Identifying the lessons in the defence pensions and OROP saga

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Editor's note: Pension is a tricky subject in most countries. Just look at the images from France where thousands took to the streets to protest President Emmanuel Macron’s unilateral decision to raise the minimum general retirement age—i.e. the age state pensions kick in—from 62 to 64. In the glorious French tradition that goes back to at least 1789, these demonstrations were vicious and violent. The provocation may be as mundane as high fuel prices, but the French zeal is always revolutionary. We are talking some serious numbers here. In 2020, France spent 13.6% of its gross domestic product on state pensions, says OECD data. To get a sense of that number, it is worth recalling that India’s total budget spending—including on health, education, defence, infrastructure, et al—hovers around 15% of the country’s GDP. But while India’s numbers may be smaller, the demand for pensions from some quarters is equally passionate. Government employees who had been moved to the contributory New Pension Scheme in 2004 are demanding a return to the old, pre-2004 system that had assured them a fixed payout. The old …