
But his solution, of paying DB pensions till 60, keep contributing to an NPS pool, and then move to DC after 60 - well, this too will wreck the budget. There are 2 elements to de-risking of pension payments:
1. Transfer the acturial risk (the longevity of the payout) to people that can quantify the risk, ie, insurance companies rather than governments.
2. Cap the open-ended nature of liabilities inherent in the DB structure.
Cut it whichever way, moving to a DC model of sorts is the only way out, that is fiscally sustainable.
It would take enormous political courage for the govt to admit that they made a mistake (by committing to open ended OROP), it isnt sustainable, and suggest a radical way forward. Maybe grant OROP for personnel already in service, while drawing a drop-dead date from which all new recruits come in to a DC plan.
The govt needs to enlist the services of credible ex-servicemen to articulate the issues and way forward.
Somehow, I dont think any govt, Modi included has the courage. But would be happy to be proven wrong.