Pension Fund And Rate of Pension

Ten percent of pay employees has to be contributed  in pension fund by each bank every month without any  exception as per pension rules. 

None of the clause gives permission  to any bank to withdraw  money from such accumulation  fund called pension fund. 

Interest and earning on securities  created by such fund is automatic  addition to such fund. 

Over and above that fund,  if it is found that future liability  is more than what is possible  from such fund then bank has to make additional provisions. Once such provisions  is made, question  of withdrawal dies not arise until pensioners die in one lot,  that is thousands of retirees  die in one month or quarter due to which payable pension is reduced to 15 percent in one stroke.  Otherwise pension liabilities  increase gradually  due to addition  of retirees,  increase in DA etc. 

How one can imagine  a situation  which reduces pension liabilities  drastically,  can anyone explain  it,  which forced some bank or the other to withdraw  provisions  made and add to profit?

There is no question of surplus or deficit. it is mandatory for every bank to have adequate provision towards all its future expenses . There are three lakh or five lakh retirees, it is not important, banks have taken back entire bankers contribution from every employee whoever has opted for pension and Banks are supposed to add every month their contribution as much as employees are doing maximum 10% of pay. It is mandatory , I differ with those who say that bank is free to make provision monthly or quarterly or yearly. RBI guidelines point number 7 clearly gives such message. ( Below is given the gist of Chapter 7 of pension rules 1995)

It further says that each bank is supposed to make additional  provisions after each Bipartite settlement because of increase in pay and consequent liabilities.  This clause is enough to say and conclude that as per existing  pension rules,  RBI guidelines  in this regard and joint note signed in BS,  every bank is supposed to update  pension of each retirees.  Unfortunately  every bank is willfully  ignoring  it and aggrieved  retirees are seeking justice in various courts, resorting to letters and dharnas. UFBU is shamelessly maintaining  deadly silence on it,  rather ridiculing  agitations  launched by various associations  of retiree. On other hand , RBI has started updating pension as and when it revises pay and allowances of working employees,

Gist of pension rules is incorporated in my above blog . If any change has taken place in any of its line , please point out the same. Similarly if anyone finds any fault in above or below mentioned message please point it out to me or put the same on the section marked as “Comment”

Following is the method of creation of pension fund as per chapter III of INDIAN BANK (EMPLOYEES’) PENSION REGULATIONS, 1995 

(1) The Bank shall constitute a Fund to be called the Indian Bank (Employees’) Pension Fund under an irrevocable Trust within one hundred twenty days from the notified date. 

(2) The fund shall have for its sole purpose the provision of the payment of Pension or Family Pension in accordance with these Regulations to the Employee or his Family. 

(3) The Bank shall be a contributor to the Fund and shall ensure that sufficient sums are placed in it to enable the Trustees to make due payments to beneficiaries under these Regulations. 

6. Liability of the Provident Fund trust:- 

The Provident Fund trust shall, immediately after the constitution of the fund, transfer to the Indian Bank (Employees’) Pension Fund the accumulated balance of the contribution of the Bank to the Provident Fund and interest accrued thereon upto the date of such transfer in respect of every employee. 

7. Composition of the Fund:- 

The Fund shall consist of the following, namely:- 

(a)  the contribution by the Bank at the rate of ten percent per month of the pay of the employee;

(b)  the accumulated contributions of the Bank to the Provident Fund and interest accrued thereon upto the date of such transfer in respect of the employees;

(c)  the amount consisting of contributions of the bank along with interest refunded by the employees who had retired before the notified date but who opt for pension in accordance with the provisions contained in these 

regulations; 

(d)  the investment in annuities or securities purchased out of the moneys of the Fund and interest thereon; 

(e)  amount of any capital gains arising from the capital assets of the Fund;

(f)  the additional annual contribution made by the Bank in accordance with the provisions contained in regulation 11 of these regulations; 

(g)  any income from investments of the amount credited to the Fund

(h)  the amount consisting of contribution of the Bank along with interest refunded by the family of the deceased employee. 

_______________________________________________________________________________

Books of accounts of the Fund:-

(1) The accounts of the Fund shall contain the particulars of all financial transactions relating to the Fund in such form as may be specified by the Bank.

(2) Within sixty days from the date of publication of the Balance Sheet of the Bank, the trust shall prepare a financial statement of the trust indicating therein the general account of assets and liabilities of the trust and forward a copy of the same to the Bank. *

_______________________________________________________________________________

Actuarial investigation of the Fund:-

The Bank shall cause an investigation to be made by an Actuary into the financial condition of the Fund every financial year, on the 31st day of March, and make such additional annual contributions to the Fund as may be required to secure payment of the benefits under these regulations:

Provided that the Bank shall cause an investigation to be made by an Actuary into the financial condition of the Fund, as on the 31st day of March immediately following the financial year in which the Fund is constituted.

________________________________________________

                           Amount of Pension :-
(1) Basic pension and additional pension. wherever applicable shall be updated as per the formulae given in Appendix I.

2. (2)  In the case of an employee retiring in accordance with the provisions of the Service Regulations or Settlement after completing a qualifying service of not less than thirty three years the amount of basic pension shall be calculated at fifty per cent of the average emoluments.
   
3. 
   
4. (3)  (a) Additional pension shall be fifty per cent of the average amount of the allowances drawn by an employee during the last ten months of his service;
   
5. 
   
6. ( I doubt bank is paying this additional pension)

(b) No dearness relief shall be paid on the amount of the additional pension.

Explanation:- For the purpose this sub-regulation ‘allowances’ means allowances which are admissible to the extent of counted for making contributions to the provident fund.

4. (4)  Pension as computed being aggregate of sub-regulation (2) and (3) above shall be subject to the minimum pension as specified in these regulations.
   
5. (5)  An employee who has commuted the admissible portion of his pension per the provisions of regulation 41 of these regulations shall receive only the balance of pension. monthly.
   

(6) (a) in the case of an employee retiring before completing a qualifying service of thirty-three years, but after completing a qualifying service of ten years, the amount of pension shall be proportionate to the amount of pension admissible under sub-regulations (2) and (3) and in no case the amount of pension shall be less than the amount of minimum pension specified in these regulations.

(b) Notwithstanding any thing contained in these regulations, the amount of invalid pension shall not be less than the ordinary rate of family pension which would have been payable to his family in the event of his death while in service.

(7) The amount of pension finally determined under this regulation shall be expressed in whole rupee and where the pension contains a fraction of a rupee, it shall be rounded off to the next higher rupee.
36.Minimum pension :-
The amount of minimum pension shall be

1. (a)  rupees three hundred and seventy five per month in respect of an employee other than a part- time employee where the employee had retired before 151 day of November, 1992 (in case of workmen) or before 151 day of July, 1993 (in case of officers) and proportionate amount thereof in relation to the rate of scale of wages in the case of a part-time employee who had retired before the 151 day of November, 1992;
   
2. (b)  rupees seven hundred and twenty per month in respect of an employee other than a part-time employee, where the employee retired on or after the 1st day of November, 1992 (in case of workmen) or on or after the 1st day of July, 1993 (in case of officers) and proportionate amount thereof in relation to the rate of scale of wages in the case of a part-time employee who retired on or after the 1st day of November, 1992.
   
3. (c)  Rupees one thousand and fifteen per month in respect of an employee other than a part-time employee where the employee retired on or after the 1st day of April, 1998 and rupees three hundred and thirty nine per month in respect of a part-time employee drawing 1/3 scale wages, rupees five hundred and eight per month in respect of a part-time employee drawing 3⁄4 scale wages where the part- time employee retired on or after the 1st day of April, 1998.
   Provided that on and from the 1st day of May, 2005 the amount of minimum pension, in respect of an employee, other than a part-time employee, who retired on or after the 1st April, 1998 but before the 31st October, 2002 shall be rupees one thousand and sixty per month and rupees three hundred and fifty five in respect of a part-time employee drawing 1/3 scale wages, rupees five hundred and thirty in respect of a part-time employee drawing 1⁄2 scale wages and rupees seven hundred and ninety five in respect of a part-time employee drawing 3⁄4 scale wages, where the part-time employee retired on or after 1st day of April, 1998. *
   
4. 
   
5. * Amended vide Notification No. 11 dated 11.01.2018

(d) rupees one thousand four hundred and thirty five per month in respect of an employee, other than a part-time employee, where the employee retired on or after 1st day of May 2005 and rupees four hundred and eighty per month in respect of a part-time employee drawing 1/3 scale of wages, rupees seven hundred and twenty per month in respect of part-time employee drawing 1⁄2 scale wages and rupees one thousand and eighty per month in respect of a part-time employee drawing 3⁄4 scale wages, where the part-time employee retired on or after the 1st day of May 2005:

Provided that on and from the 1st day of May 2005 the provisions of this clause shall also apply to an employee including a part-time employee who retired on or after 1st November 2002 but on or before 30th April 2005.;*
(e) rupees one thousand seven hundred and seventy nine per month in respect of an employee, other than a part-time employee, where the employee retired on or after 1st day of November 2007 and rupees five hundred and ninety five per month in respect of a part-time employee drawing 1/3 scale of wages, rupees eight hundred and ninety two per month in respect of part-time employee drawing 1⁄2 scale of wages and rupees one thousand three hundred and thirty nine per month in respect of a part-time employee drawing 3⁄4 scale wages, where the part-time employee retired on or after the 1st day of November 2007.".*

37.Dearness Relief:-

(1) Dearness relief shall be granted on basic pension or family pension or invalid pension or on compassionate allowance in accordance with the rates specified in Appendix II.
(2) Dearness relief shall be allowed on full basic pension even after commutation.