Wednesday, May 12, 2010

9th B.P.S. : Cruel deal for retired Bank Employees who were PF optee.


Retired bank employees, who had opted for provident fund (PF) at the time of retirement instead of a pension, are feeling left out from the benefits of the new wage settlement signed between the Indian Banks Association (IBA) and the United Forum of Bank Unions (UFBU), a body comprising nine bank unions.
According to the new wage agreement signed on 27 April 2010, about 8 lakh employees from 26 public sector banks (PSBs), 12 private sector and 8 foreign banks will get a salary hike of about 17.5%. The revision will cost banks Rs4,816 crore, including arrears payment from November 2007, which will be given in a lump sum, K Unnikrishnan, deputy chief executive, IBA said.
A total of 2.7 lakh employees and 60,000 pensioners will be benefited by the second pension option in the agreement. For employees who had not joined the pension scheme in 1995, the new agreement gives them another opportunity to join the scheme. However, there is a catch. They will have to refund the entire amount of the bank's contribution to their PF and interest accrued thereon received on retirement with the employee’s share in the contribution.
"On an individual basis, this payment over and above the bank's contribution to PF and interest thereon has been worked out at 56% of the said amount of the bank's contribution to the PF and interest thereon received by the employee on retirement," the agreement, a copy of which is with Moneylife, says.
As a result of the new wage settlement new pension optees will have to pay 2.8 times of their November 2007 revised salary from the earlier agreed 1.6 times. "All unions kept mum on this, which came to light only after signing and yet they say this is historic. 
CH Venkatachalam, general secretary, All India Bank Employees Association (AIBEA) and convener for the UFBU, said, "People had made the mistake of not joining the pension scheme earlier and some of them are still not ready to accept it. What they are not willing to understand is with the pension scheme, they can receive a regular income more than the interest they may earn. Plus this pension has a provision for dearness allowance to be revised every six months."
Refunding the entire amount of the bank's contribution to their PF and interest accrued thereon received by the employee on retirement with the share in contribution has not gone down well with some retired bank employees. Whether the employee retired in 1997 or in 2007, there is no differentiation and both have to refund the entire amount of bank’s contribution along with interest. For example, an employee who retired in 1997 might have received Rs6 lakh as terminal dues. If he invests the same amount at an average interest rate of 8%, then he would receive about Rs48,000 per year just as interest. From 1997 to 2010, he most probably would have received more amount as interest than his investment. 
"This second pension offer is nothing but a cruel joke on retired bank employees. Retired bank employees, especially those above the age of 66, are finding this offer unviable and unfair since they have to pay a heavy sum and chances of recovering the principal amount are less," said a retired bank employee in condition of anonymity.
When asked to explain the contribution and pension per month, Mr Venkatachalam said that if for example, an employee had received Rs10 lakh as PF and gratuity on retirement, then he will have to refund this Rs10 lakh plus around Rs5.5 lakh as his own contribution. However, the bank will also contribute around the same amount and the actual amount an employee has to refund comes to Rs10 lakh. To add to this, he will receive pension arrears of eight months at a rate of about Rs15,000 per month. If he can use this money for the refund amount, then his actual contribution to the new pension scheme comes to just about Rs8.5 lakh. He will continue to receive Rs15,000 every month thereafter. In addition, after every six months, the dearness allowance component in his pension will increase, so he will receive more money. On the other hand if he invests Rs8.5 lakh, then he would get an interest of about Rs68,000 for a year or  Rs5,700 per month. Now he has to decide whether to opt for Rs15,000 per month or Rs5,700 per month, Mr Venkatachalam said.
One problem with the pension scheme is that some of the retired employees may not have enough cash left with them since usually people try to buy expensive things such as a home or a four-wheeler from the money earned at retirement. They most likely would find it very difficult to garner the required money so as to receive monthly pension or regular income.
Vishwas Utagi, secretary, AIBEA said, “We have been advising employees to keep the funds they received at the time of retirement separate, in case they plan to opt for the new pension scheme. So, I think refunding the bank’s contribution and interest should not be an issue.”
The UFBU has been asking the IBA to allow another option to for those to join the pension scheme—employees who were in the service of banks prior to 29 September 1995 in case of PSBs, and 26 March 1996 in case of associate banks of the State Bank of India (SBI) and who did not opt for the scheme. IBA, however, was not ready for the same due to cost considerations. The UFBU then offered to share a portion of the initial funding liability on a one-time basis for extending pension to the non-optees.
An actuarial valuation of liability by actuaries showed an estimated funding gap of Rs6,000 crore. The UFBU offered to contribute 30% or about Rs1,800 crore to bridge the gap for retired employees. An actuarial valuation on similar lines as conducted for serving employees had estimated the funding gap as Rs3,115 crore for those retirees or their families.
“Moreover, as per the new wage agreement, bank employees, both in service and retired, will receive arrears effective from November 2007 and it would help them while contributing to the 30% funding gap,” Mr Utagi said.
UFBU is receiving calls from children of retired bank employees asking how much their parents will have to pay to get a regular monthly income and these children are ready to pay from their own pockets, Mr Venkatachalam added.


Source : Different articles in publication including "moneylife".


View circular no. 64 from AIBOC regarding 2nd option of Pension : "Bare Truth".

18 comments :

SHANKAR said...

What is the meaning of the following?
Mr Venkatachalam said that if for example, an employee had received Rs10 lakh as PF and gratuity on retirement, then he will have to refund this Rs10 lakh plus around Rs5.5 lakh as his own contribution.
Whether retired persons from 1997 to 2010 April are required to refund 56 % additional sum of both Management's contribution of PF and also gratuity? OR it is only 56 % of Management contribution towards PF?
In other words if a retiree has received 10 lakhs as Management's PF and 5 lakhs gratuity, whether he has to refund Rs 10+5+5.60+2.80=
23.40 lakhs?

Shridhar said...

It is shocked to know by the CHV that retirees has to refund 56%of banks contribution pf and gratuity.Till yesterday gratuity was not there only pf banks and 56%of that.So pl clarify so that the retirees can sleep nicely in the night.

chandan said...

"PF and gratuity on retirement", the word gratuity is a serious mistake in this context. Administrator is requested for a rectification at headlines' text.

Thanks.

dejectedbankemployees said...
This comment has been removed by the author.
dejectedbankemployees said...

Everyone has to note this 2 things from Moneylife(http://www.moneylife.in/article/8/5346.html)

"UFBU is receiving calls from children of retired bank employees asking how much their parents will have to pay to get a regular monthly income and these children are ready to pay from their own pockets, Mr Venkatachalam added."

Vishwas Utagi, secretary, AIBEA said, “We have been advising employees to keep the funds they received at the time of retirement separate, in case they plan to opt for the new pension scheme. So, I think refunding the bank’s contribution and interest should not be an issue.”

So there no one to worry about our wage settlement and pension scheme.AIBEA is always leading in front!!!!

Gyan Chand Kumbhat said...

I think the meaning of shri Venkatachalam is that the whole amount of 156% can be full filled from the amount of PF(Banks Share) & Gratuity.

G.C.Kumbhat
Ret. Manager SBBJ

Gyan Chand Kumbhat said...

Mr. Parmeswaran 12.05.2010

Generally the date of retirement is last day of month but if it is other than the last day (suppose 16th in the retirement month), we have to start calculation from 17th of the first month of qualifying service.In other words, we have to take exactly 10 months prior to date of retirement.

G.C.Kumbhat
Ret Manager SBBJ

SHANKAR said...

Referring to Gyan Chand Kumbhat-May 13, 2010 9:39 AM
There should not be any confusion while union leaders are furnishing details to press.This word"Gratuity" should not have been used since the Pension settlement is clear about the same and it is very clear that pension is in lieu of Management contribution of PF only and not gratuity.What is the necessity of creating confusion. If a person is required to repay 156 % of Gratuity of Rs 5 lakhs it means an additional burden of Rs 7.84 lakhs. Is it a joke to play with the sentiments of already overburdened retirees? Before commenting one should asses the repurcussions of his words.

akhilesh said...

You are making the issue more complex
by using word gratuity. The word gratuity is no where written in joint
note. As I feel Mr. Venkatachalam just made a comment on how to make payment of 156 percent.

Jay Vijay said...

If this C H Venkatchalam would have known how to speak proper in press then we would have not be in this state.
Do we call these as our Union Leaders ?

季洪雅 said...
This comment has been removed by a blog administrator.
RAMACHANDRAN said...

Based on the probability theory, even if we presume that 0.1% of the retires due to old age / other reasons die after refunding the PF(Bank) + 56% of it for getting pension, then the family will loose the entire amount and will get only a small amount as pension.
To overcome this, Trade unions may arrange for a master policy to cover all the retirees. However, they have to check with the Insurance companies whether all of them, irrespective of age, can be admitted to the scheme and the amount to be paid as premium by the retirees. This kind of arrangement will only serve as an additional security feature.

B V JOSHI said...

The following is para 3 of Cir 64-2010 issued by Mr Nadaf (available in their site)

During the bipartites in 1997 and 2002, few of the Banks’ balance sheets were not comfortable to bear the cost of salary revision and the pension liability. Therefore, during the VII Bipartite settlement, unions came forward to support the pension fund of the Banks by volunteering to bear a part of the additional cost (incremental cost on pension) to be incurred on account of revised pay. The IBA offered 12.25% increase in wage load. The employees and officers shared 50% of the incremental cost of revision towards pension; which was at 8.25% of pay apart from 10% of pay in lieu of P.F; out of salary revision load. The managements also contributed 18.25% of pay towards additional cost of pension. But Banks were not in a position to assure 50% of the last drawn pay as pension and hence, for the purpose of Pension, separate scales were constructed with merger of 1616 points of D.A, whereas for the purpose of regular scales, the DA merger in the basic pay was at 1684 points with loading thereafter. This has virtually influenced IBA to accept our discussions on the issue of 2nd Option.

This means over all the previous so called struggles PF optees have borne the cost of improvement in pension, then why not pension optees also bear the present cost.

SHANKAR said...

Now it is for PF optees to decide whether to board the train first,occupy the berths and then fight for discrimination inside the train
OR
whether to start arguing with the ticket issuing staff about the availability of seat and other conforts inside the train and finally miss the train.
They are at full liberty

raju said...

Dear all,

All these confusions and complexities are the result of deliberate hiding of truth from members as to what is happening in the negotiations from day one. The mystery started deepening from the date of signing MOU. Then , a total blackout of all news. Thus started rumours and planned leaks to test the waters and mislead the membership.

But now, when they came out with a settlement , which has resulted in the unhappiness o everybody and each member feels betrayed in some way, and unions demanding levy shamelessly , even when there is no sight of any implementation of the settlement, and unions are now sure that they are totally disliked by membership across all cadres, in all banks, when many bold embers resigned, and many will follow,--- now they are "coming out with Truth".? Then why did they HIDE THE TRUTH till now? How many different variations of "TRUTH" has to come? Who are all the script writers?

I have a lingering doubt, that the unions want an escape route and are awaiting desparately for some litigation, so that they can cleverly escape. That is why even after 15 days , the settlement is not implemented.

Anyway, it is clear that, this may be the last bi-partite settlement. It is now the start of decline of bank employee unions, if not this is the end.

This settlement has achieved the unique place in history of bank employees as "The most Hated settlement"- making every member unhappy in some way.
The "Dark Period in Bi-partite settlement", where the truth was hidden and lies spread by vested interests.

Membership has lost its confidence.

God only knows what is going to happen? God! Save us!!!

chandan said...

Referring B V JOSHI May 13, 2010 8:15 PM:

"This means over all the previous so called struggles PF optees have borne the cost of improvement in pension, then why not pension optees also bear the present cost"

------------------------------------------------------------------------------------------------

Now there is no relevance of these views.

Thanks.

ajitnaik said...

Dear Shri. Balan, Shri. Iyer, Shri Venugopal

Is there any possibility of taking up the case of pre 01-11-2002 retirees who are not getting 100% neutralisation of DA? All bank staff retired w.e.f.01-11-2002 are getting 100% neutralisation of DA. Please refer relevant portion UFBU/ AIBEA circular No.3 issued after talks with IBA on 13-04-2010 in this regard.
"Improvements under Pension Scheme: We took up with IBA various improvements in the Pension scheme like periodical updation of pension along with wage revision for serving employees, 100 % DA to be paid to all pensioners, common indexation of pension, increase in commutable portion of pension, increase in Ex Gratia for Pre-1986 retirees/widows, higher pension for pensioners above the age of 80, etc. After discussion it has been decided to submit a memorandum on these issues to the IBA and the Government and to be pursued further.
Source : AIBEA"
Some effective follow up is required with IBA /GOI finance ministry. Is it possible to work out a proper plan of action on this issue? All these retirees are loosing sustantial DA every month.
Ajit Naik

chandan said...

WHY FEEL ASHAMED TO BE A PSU BANKER


The leaders of the officers association and the union should voluntarily resign from their posts. They have collectively brought down the job in PSU banks to below poverty line level. The agreement reached by the leaders make our heads hang in shame. We feel isolated from the overall gambit of people who used to feel proud about working in a PSU bank. Probationary Officers were earlier called as highly paid clerks, now they will be called ‘kolhu ka bail’.

These leaders deserve to be beaten with ch**pals before the members. We don’t want any more leaders to talk about salary. Let the government form a committee like 6th pay commission and study the market and link it with business growth and position of banks and then recommend pay scales. I think we will any day get better than 17.5%.
It seemed as if during last 3 ½ years that our association was discussing the Kashmir problem with the bank management. Had Indian and Pakistani officials discussed Kashmir in as many meetings as these bank leaders were discussing with the bank management they could have also found the solution of Kashmir problem but our leaders could bargain only 17.5% hike.

The current wage settlement is a SHAME for all of us. The difference between the maximum hike of Scale-V officer and maximum hike of Scale-VI officer is 75% have these id**ts (I mean the original word and not the meaning now understood after the recent movie by same name) come to such a startling difference after 3 ½ years of negotiation. God save PSU bank employees.

Instead of talking about 5 day a week after setting up of ATM, Online transfer facilities etc, They are talking about setting up a working time. Has any leader negotiated with any AGM or DGM if they force their staff to sit late? These leaders talk about giving Rs.200/- if you sit for more than 2 hours after your office time. Even a railway coolie at New Delhi or any other big station charges Rs.300/- for shifting your two- light luggage from entrance to platform no. 2 or 3 and the job is get done in 5 to 10 minutes.

SHAME WE ARE TOLERATING THEM. I feel ashamed to be a PSU banker today.

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