Thursday, May 14, 2009

Bank staff may have to bear at least 25% of pension cost

Over 250,000 public sector bank employees may have to bear at least 25 per cent of the cost of the second pension option that will be given to them as part of the wage settlement which is being negotiated.

Sources involved with the exercise said that the public sector banks and the unions have agreed on a second pension option that is estimated to cost around Rs 6,000 crore, but the extent of burden that is to be shared is being negotiated.

While the banks are pushing for the employees to bear 50 per cent of the cost, the unions are insisting that only 25 per cent of the cost be passed onto them. The sharing formula is expected to be thrashed out over the next few weeks, along with the final wage settlement.

In addition, around 60,000 retired bank employees will also be covered by a section of the plan, which is estimated to cost around Rs 4,200 crore. Of this, nearly Rs 3,000 crore is to come by funds which were a part of the provident fund corpus.

So, the total burden on the state-run banks would range between Rs 4,200 crore and Rs 5,700 crore, depending on the outcome of the negotiations.

First pension option for bank staff since 1993
Over the last few quarters, banks have been providing for a higher pension and salary liability in the wake of the wage settlement negotiations that are underway. This will be the first time since 1993 that bank employees will get the option for pension scheme.

For new employees who join the public sector banks, there will be an option to join the New Pension Scheme (NPS) where they will make a contribution, to be matched by their employer.

Central Government employees, who joined on or after January 1, 2004, have to set aside 10 per cent of their basic salary as their contribution to the NPS and a matching contribution is made by the government.

The corpus is then transferred to three public sector fund managers – State Bank of India, UTI and Life Insurance Corporation – which are allowed to invest up to 15 per cent in equities. In the first year, the corpus earned a weighted average return of 14.8 per cent.

Numbers expected to rise over 5 yrs
Over the next five years, with over 70 per cent managerial staff scheduled to retire, banks have stepped up hiring and the numbers are only going to rise. For instance, the public sector banks hired nearly 33,000 employees during the first nine months of the last financial year, as against around 22,000 in 2007-08 and around 6,000 in 2005-06. The unions have, however, rejected the proposal for a cost-to-company or variable pay structure proposed by banks.

Source : Business Standard.

6 comments :

C N Venugopalan said...

Plight of Bank Officials Vis-a'-vis Central Government Employees

Three decades back Bank employees were a better paid lot than Central Government Employees. Pillai Committee Recommendations were implemented to keep the salaries of both at identical level. Afterwards, the subsequent decades witnessed erosion in compensation to bank officials who toil round the clock for six days a week under pressure in relation to government employees who work five days a week and that too leisurely. The pay hike granted by Pay Commission recently was 40 percent whereas the demand for 20 percent hike to bank employees is not accepted by IBA.

Coming to Pension, fresh option is the first option and not a second option since no one has been allowed to opt under the Pension Regulations that is in force now. Option was asked to be exercised in 1994-95, keeping in the Pension Regulations a clause enabling banks to forfeit the entire past services of an employee in case he/she participated in a strike any time after becoming a member of the Pension Fund. 20 years of service was mandatory for earning Pension and the existing benefit viz. Contributory PF (share of employer) standing to the employee's credit had to be surrendered to the Pewnsion Fund for becoming member of the. When the penal clause for forfeiture of entire past services was deleted from the Pension Regulations in February, 1999, Banks had a liability to extend fresh option to all those on rolls who could not exercise option earlier. This primary legal obligation was not carried out by Banks. Moreover, the Option for Pension, once exercised, was "final and irrevocable" in character as per the draft Pension Scheme as also the Government sanctioned final Pension Scheme. But Banks revoked the options of some employees on an advice from IBA, by taking letters from them. This was quite illegal since IBA had no powers to circumvent the Pension Regulations adopted by the Board of Banks and sanctioned by the Central Government. Revocation of the irrevocable options as also non-extension of fresh option upon amendment of the Pension Scheme by way of deletion of the forfeiture of service clause are gross illegality and any option that is now extended can be the first option only as per the Pension Regulation now operating. In otherwords, it would only be a corrigendum measure of the mistakes Banks committed in the past.

There was a MOU between UFBU and IBA on 25th February, 2008 to logically conclued the issue of fresh option within three months from then. This MOU is breached by IBA to the detriment of the work force and of the retired employees and the issue is not settled yet even on the expiry of 14 months. IBA managed to mix it up with wage revision and makes a foul and dirty bargain now on the proposed pay hike by asking the work force to bear a certain percentage of the proposed pay hike. Unions are now fidgetting in a trap being unable to finish wage pact and Pension Issue. Notice of strike for 12th June 2009 is given now.

IBA is now insisting on Defined Contributory Pension to fresh Recruits who are to be taken up into banking service. This is a totally irrelevant demand since in future, when the whole country is going in for Contributory Pension, it will automatically be applicable to banking sector too without IBA securing it. For Unions also, there is no point in asking non-contributory Pension for future recruits in the context the present Pension Scheme is contributory for all existing employees who secure the benefit by surrendering ( contributing) their CPF ( employer's share).

Rs.6,000 Crores would be required approximately to settle the Pension Arrears of about 60000 retired employees of all banks. But in the case of a Public Sector Bank that spent Rs.1000 Crores on changing its logo, the amount of needed for paying the arrears to all retired is a mere Rs.60 lakhs. Three PSBs changed logos during the past two-three years. Banking system could extend Debt Relief of Rs.70000 Crores to Agricultural borrowers last year. The benefit went mainly to undeserving and wilful defaulters and the deserving got only negligible share. Bank managements that waste money on unwarranted items are extenuating paucity of funds to meet legitimate establishment expenditure like Pension to those who sacrificed their entire life for the organisations. Let all of you judge the issues and come to a conclusion of your own.

Any Bank Executive or IBA Officials or Trade Union Leaders are welcome to point out errors, if any, in my observations

You may also visit the blog "www.bankpension.blogspot.com" as also "Banking on Consensus" in google search to find much matter on Pension

C N Venugopalan
Ex-Manager, Union Bank of India,
"Nandanam" Kesari Junction, N Paravoor, Kerala - 683 513 Phone 9447747994

C N Venugopalan said...

Plight of Bank Officials Vis-a'-vis Central Government Employees

Three decades back Bank employees were a better better paid lot than Central Government Employees. Pillai Committee Recommendations were implemented to keep the salaries of both at identical level. Afterwards, the subsequent decades witnessed erosion in compensation to bank officials who toil round the clock for six days a week under pressure in relation to government employees who work five days a week and that too leisurely. The pay hike granted by Pay Commission recently was 40 percent whereas the demand for 20 percent hike to bank employees is not accepted by IBA.

Coming to Pension, fresh option is the first option and not a second option since no one has been allowed to opt under the Pension Regulations that is in force now. Option was asked to be exercised, leeping in the Pensio Regulations a clause enabling banks to forfeit the entire past services of an employee in case he/she participated in a strike any time after becoming a member of the Pension Fund. 20 years of service was mandatory for earning Pension and the existing benefit viz. Contributory PF (share of employer) had to be surrendered to the Pewnsion Fund for becoming member of the Pension Fund as per the Regulations in force as of 1993. When the penal clause for forfeiture of entire past services was deleted from the Pension Regulations in February, 1999, Banks had a liability to extend fresh option to all those on rolls who could not exercise option earlier. This prmary legal obligation was not carried out by Banks. Moreover, the Option for Pension once exercised was final and irrevocable in character as per the draft Pension Scheme as also the Government sanctioned final Pension Scheme. But Banks revoked the options of some employees on an advice from IBA, by taking letters from them. This was aalso illegal since IBA had no powers to circumvent the Pension regulations adopted by the Board of Banks and sanctioned by the Central Government. Revocation of the options that were irrevocable as also non-extension of fresh option upon amendment of the Pension Scheme by way of deletion of the forfeiture of service clause are gross illegality and any option that is now extended can be the first option only as per the Pension regulation now operating. In otherwords, it would only be a corrigendum measure of the mistakes committed in the past.

There was a MOU between UFBU and IBA on 25th February, 2008 to logically conclued the issue of fresh option within three months from then. This MOU is breached by IBA to the detriment of the work force and of the retired employees and the issue is not settled yet even on the expiry of 14 months IBA managed to mix it up with wage revision and makes a foul and dirty bargain on the proposed pay hike by asking work force to bear a certain percentage of the proposed pay hike. Unions are now fidgetting in a trap being unable to finish wage pact and Pension Issue. Notice of strike for 12th June 2009 is given now.

IBA is now insisting on Defined Contributory Pension to fresh Recruits who are to be taken up into banking service. This is a totally irrelevant demand since in future, when the whole country is going in for Contributory Pension, it will automatically be applicable to banking sector too without IBA securing it. For Unions also, there is no point in asking non-contributory Pension for future recruits in the context the present Pension Scheme is contributory for all existing employees who secure the benefit by surrendering ( contributing) their CPF ( employer's share).

Rs.6,000 Crores would be required approximately to settle the Pension Arrears of about 60000 retired employees of all banks. But in the case of a Public Sector Bank that spent Rs.1000 Crores on changing its logo, the amount of needed for paying the arrears to all retired is a mere Rs.60 lakhs. Banking system could extend Debt Relief of Rs.70000 Crores to Agricultural borrowers last year. The benefit went mainly to undeserving and wilful defaulters and the deserving got only negligible share. Bank managements that waste money on unwarranted items are extenuating paucity of funds to meet legitimate establishment expenditure like Pension to those who sacrificed their entire life for the organisations. Let all of you judge the issues and come to a conclusion of your own.

You may also visit the blog "www.bankpension.blogspot.com" as also "Banking on Consensus" in google search to find much matter on Pension

C N Venugopalan
Ex-Manager, Union Bank of India,
"Nandanam" Kesari Junction, N Paravoor, Kerala - 683 513 Phone 9447747994

C N Venugopalan said...

C N Venugopalan
Ex-Manager, Union Bank of India
Nandanam
Kesari Junction,
N Parvoor,
Kerala – 683 513
Phone. 0484 2447994 Mob: 9447747994 E-Mail: ceeyenvee@gmail.com

No.20100611 11th June, 2010

The Hon'ble Minister for Finance,
Govt. of India,
New Delhi

Sir,

Fresh Pension Option to Bank Employees –
Government shall not offend the Constitution and substantive law

I invite your kind attention to letter No. PMO ID No.9 3 2010 – PMP4 164953 and 164954, both dated 2nd June, 2010 from the Prime Minister's Office, forwarding my letter Nos. 20100511 and 20100511 (a) dated 11th May, 2010 to your office for appropriate action.

The Government that evolves out of the magnificent Constitution of the nation has the responsibility of conserving and protecting its grandeur by ensuring various guarantees like right to equality of the citizens besides its own sanctity. For the very same reason, the Government has to secure the various assurances and guarantees relating to equality of the people of all manners to place itself at the pinnacle of glory. The Government itself becoming a party to creating circumstances in which a certain community feels totally aggrieved will not be able to retain its sheen. The aggrieved will tend to make a hue and cry and will ultimately be driven to Courts of Justice for redressing their grievance resulting in huge influx of petitions in Courts that are already saddled with heavy backlog of cases.

IBA and Bank Unions have concluded an agreement to extend a fresh Option for Pension to those who could not exercise it when offered in 1995 because of the presence of an adverse chapter providing for forfeiture of entire past service of an employee in case one participated in strike any time. Though fresh option was legally mandatory to be extended to them when the particular clause was scrapped from the Pension Regulations in February, 1999, Public Sector Banks fraudulently kept the amendment in camera and failed to comply with the legal requirement and deprived majority of bank men of their legitimate right. Albeit the fact that the draft Pension Regulations of 1993 and the Final Pension Regulations sanctioned by the Government categorically stated that "an option once exercised shall be final and irrevocable", banks revoked the options of some employees (including me) exercised in response to the draft Regulations. This was done at the behest of IBA which is a mere voluntary organization of banks and had no powers to overstep the authority of the Government. IBA and Bank Unions, through their whimsical actions, evolved several queer banking equations, proving themselves as totally incompetent to address wage related issues of bank men. If the government goes by the recommendations of IBA – to be better called Indian Blunder Arcade- its very image will be get tarnished soon. It has become imperative that the Government set up a separate Pay commission for the Bank employees for determining the compensation for labour in the industry as in the case of Government servants.

C N Venugopalan said...

Now that the Government is examining the modalities of extending fresh Option for Pension, it is inevitable that the absurdities are eliminated and full justice is rendered to the people who have been stranded in life for want of income after serving the banks for making what they are now. I felt is desirable that proper feed back on items of strategic importance be given to MOF as otherwise, the wrong implementation of the scheme may generate an impression among the banking community that the MOF and the Hon'ble Minister heading it are devoid of the requisite faculties of mind. With a view to preventing fresh anomalies in the process of implementation, the following items deserve special attention:-

1. Banks are alleging deficit in Pension Funds and lack of financial muscles and make an attempt to recover from the beneficiaries of Pension Scheme a substantial amount from their wages. This has no locus-standi. The simple question that pops up is "what banks and Government would have done if every one had opted for Pension when offered initially?"
2. The recovery of Provident Fund (employer's share) paid at the time of retirement together with 56 percent on it from the retired is a gross anomaly. While commissioning the Pension Scheme in 1995, all those who retired from 01 01 1986 were given its coverage on refund of the CPF paid on retirement along with 6 percent simple interest. This is having precedence and if it is done, it will bring in some amount of fair play. One who retired 10 years back paying 56 percent of the CPF ( say on Rs.2.50 to Rs.3.5 lakhs) may not be suffering much, but one who retired recently say in 2009 also paying back the same 56 percent ( say on Rs.7.00 to Rs.9.00 lakhs ) will be the worst victim of the stipulation. The former must have at least enjoyed the interest on the amount while the latter has not at all. Subjecting the latter to such an irrational payment is vitiated by gross injustice. The envisaged recovery as also its modality is equally not maintainable.
3. Pension is payable under one and the same Pension Regulations. Recovery of a levy from one segment is illegal as another set of employees are paid pension without the levy.
4. While concluding the pact on Pension, the date from which Pension is payable to the already retired is reportedly fixed as 27th November 2009, the date of signing the pact. This deprives the beneficiaries of the Pension payable to them from the date of retirement to such arbitrary date, albeit their legal eligibility to get the same. In my own case, the amount of Pension forfeited through the pact would be Rs.9.00 to Rs.10.00 lakhs for the past eight years. If the bank and the government are to snatch away the pittance payable to an employee on retirement for its functioning, it poses a big shame to the great nation. The wage pact was one to be signed much earlier and the undue delay in signing the same has also put the beneficiaries to the loss of pension for the delayed period as per the "black pact". When one set of people who have done the same work for the organization are paid pension from the date of their retirement, denying the pension payable to the others till the arbitrary date is quite unfair from legal and social angles. It is heard that the date is agreed upon at the instance of the Hon'ble Finance Minister after the parties to the pact consulted him. If so, it can cast a shadow on the reputation of the Minister who himself is a legal luminary and a versatile genius and the decision takes things to the nadir of ethics.
contd

C N Venugopalan said...

5. As per the Pension Pact, the commutation will be allowed as on the date of the option and not on the basis of the age at the time of retirement. This runs counter to Pension Regulations as subsequent amendment of the Regulations in any manner infusing fresh conditions will be as futile as patching a hole with darkness. Commutation is, in all fairness to be reckoned on the basis of the age at the time of retirement and not from the date of option as there is no enabling provision so far in the Pension Regulations. .
6. Recovery of 2.8 times the revised pay of November, 2007 from those who are in services is also not justified in any way as their counterparts who are already in Pension Segment are not made to pay the levy. Fact remains that when pay revision took place every time, a portion of the load factor was taken from the PF Optees and Pension Optees uniformly and placed in Pension Fund of Banks. Courts have viewed Pension as deferred wages and once again taking a fresh levy, that too from CPF optees alone for placing them in Pension Scheme is irrational. A number of suits are already filed in different parts of the country already by the victims.
7. The key industry is perpetrating inequality in compensating labour since three retirement benefits viz. Pension Gratuity and CPF are paid to employees in government run Allahabad Bank while those in other stronger PSBs banks paid two benefits only. The position obtaining in State Bank of India is also similar to that in Allahabad Bank. How can one reconcile if pay and allowances in MOF is different from that obtained in another Ministry.


The various legal aspects relating to the fresh option are reportedly being examined by the MOF in consultation with the Ministry of Law and Justice now. In order that righteousness is established in the process of implementation and the possible huge influx of petitions in various High Courts are prevented, it is felt essential that the recovery of 56 percent from the retired, 2.8 times pay from the working etc. are dispensed with and commutation is permitted on the basis of age at the time of retirement while extending fresh option. It is my humble submission that the Government shall not inflict an injury to the Constitution of the Country and to substantive law placing itself on Achilles' heels while dealing with the banking community that has contributed their mite to the Financial Sector in a great way. If instructions have already been issued, they may please be revised in a befitting way.

It is also pertinent to say here that the six days working bank men are paid a pay hike of 17.5 percent alone when the five days working government employees were paid 40 percent hike which is 229 percent higher than that of bank men. The proposed variable pay in baking industry is also fraught with serious repercussions as it will result in erosion in income when those who pleased the immediate boss will be paid lavishly.
.
I am enclosing a copy of the letter, Former Justice of Supreme Court Mr. Krishna Iyer had addressed to the Hon'ble Prime Minister in relation to fresh Option of Pension to be extended to bank men. A copy of my letter is also marked to the Ministry of Law for their information for doing the needful. It is my earnest desire to roar the slogan "Bharat Mata Kee Jai" as done hitherto and not "Weep, Weep Mother India".

I earnestly request you to consider the various matters at length and to have me a line in reply.

Thanking You,

Yours faithfully,



C N Venugopalan

cc.to:-

The Hon'ble Minister for Law and Justice,
Government of India, New Delhi

C N Venugopalan said...

All bank men to send the letter to MOF to ensure that MOF gets flooded with similar requests. It might be possible to avoid legal battle which is time consuming and costly

You can copy and paste from blog


From
…………………………… Place:
-------------------- Date:




The Central Public Information Officer,
Government of India,
Ministry of Finance,
Department of Economic Affairs,
North Block
New Delhi 110 001


Dear Sir,

Requisition of Information under RTI Act, 2005

We invite your kind attention to letterNo.20060611 dated 11th June, 2010 Shri C N Venugopalan of Kerala has addressed to the Hon'ble Minister of Finance pointing out the anomalies in extending fresh option for Pension in Public Sector Banks.

The following anomalies in the proposal made by IBA have been listed out and brought to the attention of the Hon'ble Minister for his consideration:-

1. Recovery of CPF and another 56 percent on it as a contribution for pension coverage to retired
2. Recovery of 2.8 times November, 2007 pay in the case of the working people
3. Forfeiture of Pension from the date of retirement to the arbitrary date of 27 November, 2009 in the case of the retired.
4. Releasing commutation benefit without reckoning the age at the time of retirement.

Pension is an already sanctioned benefit to the bank employees which had been taken away illegally through the wrong implementation of the scheme and is not at all a new benefit. Whereas the Pension Scheme has been one and the same and Government and Public Sector Banks irrationally burdening one segment of employees alone totally lacks propriety. Such an action will constitute an offence upon the magnificent Constitution of the great democratic nation and on substantive law. Government approval for the illegal recovery recommended by IBA will go to prove that the oath of office the Hon'ble Minister has taken while swearing in "to treat people of all manners alike" gets breached.

I request that the action the government has taken to do away with the anomalies and to render justice to the bank men may please be intimated. The action report on the letter either separately or in the form of the notings on the letter under reference may be made available to me. In case the anomalies are eliminated in tandem with the provisions of the constitution and of substantive law, furnishing of the information sought will stand waived.

The prescribed fees for supplying the information is sent herewith


Thanking You,

Yours faithfully,



(Name)

Encl: Postal Order No.___________ dated _________ for Rs.10/- payable at N Delhi in favour of CPIO, MOF

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