Jan 1996 as – P96
    B – your pension 0n 01 Jan 2006 as – P06
    Calculation of Pension.
    As per the interpretation of the above paras of the 6 CPC
    P06 = P96x2.48241
    Calculation of Pension on date.
    The DA rise between 01 Jan 06 and 01 Jan 08 as declared by the Govt = 23%
    This DA rise is over the Pension + 50% merged DA.
    This needs correction factor because 50% merged DA is no longer applicable.
    Therefore, the DA rise of 23% on old pension translates as 14% on the new pension.
    Therefore Pension on date (P06 + DA) = P06 + P06x0.14
    Or Net Pension on date = (P96x2.48241) + (P96x2.48241) x0.14
    = (P96x2.48241) (1+0.14)
    = (P96x2.48241) x (1.14)
    = P96x 2.830
    Now simplifying for you all –
    If your pension on 01 Jan 1996 was Rs 1,000.00
    Your pension on 01 Jan 2006 will be
    P06 = Rs 2,482.41
    Your pension plus DA as on date say
    P06 (08) = (Rs 2,482.41) x1.14
    P06 (08) = Rs 2,830.00

    To find your pension on 01 Jan 2006,
    Multiply your pension amount as on 01 Jan 1996 by 2.48241.
    To find your pension plus DA as in Mar 2008,
    Multiply your pension amount as on 01 Jan 1996 by 2.830
    I am sorry I shall not able to answer any more queries individually on this subject.
    However, if you all wish to discuss the issue among yourselves please visit our weblog .. at xxxxxxxxxxxxxxxxxx (deleted as private cc)

  9. adithyan April 9, 2008 at 10:07 am #

    can I know how the formula of multiplication 2.48241 was arrived at

  10. adithyan April 9, 2008 at 10:12 am #


    It is very much a guidance to those who are in search of a spec of light on the indianized english presentation of the pay commission report which is being interpreted in various colors. But I like to know how the figure for multiplication 2.48241 is arrived at.
    will be highly grateful if clarified

  11. R.NATARAJAN April 13, 2008 at 4:58 pm #


    Thank you for your guidance on working out of pension. Is it applicable for defence pensioners also?

  12. Mohan Das April 13, 2008 at 9:45 pm #

    @ PS

    Congrats on your new ‘avtaar’ as pension consultant!!

    This too goes into my collection of ‘quotable quotes’.

  13. R.NATARAJAN April 14, 2008 at 1:31 pm #


    As per the recommendation of 6th CPC a Junior Commissioned Officer who is gtd Hony Lt in active service,his Pay is 15600/-,Gde par Rs 5,400 and his mil service pey is 6000/ So his total salary as on 1.6.2006 is Rs 27,000/-and his pension should be (50% of the total salary)Rs 13,500/-. As per the calculation given above, his pensiopn on P96 was Rs 5250 which now works out to 5250×2.48241 = Rs 13032/- only. Can anybody clarify which one is correct.

  14. ps April 14, 2008 at 4:18 pm #

    Pension etc >
    Another circular sent to me recently:

    The Universal Formulae to Calculate 6 CPC Related Figures.

    As mentioned earlier, for answering questions of your friends on the above subject all you need to know from him/her is the full pension of as received by the person in November 2007.

    Full pension here means -

    The pension received in bank + the commuted amount if any.

    Let us abbreviate Full Pension of November 2007 as FPN07.

    Now the universal formulae to calculate the various amounts are as under -

    New Pension as on 1-1-2006
    FPN07 x 1.1737

    New Pension as on 1-1-2008
    FPN07 x 1.385

    Arrears of 2006
    FPN07 x 3.600

    Arrears of 2007
    FPN07 x 3.8892

    Arrears per month in 2008 till implementation 6 CPC or till next DA added, which ever is earlier
    FPN07 x 0.3424

    Arrears from Jan to Mar 2008
    FPN07 x 1.0273

    Total Arrears from Jan 2006 to Mar 2008
    FPN07 x 8.5168

    FPN07 = Full Pension in November 2007
    = Pension received in bank plus commuted amount if any

  15. adithyan April 16, 2008 at 8:04 pm #

    Sir, My earlier question itself is not
    answered about the factor 2.48241. I retired in 1996 july in scale 10000-325-15200 and my pension was fixed at 6243(before commutation). The pages 338and 339 of Report 5.1 talk about fixation of pension for old retirees before 1-1-06. In bold letters it says the pension in NO case shall be less than sum of 50 percent of the revised scale and the grade pay corresponding to retired scale. If the corresponding new scale is A and the grade pay of retired scale is G, does it mean that the minimum pension should be (A+G)/2 or (A/2)+G. Such a mention by CPC would have dispelled all colored interpretations. The pay commission members perhaps expect that the retired senior citizens must be teased to tiresomeness by conflicting interpretations. Right from constitution to any administrative orders, as a senior government officer ,I have seen that interpretation is left to the small mercies of the desk staff who tinker with the pay and pension as per their interpretations. Out of utter disgust I write this. Any right thinking retiree can see the evil designs of dilatory tactics of government crafted to create confusing and conflicting situation to buy time for implementation of the CPC report with its own downward corrections wherever it feels like. Don’t you understand the meaning of silence behind? Any esteemed clarifications about my point raised above since it must settle the doubts of dust at single stroke about the minimum assured pension. If you look at the look up table (Report 5.1.1), the first column mentions about previous pension plus DP if any. Does it make any meaning for old retirees? Can the CPC re-read its own text and offer explanation? oovernment trumpets it is anxious to utilise the brain potentials of the able senior ciizens and now you see the treatment meted out even at the interpretation stage.

  16. Friends April 16, 2008 at 8:52 pm #


    Thank you.
    Personally, I do not have a clue about defence pensions Sir. Army, Navy, Airwallas
    are all correctly confused.

    Best to visit Draupadighat Allahabad or Golibar Maidan Poona to get the correct integral and differential analysis. Cheers.

  17. sulekha bis April 22, 2008 at 11:41 am #

    Dear sir,
    I am widow Family pensioner,my husband retired on 31-10-1984.and my f/p as on 01-01-96 is Rs.1650/-,and now i am geting 3639.00+100/-(med),what is my f/p after 6 Cpc.

  18. MVR Nair May 10, 2008 at 12:05 pm #

    What will be the Pension of an Honarary Lieutenant of a Retired Indian Naval person after implementation of the 6th Pay Commission? Can the PCDA(P) Allahabad, Droupadighat give a reply to my question?

  19. lt col ramesh wasudeo May 12, 2008 at 6:47 am #

    what about one rank one pension? is the policy scrapped?. will there be two retired generals getting different pensions with vast difference.

    pensions are subject to income tax deductions. 40 % rise with 35 % IT deduction will be a laugh for those who are on borderline for IT. increase will bring total pension under IT. that will give negative rise to pensioners.

    please comment.


  20. sub balappa ms June 7, 2008 at 5:08 pm #

    i am going on retirement from 01 Apr 2008
    my old basic as on date is 7130 with x gp
    what will be my new salary and pnsion as per 6th cpc

  21. Wing Commander Shashikant Oak June 22, 2008 at 4:49 pm #

    Dear Sir,
    1)I have been trying to get the information regarding the new 6 monthly rates of DA by 6th PC WEF 1/1/2006, as against hike of 23 % in the matter of 2 years as per 5thPC DA rates?
    2) Also can any one tell me which one out of the following figures is the correct new rate of pension as on 1/1/2006 for me?
    My pension (P96)on 1/1/2006= 9190/- .
    My pension in bank in Nov 2007 (FPN07)was Rs 15485/-
    My pension +DP was = Rs13785.
    My Pension 9190-Commuted amount 3952+DP 4595= Rs.9833/-
    1)_As per your formula P06 = P96×2.48241
    My pension as on 1/1/2006 will be i.e.9190*2.48241= 22813.3479
    2)As per another Army formula FPN07 x 1.1737
    my pension comes = 18073.8063.
    3)As per formula in 6PC Annexture – Old Pension 9190+Dp 4595= Rs 13785= new rate comes as Rs 19667/-
    Of the three rates which one is corect?

  22. R. NATARAJAN August 10, 2008 at 3:01 pm #

    As per Ch 2.3.30 (P 86)A JCO who is gtd Hony Lt will get one increment at the time of promotion as Hony Lt. Now my question is what is the annual increment as Lt and is that also be included while calculating his pension?.

  23. menon August 10, 2008 at 9:42 pm #

    This thing about Defence pension bill being 50% of the central govts pension bill is FALSE like in UNTRUTH like in FIB. It is just about 4% of the total payout of pension when all civil services are clubbed as one. When segregated for statistical falsification it is inflated to 50%

    A world bank study carried out by Robert Palacios and Edward Whitehouse on Civil Service pension Schemes around the world in May 2006 can be read at this link:

    :http://siteresource s.worldbank. org/SOCIALPROTEC TION/Resources/ SP-Discussion- papers/Pensions- DP/0602.pdf

    Figure 6 of the report shows how India is the second highest after Brazil in expenditure on civil service pensions as a % of government revenues. Then why the hesitation to pay us?

    In pg 23 it says that even if (as our IAS argues that Defence Forces have the benefit of pension) in the case of an employee contribution, it can be argued that since civil service wages are not determined freely and negotiations are based on net wages, the incidence of an employee contribution would still fall on the budget.

    Fig 11 IS AN EYE OPENER and will show you how we and the ministers are are kept in the dark when the FM says “NO MONEY”.

    Pg 70, 71 and fig 20 will tell you how we compare to Pakistan in Def Pensions vs Civilian pensions.


    “Military Personnel: Perhaps the single most difficult group to integrate into a general pension system is the military. Soldiers clearly face special risks and cannot be expected to retire late as most workers. Not surprisingly, most countries make special provisions for them, even if they are somehow covered under the main pension programme. – - – .

    Figure 20 shows military versus civil service pension spending in India and Pakistan over the period 1993-2003. During the period, India spent on average about half as much on defence pension as Pakistan. The civil service pension bill rose dramatically and the military pension bill moderately in India, while both were relatively stable in Pakistan. Strikingly, for most of the period, Pakistan’s defence pension spending was greater than spending on civil service pension. – - – “

  24. S.SAM DANIEL August 22, 2008 at 10:16 am #


    Dear Readers,

    This is regarding Proposed Pension to Central Government Pensioners with effect from
    According to the following calculations made, a retired Central Government Group A Officer will get an increase of only 19.06% as on 1-1-2006, and 9.15% as on 1-1-2008 in his Pension!
    A Group A Officer [Retired on 31-5-2004] was drawing a Basic Pay of Rs.11,950+DEARNESS PAY 50% +DEARNESS ALLOWANCE 11 % in the Scale of Rs 10,000-325-15,200 with effect from 1-4-2004.Based on the Average Emoluments ,his Pension was fixed as Rs 8,768 +DA 11% of Rs 8,768/-from 1-6-2004.After commutation of 40% of Pension viz,Rs 8,768/-[Rs.3,507/-] his residuary Pension was Rs 5,261/-+DA 11% of Rs 8,768 wef 1-6-2004…What he got on 1-1-2006 was Rs 7,365 /[Pension Rs 5261+DA Rs2104 [24% of Rs. 8,768]
    According to the Central Pay Commission’s Recommendations, ,his basic Pension viz,Rs 8768/- has to be raised to 40% wef 1-1-2006.That will be Rs 12,275/-.For this, there will be no DA [from 1-1-2006 to 30-6-2006] according to the Pay Commission.The actual increase he will get on 1-1-2006 is Rs 1,403/-[12,275-3,507=8,768-7,365].This increase is only 19.06% of Rs 7,365/-from 1-1-2006 and not 40% as widely publicized!
    According to the Recommendations of the Central Pay Commission, the percentage of DA wef 1-1-2008 is 12%.This Retired Officer will get a Pension of Rs 8,768/-[ 12,275-3,507]+ Rs 1,473 [12% DA of Rs 12,275].The total amount he will get as on 1-1-2008 will be Rs 10,241/-At Present, he is getting Rs 9,382/-[Pension Rs 5,261/-+DA Rs 4,121[47% of Rs 8,768,the Original Pension]
    The increase he will get from 1-1-2008 is Rs 859/- [Rs10,241-Rs9,382] which is only 9.15%. It is not known as to how the much publicized 40% increase has been worked out by the Central Pay Commission as well as the Central Government while the actual increase is only 19.06% as on 1-1-2006 and 9.15% as on 1-1-2008!
    Will the Central Government look into the Reality?

  25. jaspal singh August 25, 2008 at 11:21 am #

    my defence pension basic 1710 , commutation 770, dp 855 ,
    basic+dp = 2565 +da 1205 total 3770 pls send me my pension as per new 6th cpc

  26. I Lodhi August 25, 2008 at 12:23 pm #

    @Pragmatic and all erudite bloggers please ponder on these two news items and then, in conjunction with Menon’s comments on 10 Aug 2008, show your intellectual ability to explain this dichotomy.

    The J&K government, in consultation with the Central Govt, has announced a Pension fot the Terrorists’ families saying that it is not their mistake that their children/ father/ brothers have become terrorists

    The Delhi High Court has denied an Army man disability pension for the disability he got while not performing Army task

    I am really amazed by this crassness.
    Shame on these A*******.
    God save this country of ours.

    Why dont you take up this matter for your blog.

  27. Pragmatic August 25, 2008 at 2:18 pm #

    @I Lodhi:

    Send me the link to the first story to get the complete picture. I have seen the other one.

    Notwithstanding all this, if these stories move you and you wish to expound on them, please open your own blog to disseminate your views. It is rather crass to advise other bloggers on what they should blog about.

  28. I Lodhi August 25, 2008 at 3:47 pm #

    Its an article by Ex CBI director Mr Joginder Singh in one of the news papers. Available at : -

    I wish I had enough free time to start a blog.

  29. menon August 25, 2008 at 9:24 pm #

    Politicians will be Politicians & some times logical thinking defies logic. We have different laws for every Indian. One to be passed when appeasement of minorities is concerned, one for politicians, one for the Dons etc, etc. The Delhi High Court giving due consideration to the culture of the land has passed such a Judgment. When being at the wrong place at the wrong time can earn you a Kirti Chakra what more do you expect. Tomorrow the Param Vir Chakra may be handed out for saving the Govt. of the Day from a No Confidence Motion. It doesn’t take long to declare the Oppossition as the Enemy of the State.
    You know why I love blogs? Because like a gossip magazine we discuss everything including Coitus Surplus of the Fauji. Aakhir fauji bhi insaan hain. Let him screw in peace. Politicians do it to the Country, KPS Gill excelled at posterior crimps, IAS chaps do it & so does the rickshaw Walla on the street so WHY NOT THR POOR BLOODY FAUJI.
    The Fauji is supposed to be Straightforward, Tough, Loyal, Honest, Patriotic, and now a Celibate etc &
    A Mushroom
    Keep him in the dark & feed him shit.
    After the Parliamentary Committee saying & recording that One Rank One Pension is justified, the SCPC says “balls’.
    Equal Service equal Pension and the Reviewed SCPC says “it will never stand the Testes of time’’. Lt Cols will still be in PB3 & PBOR will be akin to Anganwadi workers and the Service HQ will let is pass. People will go to Court & spend money and get hypertensive and the ECHS will not give away free hypertension tabs and life goes on. In India it is a crime to be poor and if you are uncivil and rich your day is made. So many Army veterans were worried about the image of the Army when demonstrations against the SCPC were held. Maybe a Guy like Col Bainsla may have moved better results for the veterans. There were a lot of Gens in the fray for better pension but now that they have an upward revision in their grades they have simmered down.
    BTW have any of you heard this Chap Joginder Singh speak on some TV channels. You will be convinced that miracles do happen in India. You
    flick channels to wonder how comedy time started. If he can make it to CBI dir, Hav Bhoop Singh can be considered for the post of Cabinet Secretary.

  30. narayanank August 27, 2008 at 2:44 pm #


    I am a retired Hony Nb Sub from Indian Army. Would you please intimate what pension I can get as per 6th pay commission. Can PCDA (P) (Allahabad) be reply my question.

    with regards,

  31. Major singh August 28, 2008 at 2:28 pm #


    I am a retired Sub (Hony Sub Maj on retirement} Clerk GD, Group B from Indian Army, Corps of SIGNALS on 31st Dec 1991 (A/N) and SOS wef 01-01-1992 (F/N). Would you please intimate what pension I can get as per 6th pay commission. Can PCDA (P) (Allahabad) be reply my question.

    with regards,
    Major singh

  32. Surender August 28, 2008 at 3:08 pm #

    Dear Sir,
    Your this page shows old letters. Please let me know about the latest on the 6th pay commission.
    Thanks and regards,

  33. Ram Narayan September 4, 2008 at 5:53 am #

    Dear Sir,
    I am retired from Navy on 31 Aug 2004 as Chief Petty Officer and presently drawing my Pension Rs. 6228/-. I would like to know, what will be my pension after 6CPC. Please reply.

    With great regards,

    Ram Narayan

  34. sishutosh Panigrahi September 4, 2008 at 1:43 pm #

    I am an Ex-Sgt of IAF retired on 16/2/1998. Could you please let me know what will be my new pension once the 6th CPC is implemented. Whether, I will be covered under the schme that states full pension after 20 years.

    Looking forward to your kind reply in the matter.
    Thank You,

    S. Panigrahi, Cuttack

  35. gcsingh September 5, 2008 at 3:55 pm #

    i am ex- army naik gp b my basic pension is 1501 (486 on nov 1991when retired after 18 years)kindly calculate my present pension vide 6th cpc—–g c singh

  36. prem babu sharma September 17, 2008 at 9:39 pm #

    i am ex- army retaired from eme in group “b”, being Naik.after complition
    of 11years 6 months. at present getting service element Rs-1932/- & disablity also 40%. what is pension in sixth pay commission.please reply.

  37. M Shivanna September 18, 2008 at 4:04 pm #

    I am an ex-Hav/Clerk of Army, retired on 01.10.1994, after completion
    of 17 years. At present drawing my pension isRs.3615/-. I would like to know, what will be my pension after 6 CPC.

    Please reply.
    with great regards

    M Shivanna, Ex Hav/Clerk

  38. Mohinder Singh September 18, 2008 at 10:02 pm #

    I Am Ex JWO in Airforce Retired on Nov 1986 currently Drawing Basis Pension + Dearness PAy = Rs 4421. What will be my revised pension after 6th Pay commission

  39. SK BHARDWAJ September 22, 2008 at 12:55 pm #

    i retired as honorary lieutenant (indian navy) on 31/12/98. my last basic pay was Rs 10850/ and pension fixed at Rs5425/-.what will be my new pension scale please ? THANKS

  40. A.K vijayan September 22, 2008 at 11:59 pm #

    I retired in 30/09/2003 (1st Oct 2003 FN) when i retired my pension was Rs 1701/- my current pension is Rs 3465/- . What will be mw new pension scale please.

  41. SN Charan September 24, 2008 at 1:00 am #

    I retired on 31 Oct 2004. My basic pernsion was 10900. Commutation was 6213. DA was 6431 at the time of retirement.I am from armed forces.
    I do not understand what is DP – is it Dearness Pay?
    As per bank passbook, Pension on Nov 07 was 18367.
    What will be my pension now with DA and what would be my total arrears?
    Thank you for the good work.

  42. Racer September 24, 2008 at 1:31 pm #

    @SN Charan

    Wrong guy to ask the question….
    [Comment edited - unrelated to the subject]

  43. Pragmatic September 24, 2008 at 2:03 pm #

    Commenters #31 to #42:
    Racer is right. This site does not have a pension calculator.

    [Admin Note - Comments on this blogpost are closed]


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