Ex-servicemen have been protesting since June 14 to press for the implementation of One Rank, One Pension.
Currently, the pension of retired personnel is based on the pay commission recommendations in force at the time of their retirement.
This leads to a difference in pensions for officers of the same rank who retire on different dates.
With One Rank, One Pension, those who retired earlier will draw the same pension as officers and jawans of the same rank who are retiring now.
They would also be entitled to a year's back pensions at the new rate, which would be a windfall for pensioners.
The system will benefit 25 lakh ex-servicemen. It is expected to cost the government around Rs.8,500 crore.
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