Wage Revision & Pensioners Issues In the wake of emerging divergence among the Constituents of UFBU to clinch the Wage Revision amicably to the satisfaction of all stakeholders, it is learnt,that AIBRF has submitted a Memorandum to IBA urging them to invite the Retirees Unions also while discussing the Issues of Pensioners in the proposed Talks to be held in the First Week of February. News for BankPensioners will upload the contents as soon as we receive a copy of the same! A Note on Updation (Courtesy: AIBRF) WHAT IS PENSION UPDATION? There are three components in the pension scheme applicable to bank retirees (a) Basic Pension (b) Dearness Allowance (c) One- time payment of commutation on optional basis. Updation exercise is related to component no (a) i.e. BASIC PENSION. It is universal practice that while reviewing pay and allowances of the employee the first and foremost exercise carried out is RE-SETTING OF THE BASIC PAY according to the movement of inflation in the intervening period , business growth of the employer and general economic environment of the country. The similar exercise need to be carried out periodically in the case of pensioners too as pension is nothing but deferred salary payable after the retirement. The basic pension need to be re-set in tune with the increase given to the employees in the basic pay in the wage settlement. Government of India has been doing exercise of updation of basic pension for its past retirees in each pay commission since 5th Pay Commission in view of the historical decision of the constitutional bench of Supreme Court in the famous case of D.S.NAKARA Vs UNION OF INDIA. The another important point to be noted is that whenever we talk of pension updation it necessarily relates to the past retirees. As far as employees are concerned their basic pension gets automatically updated with each wage settlement and with each increase on basic pay. Pension updation is nothing but to realign the basic pension of the past retirees with the basic pension of future retirees. It should not happen that two members of the pension funds holding similar positions in the organisation are discriminated in fixation of the basic pension on the basis of their date of birth and date of retirement. WHAT IS THE POSTION OF PENSION UPDATION IN BANKING INDUSTRY AND FINANCIAL SECTOR ( HUGE BACK LOG ) Pension scheme under the provisions of Pension Regulations 1995 was introduced in the banking industry with retrospective effect of 1st January,1986. As all of you know the exercise of pension updation has not been carried out for last 28 years since 1986 despite the fact that it is quite long time period , CPI representing inflation has increased 10 times , salaries of the employees have been revised 5 times, banks net profits have gone up 10 times country’s GDP has gone up 8 times. Therefore there is a very strong case for updation of pension for past retirees. This situation has created huge backlog in respect of pension updation for the past retirees in the banking industry as can be seen from the following data Retired Between CPI merged in Present CPI Difference Basic Pension 1986 - 1992 601 5501 4900 1992 - 1998 1149 5501 4352 1998 - 2002 1684 5501 3817 2002 - 2007 2190 5501 3211 2007 - 2012 2664 5501 2957 After 2012 4400 5501 1101 This position can be further understood from the following data Category of Retiree B. Pension B. Pension Difference Under 5th BPS Under 9th BPS Sub-staff 760 5500 4740 Clerk 1430 9150 7720 Officer MM I 2010 12850 10840 Officer MM II 2195 14050 11865 Officer MM III 2455 15750 13295 Officer SM IV 2675 18100 15425 Officer SM V 2975 20200 17226 Officer TM VI 3275 23400 20125 Officer TM VII 3500 26000 22500 It can be seen from the above statistics that in last 28 years basic pension has gone up by 6 times and the gap will further increase unless updation exercise is carried out for past retirees before conclusion of 10th settlement. WHY THIS SITUATION? It becomes highly depressing and frustrating for the past retirees to see that while their basic pension remains stagnant without any review, basic pension of future retirees get automatically updated with every wage revision. They have been therefore agitating on this count and have been demanding updation of basic pension in this settlement with clearance of backlog of all the past settlement. Let us analyse the reasons for this situation. As all of you know that the pension option was exercised by only 40 percent employees originally in 1995 and majority of employees did not find the pension scheme very attractive on the basis of their own analysis, inputs received from certain quarters and some systematic propaganda carried out against it. It took almost 15 years for the unions to correct this situation. Up to 9th settlement the priority for the unions was not updation exercise for the past retirees but to ensure one more pension option for the leftovers. Therefore for delay in updation exercise, to large extent, employees and retirees can blame themselves. However, there is qualitative change in the position after one more pension option given to the leftover under 9th settlement and today more than 98 percent retirees are pensioners. PRESENT ENVIROMENT TOWARDS PENSION UPDATION We are happy to mention that today the overall environment towards pension updation for past retirees is favourable and positive in view of the following facts (1) More than 98 percent retirees are pensioners and now agenda for all concerned is improvement in pension including updation of pension. (2) All retiree organisations as well as all unions under the banner of UFBU have been demanding pension updation (3) It is seen that it is being discussed with all seriousness by IBA and UFBU . (4) RBI Retirees’ Federation with full support of the unions are agitating for pension updation. We understand that RBI Governor, in the meeting with union leaders has given assurance to carry out pension updation exercise in near future. (5) LIC & GIC retirees are also demanding pension updation in their organisations and are agitating for it. LIC comrades are fighting legal battle for pension updation. (6) We have come to know from unconfirmed sources that Labour Minister and Department of Personnel in Home Ministry have prepared detailed note on pension updation in financial sector to be placed before the new government. (7) United Forum of Bank Unions ( UFBU ) have been relentlessly taking up the matter at IBA/ Government level for solution in the ensuing wage settlement. (8) AIBRF has been continuously fighting for solution of the issue and last organisational action in this regard was highly successful dharna programme at Jantar Mantar Delhi on 7th March 2014 (8) Recently three major retiree organisations which represent more than 85 percent of bank retirees including AIBRF have come together on the issue of pension updation and on some other common demands and have issued joint appeal. CONSIDERING THE ABOVE, WE ARE QUITE OPTIMASTIC THAT ISSUE OF UPDATION WILL BE ADDRESSED IN THE FORCOMMING SETTLEMENT. HOWEVER, IT IS HIGHLY COMPLEXED MATTER AND NEED TO WORK FOR THE SOLUTION WHICH SATISFY ALL CATEGORIES OF RETIREES. OUR DEMANDS ON PENSION UPDATION Our demands in this regard are as under (1) Dearness Allowance should be merged at CPI 4440 as being done for employees under 10th wage settlement for all categories of past retirees. (2) Date of effect for updation should be 1st November, 2012, the date agreed for extending benefit to employees under 10th wage settlement. (3) While constructing new basic pension after merger of DA at CPI 4440, formula given under 6th pay commission for updation should be applied. (4) Concept of higher basic pension to the super senior citizen as given to government retirees under 6th pay commission should be introduced for bank retirees under 10th wage settlement. (5) Basic pension should be restored after 12 years instead of present 15 years for commutation. (6) Pension Regulations should be suitably amended to make specific provisions for pension updation for past retirees at the time of each wage settlement as originally envisaged in the settlement signed for introducing pension scheme in the banking industry. (7) The matter should be discussed with AIBRF and other retiree organisations and they should be taken into confidence before finalising the settlement. THE ABOVE DEMANDS ARE REALISTIC AND REASONABLE. WHAT WE ARE DEMANDING THERE IS NOTHING NEW IN IT. THESE BENEFITS ARE ALREADY BEING EXTENDED TO THE RETIREES IN THE GOVERNMENT SECTOR FROM THE YEAR 2006. COST FACTOR The biggest argument coming against pension updation is paucity of funds. Therefore it is necessary to examine the issue from this angle. We would like to place some facts in this regard as under: (1) We have examined data of pension funds of previous years in respect of some banks received under RTI. It is observed that there is no undue strain on the balance sheets of pension funds during last 15 years despite the fact that dearness allowance has increased by almost 800 percent during this period, one more pension option given to almost 4 lakhs employees/ retirees in 2010 and high increase in commutation amount for new retirees due to inflation factor. (2) we below give data of pension fund of one bank collected under RTI in support of our contention given above. (a) Growth in pension fund- From 174.36 crores in 1996-1997 crores to 8767 crores at the end of March 2014. It has increased by about 5000 percent in last 19 years after meeting all pension liability. The major growth in this fund is mainly due to the interest income and statutory contribution received in lieu of provident fund. (b) The receipts and payment position of Pension Fund in this bank during last 5 years are as under (Amount in crores) Year Receipts Payments Surplus ( Int. + Contribution) ( Pension+Commutation) 2008-09 110.46 36.59 73.87 2009-10 93.79 41.84 51.95 2010-11 455.59 100.03 355.56 2011-12 863.80 168.05 695.75 2012-13 944.98 194.41 750.57 (3) Position of pension funds in other banks too is more or less on similar lines and they have shown healthy growth in last 28 years. (4) We are of the view that present accounting system of funding pension liability need to be re-looked and it should be made simple and on the lines of government pension funding. Today, total corpus under pension fund in the banking industry is about Rs.1.10 lakhs crores. Legally speaking, this money does not belong to the members of pension fund. But these are basically provisions made by banks for meeting future pension liability in smooth and in uninterrupted manner. Imagine, in case this amount of Rs. 1.10 lakhs crores is transferred to the capital account of banks and pension liability is met out of profit and loss accounts on the lines of employee cost, it can change whole balance sheets of banks and improve their capital adequacy ratio and Indian banks may be re-rated. It can become win-win situation for all concerned, though it will need lot of changes in the present legal provisions. On the basis of above analysis, we can say that fund position should not become constraint in the way of carrying out long pending pension updation exercise. Further, the retirees have legitimate claim for sharing profits and additional funds, if required for this purpose, should come from growing profits of banks. (Courtesy: AIBRF)
Posted on: Wed, 21 Jan 2015 08:59:15 +0000
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