Working on Updation of Pension

Following  message is collected from. Facebook and posted here for all.

Working on updation of Pension

Facts:-
1.   Mass recruitment in Banks started from the year 1969, before which number of staff was very less in Banks.
2.   Mass Recruitment was stopped from the year 1982.
3.   Again Recruitment started from the year 2010.
4.   Staff joined on or after the year 2010 is covered under separate Pension Scheme, namely NPS.
5.   Pension Fund is a closed Fund after the year 2010, which means that there are/will not be any new entrant after the year 2010.

6.   *Pension fund balance as on 31.03.2018 was Rs. 2.40 lakhs crores.*

7.   *In the year 2017-18, interest earned on the Pension Fund was Rs. 18,400 crores, i.e. average rate of interest is 8%.*

8.   *In the year 2017-18, Pension of Rs. 14,800 crores was disbursed.*

Assumptions based past facts:-
1.   Pension Disbursement will increase by average compound rate of 5% every year due to DA increase.
2.   Pension fund will earn same rate of interest i.e. 8% p.a., henceforth.
3.   The average life of present pensioners is further 15 years from the year 2018, i.e upto the year 2033.
4.   The surplus funds available from the balance of pensioners died before the year 2033, will be available for disbursement of pension to the pensioners surviving after the year 2033.

 Working:-
1.   Working of position of Pension fund with above facts and assumption is shown in Table A.

2.   Working of position of Pension fund with updation with average rise of 22% in the year 2020 and further 15% rise after every 5 years is shown in Table B.

3.   Average 22% rise means
(i) 15% rise to retirees before the year 2020,
(ii) 17.50% rise to retirees before the year 2015,
(iii) 21% rise to retirees before the year 2010,
(iv) 24.50% rise to retirees before the year 2005, and
(v) 28% rise to retirees before the year 2000.

Conclusion:-
1.   From Table A, it is clear that with normal rise of DA, huge surplus of Rs. 1,95,022 crores in pension fund will be available with the Banks in the year 2033. This surplus is many times more than the funds required for payment of pension to the pensioners surviving after the year 2033.

2.   From Table B, it is clear that even periodic updation as above is granted, present funds are sufficient upto the end of year 2033, when most of the Pensioners have said good bye to this world. The surplus funds available of the balance of pensioners died before the year 2033, will be available for disbursement of pension to the pensioners surviving after the year 2033.

Thus, the contention of IBA that Pension funds are not sufficient for up-gradation, is false. On the contrary, Banks would not be required to contribute anything in present as well as in subsequent BPS for upgradation of Pension. If the Banks contribute something, more liberal upgradation may be possible. (Source – BankPensioner)

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C N VENUGOPALAN
Ex-Manager, Union Bank of India &
Former Director (GOI Nominee) e-State Bank of Travancore
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Nandanam, Kesari Junction, N Paravur, Kerala -683513
No.200726                                                                                    26th July, 2020

The General Secretary,
Bank Employees’ Federation of India (BEFI),
3 Radha Bazar Lane, Kolkatta – 700 001
Comrade,

XIth Bipartite Settlement

It makes everyone happy that while those who declared that they would not sign the BPS unless retiree issues are settled became roll-models by taking “U”- turn and signing the settlement, BEFI befittingly stayed away from signing it and became role model though the abstinence was on other grounds.   The act of BEFI was stellar and remarkable and other organisations were failing to deliver goods as trade unions.
Tracing the origin of BEFI, I remember that in the seventies, while AIBEA that was dominating the trade union scenario was not performing on several parameters, people including me fell apart in 1973 and afterwards joined BEFI that originated in 1982.  The splinter group was assembling at Madras Cafe auditorium, Kochi.  So it gave me immense pleasure that the organization BEFI is now upholding the cause of employees in the right direction.  It is my wish that BEFI champions the cause of employees and retirees who are former members.


While remaining under the umbrella union UFBU, BEFI was also sustaining a pitfall in signing the Joint Note dated 27.042010 agreeing to the unlawful contribution of 2.8 times revised pay for November 2007 from serving employees and 56 percent of CPF from retired employees to the Pension Funds of banks and for forfeiting pension from the date of retirement to 27.11.2009 for granting an option for pension afresh.   The frills were inconsistent with Pension Scheme and hence void in law.  Ministry of Finance was according sanction for implementing the Joint Note knowing well that it was an administrative instruction which is unsustainable.  IBA and banks had breached conclusion 10 of the Joint Note whereby the Pension Regulations were to be amended by following the due procedure in law of amending them, rendering the act challengeable.
The Pension (Amendment) Regulations, 2017 brought in by banks makes it explicit vide clause 1 (2) of it that clause 3 (b) of it relating to the contribution to Pension Fund, clause 8 (b) of it relating to payment of pension from 27.11.2009 can come into effect, even assuming as valid, only on the date of the notification in the gazette of India and establishes that banks were guilty in having raised the contributions and in having denied  pension from the date of retirement of the employee to 27.11.2009 on the basis of the Joint Note dated 27.04.2010.  This apart, the clauses 3 (b) and 8 (b) of the notification cannot evolve as valid amendments to regulations as they are inconsistent with the Pension Scheme and impermissible under the Banking Companies (Acquisition & Transfer of  Undertakings) Act, 1970.  The act of banks in raising the contribution and denying pension till 27.11.2009 on the basis of the Joint Note was corrupt and easily challengeable.

 The Pension Scheme in banks was agreed to be on the lines of that obtaining in Reserve Bank of India in terms of clause 6 and 12 of the memorandum of settlement dated 29.10.1993 on pension concluded by IBA so far as relating to payment of pension, amount of pension, updating, general conditions etc. Now Ministry of Finance, vide letter F No.11/5/2001-IR dated 26th June, 2020 granted another option to employees of Reserve Bank of India to join Pension Scheme without the contribution to Pension Fund from serving and retired employees and without losing pension for any period to the retired employees.  This too makes imperative that similar option has to be granted in public sector banks also either through fresh administrative instructions or by deeming the options extended on the basis of the Joint Note as options for the purpose of the regulations.      In either case, it is inevitable that the unlawful contributions raised to pension fund is refunded and pension from the date of retirement to 27.11.2009 is released with interest to those concerned.

It is germane in this context that vide clause 4 of the Pension (Amendment) Regulations, 2017 it is notified that employees who ceased to be in service after 29.09.1995 after rendering minimum service of 15 years are entitled to join Pension Fund.  When they are granted the notified benefit, they become entitled to pension from the date of retirement and without the contribution to the Pension Fund.  But the notified benefit is remaining unpaid.

Likewise, vide clause 8 (a) of the Pension Amendment Regulations, 2017, notification, it is notified that employees to whom provisions of either regulation 34 or regulation 46 is inapplicable are entitled to pension from the date following the date of their retirement. In the wake of this, pension is payable to such employees from the date following the date of their retirement inescapably. 

 Coming to updating of pension which is remaining undone ever since the inception of the Pension Scheme in spite of regulation 35 (1) postulating that “Basic Pension and additional pension, wherever applicable shall be updated ……” and regulation 56 making it crystal clear that the Pension Scheme in banks is exactly on the premise of Central Civil Pension which gets formally updated with the implementation of each Pay Commission without any provision in Central Civil Pension Scheme, requiring updating of pension in banks simultaneous with each bipartite settlement, it is a major lapse on the part of any organization worth its name to remain inert on the want of updating of pension in banks. 


It is also pertinent that the pension in RBI was revised with effect from 01.04.2019 requiring similar updating in public sector banks also since the memorandum of settlement dated 29.10.1993 on pension postulates that the pension scheme in banks shall be on the lines of RBI Pension Scheme.  But the pension in public sector banks ought to be revised from time to time with retrospective effect in view of specific provisions under regulation 35 (1) and regulations 56 therefor.  Non-revision of pension is in derogation of the Pension Regulations in force.

Besides what are aforesaid, the ruling dated 01.07.2015 of the Hon’ble Supreme Court in Civil Appeal No.1123 of 2015 viz. State of Rajasthan & Anr. Vs. Mehendranath Sharma commands that pension shall not be lesser than 50 percent of the running pay bands corresponding to the pre-revised scales of pay making it imperative that pension is determined and paid at 50 percent of the revised pay at any point of time.    The act of the Ministry of Finance in permitting the updating of pension in RBI with prospective effect and subjecting further updating subject to previous sanction from it is in gross disregard to the law laid down by the Apex Court.   It is pertinent that the ruling in Civil Appeal 1123 of 2015 was emanating in a scenario where pension is with a cost to “state” and the denial of pension in banks is without cost either to the banks or to the government as pension is payable out of Pension Funds which comprise the money, property and deferred wages of employees and the Pension Funds of all banks have the potentials to pay two to four times the present pension to all the pensioners.

The Pension (Amendment) Regulations, 2017 has, vide clause 3 of it excluded employees who joined service after 31.03.2010 from the Pension Scheme.  This makes it explicit that such exclusion can come into operation from the date of the notification of the amendment regulations and not before, whereas banks have, on the basis of the Joint Note excluded then from the Pension Scheme from 2010.    Since such exclusion is impermissible under sections 19.1 and 19.4 of the Banking Companies (Acquisition& transfer of Undertakings  Act,  Banks are bound to bring back from the New Pension Scheme the contributions so far paid to it on behalf of the employees who joined service after 31.03.2010 and to reinstate them in the original Pension Scheme.

All the foregoing are brought to surface so that they shall not go unnoticed by BEFI for demanding appropriated corrigendum measures for restoring righteousness.   BEFI, an organization with purpose, can get things done easily by taking them up with IBA or filing a writ petition in case IBA is not acceding to the request.
With sincere regards,,
Yours faithfully,

C N VENUGOPALAN