IBA Letter Regarding Pension

Indian Banks' Association
HR & INDUSTRIAL RELATIONS
Cir No.HR&1WKU/2015-16/G2/1506
October 17, 2015

HR Heads of Public Sector/Private Sector Banks which are parties to Pension Settlement dated 29.10.1993

Dear Sir/Madam,
LPA No.789/2012 &
LPA 71, 80, 109, 110 & 338/2013 before the High Court of Judicature for the states of Puniab & Haryana, at Chandigarh on "Updation of Pension" — Judgement dated 9.9.2015

The above referred Letters Patent Appeal (LPAs) were filed by P C Jain, M C Singla & Other, L R Singla, the Oriental Bank Retired Officers Association, the Punjab & Sind Bank Retired Employees Welfare Association and the Punjab & Sind Bank Retired Officers Association before the High Court Judicature for the States of Punjab & Haryana at Chandigarh.

The appellants put forth in the LPAs that there has been no updation of their pension in the manner contemplated at the time when pension scheme was introduced in the year 1995 pursuant to a settlement reached between the bank employees and the Management (through IBA) on
29.10.1993.

Extracts of the Judgement is reproduced below:
 .24) A Perusal of Clause 12 of the Settlement makes it abundantly clear that it only provides for further negotiations as regards "applicability, qualifying service, amounts of pension, payment of pension, commutation of pension, family pension, updating and other general conditions etc." and cannot be read to provide for updation of pension. Similarly, Regulation 56 deals with a situation where a doubt arises in the matter of application of the pension scheme and mandates to clear that doubt by referring to the "corresponding provisions of Central Civil Services Rules 1972 or Central Civil Service (commutation of pension) Rules, 1981 applicable for Central Government employees with such exceptions and modifications as the Bank, with the previous sanction of [he Central Government, may from time to time determine ". No such doubt is shown to exist as could necessitate a reference to corresponding provisions of CCS Rules 1972 or CCS (Commutation of Pension) Rules, 1981 applicable for Central Government employees. Thus Regulation 56 cannot be treated to confer certain benefits upon the appellants, which the RBI's
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Indian Banks' Association CONTINUATION SHEET
Regulations or the CCS Pension Regulations provided for . Further, Clause 17 of the settlement provides that if there is difference of opinion with regard to interpretation of any of the provisions of the settlement , the matter can be taken up at the level of IBA and All Indian Bank Employees Association for discussion and settlement. Presumably this clause impelled the learned Single Judge to observe that it would be open for the applicants to make demand for parity if they are so advised and use their bargaining skills through their associations.
25) Ad finem, a word about minutes of meeting dated 26.3.1994 of the Small Committee on Pension whereby it is said to have been accepted that formula for updating pension should be on  the lines of same given in Reserve Bank's Pension Scheme. Discussion s held and agreements reached in this meeting, in our view, are nothing more than parleys preliminary to the final decision which came in the form of pension scheme of 1995. Therefore, the minutes cannot vest the appellants with a right to claim parity with employees of Reserve Bank of India. It may be hastily added here that it is the specific stand of the respondents in the written statement that even Reserve Bank of India has withdrawn the order of updation of pension and the matter is pending adjudication before Bombay High Court. This assertion has not been disputed by the appellants by filing a replication to the written statement.

26) Thus, viewed from all angles, appeals are found to carry no substance and are, therefore, dismissed."

A copy of the Judgement is enclosed for your perusal and record.
Yours faithfully,

K UNNIKRISHNAN
DEPUTY CHIEF EXECUTIVE

Extract from Bank Employees’ Pension Regulations, 1995 :

56. Residuary provisions - In case of  doubt  in  the  matter  of application of   these regulations, regard  may  be  had   to   the corresponding  provisions  of Central Civil Services  Rules,  1972,  or  Central Civil Service (Commutation of Pension ) Rules, 1981  applicable  for Central Government employees with such exceptions and modifications as the State Bank of India in consultation with the Board of  Directors  of the Bank and with the approval of the Reserve Bank of India may from time to time determine.

Extract from Central Civil Services (Commutation of Pension) Rules, 1981

6 (1) The commutation of pension shall become absolute in the case of an applicant referred to
.   .   .   .   .   .   .   .
Provided that -
(b) in the case of an applicant who is drawing pension from a branch of a nationalized bank, the reduction in the amount of pension on account of commutation shall be operative from the date on which the commuted value of pension is credited by the bank to the applicant's account to which pension is being credited.
.   .   .   .
(2) In the case of an applicant referred to in Rule 9 or Rule 10, the commuted value is paid in two or more stages, the reduction in the amount of pension shall be made from the respective dates of the payments as laid down in Clause (a) or Clause (b) of the proviso to sub-rule (1).
 
10 A. Restoration of Commuted Pension –

“The commuted amount of pension shall be restored on completion of fifteen years from the date the reduction of pension on account of commutation becomes operative in accordance with rule 6:
Provided that when the commutation amount was paid on more than one occasion on account of upward revision of pension, the respective commuted amount of pension shall be restored on completion of fifteen years from the respective date(s)”



Extract from FAQs on Central Civil Pension in website (http://pensionersportal.gov.in/FAQ_Civil.pdf)

G.12. What would be the age to be used for commutation of additional commutable pension and which factor would be used for such additional commuted value of pension ?

The age reckoned for calculation of commuted value of pension at the time of original application for commutation of pension will apply for calculation of commutation value of additional commutable pension. However, as mentioned in the OM dated 2.9.2008, the commutation factor in the revised Table of Commutation Value for Pension will be used for the commutation of the additional amount of pension that has become commutable on account of retrospective revision of pay/pension.

G.13. From which date the reduction in pension on account of additional commutation of pension will take effect?

Reduction in pension on account of additional commutation of pension will be in two stages as per the provisions contained in Rule 6 of the CCS(Commutation of Pension) Rules,1981

G.14. What will be the date of restoration of additional commutation of pension?

The commuted portion of pension shall be restored after 15 years from the respective dates of commutation as provided in Government of India decision No.1 under the Rule 10 of CCS(Commutation of Pension) Rules,1981. Necessary endorsement should be made on PPO.

G.15. A person with D.O.B. on first of month retires in the previous month. What will be the value to be taken for calculation from commutation table ?

The commutation of pension become absolute on the date following the ate of his retirement. The commutation value taken will be Age on 61st Birthday i.e. 8.194 in the present commutation table

G.16. If the commuted amount is paid in stages then what will be the date of restoration?

If the payment of commuted value is made in stages, the restoration will also be made in stages from the respective dates of payment.

The Chairman State Bank of India, Mumbai.

Respected Sir,

Payment of Commutation 

EAssociate Bank retirees are entitled to payment of Pension, including Dearness Relief and Commutation in terms of Bank Employees’ Pension Regulations, 1995, as on the date of their retirement.  This is also essence of decision of Hon’ble Supreme Court in Civil Appeal 5525/2012 of Bank of Baroda Vs G Palani & Ors.  Hon’ble Supreme Court provided time of four months to pay the benefits with 9% interest from 13/02/2018.  Now, it is more than five months from the date of Judgment.  Still, our Bank has not paid any benefit to those who retired from State Bank of Patiala and State Bank of Saurashtra.  Retirees from other eAssociate Banks have received only a small portion of arrears. 

Those who retired during the period 01.04.1998 to 30.04.2005, are entitled to following benefits, in terms of Judgment of Hon’ble Supreme Court :

a. Payment of Pension calculated and fixed based on average of last ten months’ ‘Pay’ drawn including Dearness Relief as per Regulation
2(d), 2(s), Regulation 35 and Regulation 38 ;
b. Payment of Pension calculated and fixed duly adding service upto five years, including Dearness Relief as per Regulation 29, in respect of those who retired under VRS - 2001 ;
c. Dearness Relief as per Regulation 37 – Appendix II (2) i.e Dearness Relief Calculated at 0.35% of Rs.2,400/- plus 0.29% of the difference between Rs.3,850/- & Rs.2,400/- plus 0.17% of the difference between Rs.4,100/- and Rs.3,850/- plus 0.09 per cent of basic pension in  excess of Rs.4,100/- for each slab of four points over and above 1148 points of Consumer Price Index – 1961
Series.;
d. Payment of Commutation as per Regulation 41, with Commutation Factor applicable on the date of retirement and recovery/reduction for a period of 15 years from the pension of the month, in which the same is credited to my account.  This is as provided in Para 5 of e-
Circular No.CDO/P&HRD-PPFG/5/2017 – 18 dated 13.04.2017 ;


e. Interest at 9% on the aggregate amount due and payable to me on the date of payment, calculated with effect from the date of retirement ;
f. Cost of Rs.10,000/- ordered by Hon’ble High Court of Karnataka.

It is unfortunate to note that a very small portion of arrears has been paid to these retirees, so far.  While we request you to kindly order immediate payment of balance of arrears, we request you to kindly pay arrears along with interest on entire arrears of Pension, immediately.  In the meantime, we understand from some of the eABs’ Retirees’ Organisations that Corporate Centre has advised that the payment of differential Commutation also entails recovery of commuted portion of pension of fifteen years.  In this regard, we would like to bring following, to your kind notice:
a. If recovery of Commuted portion of Basic Pension of 180 months, while disbursing differential amount of Commutation, this amount needs to be recovered from arrears of Pension or Commutation amount or interest thereon.  This results in payment of amount which is far less than the amount payable as per Judgment. This will not be in accordance with the Judgment of the Hon’ble Supreme Court.  Consequently, such action is treated as violation of the orders of the Hon’ble Supreme Court, ;

b. Para 5 of e-Circular No.CDO/P&HRD-PPFG/5/2017 – 18 dated 13.04.2017 of our Bank has provided for recovery on account of Commutation would be for a period of 15 years from the month of Payment of Commutation amount ;

c. Regulation 56 of Bank Employees Pension Regulations, 1995 provides for reference to corresponding provisions of Central Civil Commutation of Pension Rules, in case of doubt.  Since, Regulation 41 does not explicitly provide for payment of Commutation and reduction thereof, in case of payment of a portion of Commutation is made on account of upward revision of Pension for any reason, there is a need to refer to Rule 5, 6 and 10 of Central Civil Commutation of Pension Rules, 1972.  These Rules are extracted in Annexure I.  Office Memorandum which clarifies further is also provided in Annexure II.  These documents/Rules and Regulations make it abundantly clear that these Pensioners are entitled to differential Commutation calculated taking into account age as on next Birthday at the time of retirement and reduction for a period of fifteen years, from the pension of the month in which Commutation amount is paid ;

d. Indian Banks’ Association, vide Cir No.HR&IR/KU/2015-16/G2/1506 dated 17/10/2015,  quoting the Judgment of Hon’ble High Court of Punjab & Haryana at Chandigarh,  has advised members Banks that  : ‘Regulation 56 deals with a situation where doubt arises in the matter of application of the Pension Scheme and mandates to clear that doubt by referring to Central Civil Services Rules, 1972 or Central Civil Services (Commutation of Pension) Rules, 1981 applicable for .  .  .’.  Further, Indian Banks’ Association has also informed Shri K Srinivasan, President of SBT Retirees’ Association that deduction of Commuted portion of Pension for a period of 15 years after such payment, vide PD/GSN/MISC/G2/486 dated 28/07/2001.  Copies of these Circular and letter are attached, hereto for your immediate reference.


e. Further,  Commutation amount is the purchase price of amount recoverable over a period of 15 years after it is paid.
On account of foregoing, we request you to kindly intervene and order payment differential amount of Commutation and recover the Commuted portion of pension over a period of fifteen years from the date of payment. 
Kindly order payment & oblige.  Please acknowledge receipt

Thanking you,

With regards,