Forum of Bank Pensioner Activists
PRAYAGRAJ
Pension Funds:
Has it been used to settle NPAs?
Is it safe & sound?
Many comments are in air to show the Pension Funds in bad light, as if it is plundered by the Bank Management. Some allegations are afoot, Pension Funds are used to settle NPAs. Another hypothesis is that it is so adequate that it can bear the shock of Pension Revision cost. Next, that it is Pensioners Fund, as against the fact that pensioners' is the Pension only, not Pension Fund. Funds are of Trust which itself is a legal person. Pensioners status with regard to Pension Funds is very clear. In place of CPF, they shifted to GPF with defined Pension. It's simple way to take the things. Pensioners are nobody in Trust, its assets & liabilities.
Today, we shall deal only one aspect, Pension Funds' legal position, it's safety and utilization only.
The Pension Regulations, 1995 (for PSBs) is passed by respective Banks' Boards under power vested in it under Acquisition and Transfer of Undertakings Act, 1970/1980, which came into force on the date of their publication in the Official Gazette.
Constitution of the Fund:
As said in Regulations, "(i) The Banks (not employees, officers or pensioners) shall constitute a Fund to be called, say Dena Bank (Employee's) Pension Fund, under an Irrevocable Trust within one hundred twenty days from the notified date.
According to Indian Trust Act, 1882, (2 of 1882),
"An irrevocable Trust is a trust that can't be changed/modified/altered/terminated by the grantor, once the trust deed is signed and comes into effect. Once the asset is transferred to the trust, it cannot be reversed. Therefore, the grantor, cannot exercise control over the asset."
Hope, it clears the legal status of Pension Trusts as to who created the trust.
Regulations, 1995 says,
"The Fund shall have for its 'sole purpose' the provision of the payment of pension or family pension in accordance with these regulation to the employee or his family."
Fund's 'sole purpose' is laid down, as above. In no other purpose, it can be used.
Regulations, 1995 further says,
"Payment out of the Fund- The payment of benefits by the Trust shall be administered 'for grant of pensionary benefits' to the employees of the Bank or the family pension to the families of the deceased employees of the bank."
In addition to 'sole purpose' the position is more specifically and emphatically laid down in above clause.
Investment of the Fund:
" All moneys contributed to the Fund or received or accruing after that date by way of interest or otherwise to the fund may be deposited in a Post Office Savings Bank Account in India or in a current account with any scheduled bank or utilized in accordance with provisions of the Indian Trust Act, 1882 (2 of 1882)."
Read above provision which stipulated to keep the Funds in Indian Post Offices in India or in current account with scheduled Bank. Trust can invest it's fund subject to compliance of Section 20 of Indian Trust Act, 1882, a British time enactment, which clearly stipulates the investment avenues where Trust can invest or park its Funds, with zero risk proposition.
From the facts stated above, it is abundantly clear that there is no way as to flirt with Trust moneys. Even Trust grantor, in our case Banks, have no power to act beyond the strict stipulations governing the management of Fund.
The allegation that Pension Funds are diverted by Banks or used to settle NPAs bear no testimony at all. It's just baseless allegations, at best nuisance, because so far no such revealations have surfaced.
Two instances we see in past. One in PNB & other in Bank of Baroda, where 'attempts' were made to transfer whooping amounts from Pension Funds, on premises that Actuarial Reports declared huge amounts in crores as surplus above the adequacy level. Banks were under impression that if they are liable to make good funds inadequacies, they have inherent/implied/vested right to draw back the surpluses declared by Actuarial Reports. They were on wrong premises. Trust moneys are not Banks property or asset. In absolute terms, its Trust moneys. The legal opinion in this regard is very clear and candid that in case any amount is used or diverted for other than the specified purposes, it would amount to breach of trust and criminal conspiracy. We don't think any Bank Executive can take such risk as to land himself behind the bar. Further, in Trusts one each of workmen and officers' representative are nominated as trustees. They are the right people to be believed and they have not said any thing otherwise. It's sinister design by our own people to malign the grace of Institutions.
People who allege diversion of Pension Funds to settle NPAs, seem to had worked as grass cutter or gardener in Banks, otherwise bank men know well how NPAs cause, grow and side by side how parallel provisioning is done to meet out any eventuality in the end. Just to reduce NPAs, Banks do 'technical writes off' of such accounts in which provisioned amount stands equal to book outstanding.
By wrong propagations or indulging in slanderous campaign, one can't help pensioners cause. Let us be true to facts and with the constraints, if any. In next issue, we shall deal the two hypothesis, one that Pension Funds are ours and two it is so robust that it can bear the financial burden of Pension Revision & banks need not to make additional contributions.
8.6.2021
(continued from 8.6.21 post)
◆ Are Pension Funds Ours?
◆ Are they so robust, can meet
revision financial burden?
In our mail of 8th June, 2021 we have discussed the legal status of Pension Fund Trusts, administration of Funds, it's investments and uses. Also, we nailed the truth about obnoxious propagandas let loose about alleged diversion and plundering of Pension Funds by Banks.
In the mean time, just we came across a lengthy 'so called petition' addressed as "In the Court of the Central Bureau of Investigation, Before the Director, CBI..", purported to be Sd/- by Senior Citizen/ Bank Pensioner, no name, place etc. This we will discuss in next mail.
As we opined that these grass cutter/ gardener level exercises are nothing, but a sort of problem that they cause to Pensioners. Pensioners are misguided & frightened to such extent that they forget their real strength, standby legal backup, issues and run behind imaginary & concocted stories, get tired, frustrated, defeated and in end turning abusive.
However, let us come to our issue number one: Is Pension Funds ours?.
Agree first that in 1993, what we refer to as Pension Agreement dated 29.10.1993, Unions-IBA agreed to a option to either continue with then existing CPF, as retiral benefit or in exchange opt for GPF+ defined Pension. Better, rest we forget as non-issue.
Those who opted for GPF+defined Pension, naturally they relinquished their right over Bank's Contribution to Providend Fund (CPF).
Once this exercise was over, it was left to the management to formulate Pension Regulations, set the rules how to manage, administer and implement Pension. It were their issues to be taken care of. Banks were at liberty to either capitalize surrendered CPF amount and pay Pension from it's revenues as they do wages or create a separate Fund for this specific purpose. They preferred to create a special purpose vehicle, that we can see in constitution of Pension Fund Trust, obviously to attract tax benefits as well. Banks are grantor of Trusts. Banks have no ownership rights, but obligations to Trust to keep it financially adequate to meet long drawn liabilities of pension payment. It's Banks contractual obligation, which they are complying and nothing else.
As far employees & officers, who opted for Pension, are concerned, they have no such obligations, rather they are beneficiary & recipient of defined benefits from the Trust. For no sensible reason, bankmen say, Pension Funds are ours. It's forged and fake argument.
We try to make home in other words. After retirement, two baskets were made available to bankmen. In one basket it were CPF and in 2nd basket it were GPF + defined pension. Bankmen were given to pick up one either. If we lifted 2nd market, then first one went to Bank. Now, how bank men who picked 2nd basket can claim that first basket is theirs? Legitimately, CPF basket is not ours. CPF basket is full of great obligations, while second basket is full of bonanzas.
Employees & Officers, while in job or after retirement do not make any contribution or support financially to maintain Pension Funds' adequacy. Then why to create this illusion in mind and deceive oneself that Pension Fund is ours? This propagation just boggles our mind. Take It as your forged and fake argument.
Therefore, Pensioners should focus on 'revision' only, which Banks have been denying with tacit support of in-service 9 Unions for 'sole reason' that in case they agree to revision, they will have to cough up more contribution in Pension Funds as revision will cause increased pension outgo that will warrant matching contribution in Pension Funds to increase income level.
Now, we would like to explode the myth that existing aggregate amount of Pension Funds are big enough to sustain the financial burden that may cause in case existing Pension is revised. People made herculean job to workout a projection to prove their myth, but that's big jugglery in our view. Existing Pension Funds consist of CPF contributions of all such pension optees also, who are still in job and shall retire in future. All Actuarial Reports of Banks are on the basis of present pension calculation scheme. Revision will entail change in pension calculation method. Naturally, fund adequacy will be re-examined in the light of new revision calculation scheme.
We can say, existing Pension Funds position is some below the adequacy. Insiders news is that all Banks have less Pension Funds ranging between 100 to 1000 crores. With this fact, how the said myth of 'robust enough' can be relied upon? Please accept the bare truth that revision will call upon Banks to pump extra fund in Pension Funds. It's accumulated over long period, so quite big, since never in past any time revision was made.
We trust banking fraternity, particularly Pensioners shall take a note that Pension Funds are not theirs and the myth that pension revision is quite comfortable at present fund base is just a myth, big hoax. It's mere baseless proposition, at best just to tilt the balance in revision favour. Revision is our right and it doesn't need to have v such foul & untenable arguments.
(to continue)
10.6.2021
( Part-3)
(continued from 10.6.2021)
◆ Is there no 'contractual relationship' of Pensioners with their respective Banks?
◆◆ How on Financial constraint plea, Banks can deny their contractual obligations?
◆◆◆ Is Pension Revision our right or a favour?
◆ In Joint Note dated 25.5.2015, IBA went on record to say that there is no contractual relationship of Pensioners with their respect Banks. IBA, as an accused in our case, is free to take any plea to deny our rights, but if the same is not countered, contradicted and contested by opposite party, we mean our Unions, that means the stand of first party is accepted even by opposite party. The said Joint Note was signed by all 9 Unions, that gave authentication to IBA's baseless stand of 'no contractual relationship.'
Now, look to official statement, which same IBA makes and conveys to government, whenever any complaint is referred to it by DFS, MOF, GOI. Official version is as below:
"Pension is a funded scheme in Public Sector Banks and was introduced in lieu of the Contributory Provident Fund on the basis of consensus arrived at between bank unions Associations and IBA on behalf of Participating Banks.Accordingly Bank Boards framed Employees Pension Regulations,which were notified under the Provisions of the Banking Companies Acquisition and Transfer of Undertakings Acts of 1970 and 1980.Pension is Payable as per the agreement arrived at between bank unions Associations and the banks."
Hope, it amply clears and exposes the obnoxious stand that IBA took in above referred JN and supported by Unions. Pension is a part of service conditions, reached to with due concurrence between Unions/ Associations, as authorised by their members and Indian Banks' Association on behalf of participating Banks. All settlements/ understandings reached under ID Act or Joint Note in officers case, create and constitute 'contractual relationships' of employees/ pensioners with their respective Banks. Under this very 'contractual relationships' employees/officers wages, allowances, perks, facilities as well as on superannuation pensionery benefits flow out. Pension Payment is not under any charity programs of PSBs. It's in discharge of PSBs contractual obligations, failing which, they may land in trouble. It's really a shaming that having lived in bilaterism over 5 and a half decades, such baseless issues are in discourse. It's shocking to see them in Joint Notes as well, without any rebuttle from Unions. We think we must counter, if anyone says it any more
◆◆ No w, we would like to talk about much hyped 'financial constraints' story, very powerfully put forth by 9Unions. In RBI revision case before Bombay High Court, DFS being party, stated on affidavit that if RBI revision is considered it would entail similar demands from other financial institutions who are passing through financial difficulties. Financial institution in 'difficulties' obviously were these PSBs. Later, in RBI revision processing file, the DFS mentions very clearly about the Pension Agreement/ Regulations of PSBs having connect with RBI Pension Policy.
We all know, all PSBs were booking huge losses in FY ending-2016, 2017, 2018, 2019. It were worrisome or can say horrible conditions. It happened, not because banking business or operating profits were plunged, but because of wreckless financing bad loan at the behest of then FM/PM under 'phone banking scandal' during years 2008-12, which turned out to be nightmare for PSBs as those advance started turning NPAs, for which Banks were making huge provisions and plunging in losses, despite best performance.
You may be aware that in first term of NDA govt, GOI infused over Rs.3 lakh crores as fresh capital to PSBs to keep them going. Despite such disastrous situations, 15% wage rise, as a condition set by 9 Unions, was granted that too from retrospective effect from Nov.2017, with over 36 months arrear. This defy and defeat the 'alibi' of financial constraints. Despite aforesaid loss making conditions for years, govt consented to grant increase in salaries and allowances, because employees & officers were at no fault.
That's why we say, govt has least problem in financial constraints. To substantiate our view point, we would like to request you to read FM's interview & hear her key note address to AGM, IBA. Did she ever speak or make any reference on 'financial constraints?' No, she just told, former bankers can't be ignored, because they did contribute when they were. She referred of Defense culture where families of in-service and retired are taken due care and categorically said, she wants it in Banking. Hence, slap a big hand on whosoever face, if he talks of financial constraints any more.
◆◆◆ Pension is our right, not a favour.
It was not new scheme, rather new offer, subject to foregoing some right prevalent at a point of time. We have to examine the document, inferences, references, linkage and prevalent rules from where the basics were drawn to make our Pension Scheme.
It is well established that the scheme is the replica of Central Govt Pension Rules, as well as of RBI Pension Scheme. In Agreement/ Regulations, governing Pension, this finds due mention. See, DA in Banking has been on quaterly variance, but in Pension, it has been made half yearly, as in Central government Pension. Commutation values, 50% pension of last pay drawn, indices linked DA etc. are as existed in Government/ RBI pensions. In Central Govt pension updating is done on 10 year variance. In RBI it was first done in 2002, from 1992 to 2002. Now, on 5th March, 2019, tiding over the dispute, Government cleared for another 10 year block from 2002 to 2012. In RBI it is done from Nov, 1992 to October, 2012, for 2 block of 10 years. These references/ inferences are just to establish that Bank Pension was on same footings as was in Govt/ RBI.
Given a look to Cl.12 of Agreement, it is found that all terms and conditions, including revision is said to be on RBI line. Now, let us examine the core issue of 'revision' as to whether was it there in spirit or not. In settlement, Regulations and in implementation there of, element of 'revision' did exist. Pension came into effect from 1.1.1986 and in settlement Pension for periods 1.1.1986 and 31.10.1987, had been revised on formula already given in Regulations. So, nobody can say that Revision was not in spirit. It was from day one that our Pension would undergo revision from time to time, obviously in the light of changes that take place in Govt/ RBI Schemes. Such changes can be made, of course with priority approval of Government. It's very clearly mention in Regulations. Dispute is around this very situation that our Scheme has not been revised any time since it came into operation. This dorment situation is the real cause. This clause was not just for amusement, but IBA & Unions jointly made it mockery.
Many lame ducks argue together that there is no specific term in Agreement or Regulations for Revision. Could they tell, was it in RBI scheme? There was no speaking clause. But, in RBI revision was done in 2002 or on 5.3.2019. Revision in RBI make our Agreement cognizable, same should be done here. No body can terminate this right. Revision is our right.
In this issue we have discussed the Pensioners relationships with their respective Banks, nailed financial constraints that IBA-9 Union combination propagate to cover contractual obligations and pension decision is our right, not any favour.
In our next issue, we shall discuss more about the tirade let loose in many disguished manner, without any accountability, in fact which derail our movement in this respect.
(to be concluded)
(J. N. Shukla)
National Convenor
11.6.2021
9559748834
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