Revision Of Pension

Letter No: AIPNBPRA/86/2019

Patna
Date: 01.05.2019

The Managing Director & CEO,
Punjab National Bank,
Head office,
Plot-4, Sector-10,
Dwarka
New Delhi -110087.


Dear Sir,

           Sub: Revision of Pension.

For introduction of any new rule in OSR or amendment of pension regulations, four parties are involved.

1. All trade unions, workmen and officers associations (UFBU)

2. Indian Banks Association, after having mandate from individual Banks.

3. Government of India-Ministry of Finance.

4. Boards of individual Banks.

In the process of any industry wise amendment, 4 steps are involved.

1. Individual Bank gives mandate to IBA to negotiate the same with UFBU.

2. Negotiations are held between IBA and UFBU. And an agreement is signed between IBA &UFBU for workman under Industrial Disputes act and for officers in the shape of Joint Note.

3. This agreement/joint note (Industry level) is then forwarded to G.O.I., Ministry of Finance for its approval/sanction.

4. The agreement/joint note so approved by the G.O.I. is formally placed before the Boards of respective Banks for formal approval and implementation in the Bank. This is just a mandatory formality under clause (f) of sub section (2) of section 19 of the Banking Companies (acquisition and Transfer of Undertakings) act 1980.

Pension was introduced in the banking industry by signing of agreement between IBA (after having received mandate from banks) and UFBU on 29.10.1993. The same was then forwarded to G.O.I for approval. After the G.O.I approval the agreement was placed before respective Bank boards under section 19 (2) of the Banking Companies (Acquisition and Transfer of Undertakings) Act 1980. After approval of the same by respective Banks these pension regulations were notified on 29.09.1995 simultaneously in all banks.

One of the conditions of this agreement of 29.10.1993 was that Pension Regulations of PSB’S will be on the same pattern as RBI Pension Regulations.

After sometime, it was observed by the employees and banks that there is a small difference in Pension Regulations of RBI and that of PSB’S. The difference was in Regulation 22(4) of the pension regulations 1995.

To synchronize these two regulations (RBI & PSB), the Banks gave a mandate to IBA for negotiating the same with UFBU. Another agreement was signed at New Delhi on Monday, 10th March 1997. The agreement was signed by IBA (on behalf of PSB’S, after having got the Mandates from them) and all the 9 constituents of UFBU. At page 2 para 3 of the agreement, it is stated: “The Unions asserted that the Pension settlement in Banks was arrived at explicitly on the premise that it will be exactly on the lines of the RBI Pension Scheme. This is the Bedrock of the Pension settlement.”

This agreement was forwarded to G.O.I for approval of the amendment. The G.O.I, Ministry of Finance by letter dated 27.12.1997 advised the Deputy Personnel Adviser IBA regarding the amendment with the instructions to advise the Banks to make necessary amendments in regulation 22(4) of the Bank Pension regulations 1995(Annexure-1). This was subsequently notified by Banks on 7thMarch 2000 after placing the same before both the houses of Parliament.

THIS CLEARLY ESTABLISHS THE FACT THAT THE PENSION REGULATION WERE BEDROCK SAME ABENITIO AND HAS THE STAMP OF G.O.I. BY THIS IT HAS BECOME STATUTORY HARD FACT.

RBI pensioners have been demanding updating/revision of pension since long from M.O.F. Ministry of Finance vide letter dated 26, February 2018(Annexure-2) addressed to C.G.M. (HR) of RBI, at para 3 states as “As regards update of pension, any change in the manner of calculating pension is likely to result in similar demands in Public Sector Banks and Financial Institutions, most of which are currently experiencing financial difficulties.”

This letter establishes that Pension Regulations of RBI and PSB’S are bedrock same and if updating is done for RBI, it has to be given to pensioners of PBS’S also. It also shows the commitment of G.O.I towards revision of pension in PSB’s along with pensioners of RBI. Here, in the above mentioned letter, the G.O.I erred by stating that PSB’S are experiencing financial difficulties. The pension revision/updating has no link with the financial position of Banks. Pension is paid from Pension Fund, which consists of contribution by the employees in lieu of P.F. The position of pension Fund has always been very healthy and sound, it can beer revision of pension many times over.

This letter of Ministry of Finance is based on office note of the ministry, para (IV), page bearing no. 264 F.NO.15/32/2018-IR and is approved by Sect. Finance on 21.2.2018(Annexure-3) It states:

“Contagion effect on PSB/FIs may have cascading effect on banking industry as it is mentioned in Industrial level Settlement of 1993 at the time of introduction of Pension in PSBs  that applicability, qualifying service, amount of pension, payment of pension, commutation of pension, family pension, updating and  other general conditions, etc., will be on the lines as in RBI”.

This indicates nothing but the commitment of M.O.F. for updating/revision of pension of PSB’s pensioners along with that of RBI pensioners.

Now G.O.I. Ministry of Finance vide its letter no. F.No.11/5/2001-IR dated 05.03.2019(Annexure-4) has advised RBI to revise the pension of RBI pensioners as per the formula given in the above mentioned letter with effect from March 2019.

The Reserve Bank of India vide its letter CO.HRMD.NO.G 84/18491/21.01.00/2018-19 dated March 7, 2019 (Annexure-5) has conveyed the sanction of G.O.I to the field staff regarding revision of pension including extent of revision. Now everything is crystal clear.

1. Banks Boards gave mandate to IBA to negotiate with UFBU for amendments in pension regulations on the ground that pension regulations of RBI and PSB’s are bedrock same.

2. UFBU &IBA signed agreement in 1997 on this basis.

3. M.O.F is committed to the fact that if ever it gives sanction to RBI for revision of pension, it has to do the same for PSB pensioners.

All the parties involved in the process of amendment of pension regulations (PSB’s-IBA-UFBU and M.O.F &the Board of Banks) agree to the fact that RBI & PSB pension regulations are bedrock same and if one is amended, other will be amended automatically. M.O.F in its letter 26.02.2018 has committed to revise pension of PSB pensioners when it revises pension of RBI pensioners.

Only thing left is placing the proposal to amendment of revision of pension regulation before the Board under section 19 (2) of the Banking Companies (Acquisition and Transfer of Undertakings) Act 1980.

All the parties to the amendment have agreed and Ministry has shown its commitment. Any Breach of agreements and G.O.I commitment is criminal offence.

Sir, I am sure that you and your legal advisors/consultants/IBA will be able to contradict the facts stated above, such as:

1. The pension regulations of PSB’s are on the same pattern as in RBI as per the agreement dated 29.10.1993.

2. Amendment to Regulation 22(4) of pension regulation1995 was signed between IBA &UFBU on the premise that the Pension Regulations of RBI and PSB’S are Bedrock Same.

3. The M.O.F denied revision of pension to RBI pensioners on the ground that if it allows to RBI it has to also give to PSB pensioners.

4. The M.O.F has ultimately allowed revision of pension to RBI pensioner vide its letter dated 5.3.2019.

You are requested to confirm or contradict the above.

In case of contradiction by your legal consultants/IBA, please let me know about the views of your consultants/IBA on this and oblige.

 Otherwise you are requested to do this statutory Act of placing the pension revision on the lines of RBI circular dated 7.03.2019 before the Board of the Bank at the earliest.

A silence on the part of Bank for 30 days it will be assumed that your legal consultants have been successful in contradicting all the settlements.

Looking forward to your positive response,


Shok Haran Prasad Singh
             General Secretary

Mob: 9471000067
Email: shokharan@gmail.com

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*Payment of Gratuity : Correct interpretation of provisions of service regulations visa vis Relevant provisions of Gratuity Act, 1972*
AIBRF Letter dated 11th May 2019 to Joint Secretary, Government of India, Ministry of Finance, Department of Financial Services, attaching the judgment delivered  by Madhya Pradesh High Court ( Single Bench)   in writ petition no 9182 of 2017 in the matter of calculation of gratuity entitlement of retiring bank employees.
AIBRF has requested DFs, MOF to ask all banks to recalculate gratuity entitlement of all affected retirees and pay the difference amount wherever applicable as per the high court order, and confirmed by the highest court of the country.
Kindly note.


M.K.Mundul
Vice President,
All India Bank Retirees' Federation, 
MUMBAI - 400 016.
Mobile No:                     + 91 9769842350
EMail Id:                           mkmundul@hotmail.com

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KIND ATTENTION ALL RETIRED EMPLOYEES -- VERY IMPORTANT COMMUNICATION :-
ILLEGAL DEDUCTION OF INCOME TAX BY BANK ON LEAVE ENCASHMENT AT THE TIME OF RETIREMENT

A VERY IMPORTANT ISSUE HAS BEEN BROUGHT TO OUR NOTICE BY  one SHRI MC GUPTA,  RETIRED SENIOR OFFICIAL SARAS DAIRY RAJASTHAN MOB NO  9928991918 THAT THE DEDUCTION OF INCOME TAX ON LEAVE ENCASHMENT RECEIVVED AT THE TIME OF RETIREMENT IS NOT CORRECT BECAUSE :

UNDER Income Tax Act Chapter - III, the Central Board of Direct Taxes has made rules in which an employee after retirement/Superannuation/VRS gets amounts in the form of gratuity, leave encashment, provident fund, commutation which  are not considered to be the income of the employee and hence these are NON TAXABLE.
For leave encashment, for which CBDT has created two categories and how much of this amount is exempted from taxes, has been stated as mentioned here below.
Rule 10 (10 AA) – I  Category First

The amount received in the above mentioned item i.e. Leave Encashment, by an employee of the Central / State  Government  is  fully exempted from income tax  i.e. the entire amount is not considered as income.
Rule 10 (10 AA) – II  Category Second :
Other than the employees of Central / State Government who have been called 'Other Employees' , the amount  which is the lowest in the following four points, shall be tax free :-
1.   Earned Leave cannot be allowed more than 30 days in one year, keeping in mind that  theoretical amount of leave encashment is made.
2.  More than 10 months leave encashment is not available at the time of retirement. Keeping this in mind, theoretical leave encashment is based on the 10 X Average Salary.
3.   The Central Government / CBDT may specify the Amount of Limit by Gazette Notification, keeping in mind the Highest Salary of Central Government employee i.e. 10 months Salary of employee who is getting highest salary in Central Government.
4   Actual Amount received by the employee against the earned leaves.
For the 'other employee,' the exempted amount from income tax is the lowest of the above mentioned four points.
Here it is important to understand that limit of Rs 240000/ was fixed because cabinet secretary was getting 8 month leave encashment and his salary was 30000/- at the time of 5th CPC. The leave encashment was raised to 10 months so the limit was revised to 3 lacs vide notification dated 31.05.2002 with retrospective effect of 01.04.1998. All the Govt Notifications and the basis of fixing limit have been obtained under RTI. In 6th CPC the salary of Cabinet secretary was fixed at 90000/ so the limit should have been notified as Rs 9 lacs w.e.f 01.01.2006 and under 7th CPC the salary of Cabinet Secretary is 2.5 lacs so the limit should be revised to R 25 lacs w.e.f 01.01.2016.
But, during the last 16 years period, Central Government/CBDT failed to notify this limit through Gazette notification year wise/period wise.
ACTION POINT FOR THE RETIREES
1. WE ARE ENCLOSING A REPRESENTATION IN WORD FORMAT ADDRESSED TO THE CBDT FOR  ISSUEING REVISED NOTIFICATION AS IT WAS BEING DONE IN THE PAST SO THAT ALL THE RETIREES MAY FILE REVISED RETURN AND GET THE REFUND OF INCOME TAX WRONGLY DEDUCTED BY THE EMPLOYER. Mail address pasted at bottom of letter.
2. ALL THE RETIREES RETIRED DURING 2018-19 MUST CLAIM EXEMPTION ON LEAVE ENCASHMENT WHILE FILING THE RETURN. 
3. RETIREES OF THE PREVIOUS -1- YEAR AMY FILE REVISED RETURN AS PER RULE  IN CONSULtATION WITH THEIR CA AND MAY CLAIM REFUND.
4. ALL OTHER RETIREES SHOULD DISCUSS WITH THEIR CA HOW THEIR RETURN CAN BE REOPENED.
WE ARE ENCLOSING A REPRESENTATION FOR CBDT to be mailed to CBDT AND ALSO  one 31 PAGE PDF FILE CONTAINING FULL FACTS ABOUT THE ISSUE AND INFORMATION OBTAINED UNDER RTI FOR YOUR KIND PERUSAL.

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