PENSION UPDATION IS THE DEMAND: EX-GRATIA IS NOT THE SOLUTION January 27, 2024Bank Workers Unity1 comment N. Suresh The bank pension scheme implemented from 01-11-1993 with retrospective effect from 01-01-1986 still continues without any change. The present system of pension revision along with salary revision has been prevailing in Central Government service since the time of fifth pay commission in 1996. Similar is the case with State Governments and other public sector establishments. Demand for revision of bank pension scheme gained momentum and during the nineth bipartite negotiations, the issue was raised by United Forum of Bank Unions. Various organisations of retired bank employees also started raising this demand. WHY THE DEMAND FOR PENSION REVISION Pension is one of the important social security measures. It is based on the concept that it is the duty of the employers and governments to provide a respectful and decent living to their workers after retirement considering the services rendered by them. To do justice to this concept, the employers are duty bound to make revisions in the pension quantum taking into account the rate of inflation, change in standard of living etc. Now the tendency world over is that the governments and employers are backing out from this social commitment. The tendency to deny the legitimate demand of pension revision is part of this changed global approach. In India, the highest judicial forum gave a verdict against this tendency. In the historic five bench judgement of the Hon. Supreme Court of India in the case of D.S. Nakara & Others Vs Union of India on December 17, 1982 mentioned: Paragraph 31(i) ….. that pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer and that it creates a vested right ……… (ii) ….that pension is not an ex-gratia payment, but it is a payment for the past service rendered ……. (iii) …it is a social security measure rendering socio-economic justice to those who in the heyday of their life ceaselessly toiled for the employer on the assurance that in their old age, they would not be left in the lurch ……. In the same judgement, Paragraph 42 reads … Revised pay scales are introduced from a certain date. All existing employees are brought on to the revised scales by adopting a theory of fitments and increments for the past service. In other words, benefit of revised scale is not limited to those who enter service subsequent to the date fixed for introducing the revised pay scales, but the benefit is extended to all those in service prior to that date. This is just and fair. Now, if pension, as we view it, is some kind of retirement wages for the past service, can it be denied to those who retired earlier, can revised retirement benefit available to future retirees only? Pension updation is inbuilt

was in the background of this judgement that the Central Government, State Governments and Public Sector establishments started the exercise of periodical pension revision. But the managements of the banks ignored this legal obligation. Even though the IBA and some other quarters argue to the contrary, it is a fact that provision for pension updation is inbuilt in the Pension Regulation 1993 and there is no provision in it preventing the revision of pension. It is pertinent to note that the pension scheme in RBI has been revised twice during this period and the pension scheme in banks is drawn in similar lines with that of RBI. It is a great injustice that the authorities have not, till date, shown any inclination to revise the pension as mandated by Supreme Court. WHY REVISION As stated earlier, to ensure a decent living by compensating the inflation and raise in cost of living, periodical revision is essential and inevitable. In the absence of revision, the basic pension of an employee remains stagnant. As an example, the pension of a clerical staff retired during previous bipartite settlements is given below. 5 BPS 24022 8BPS 31608 9BPS 39879 11BPS 49053 To Make a comparison, given below is the pension of a Scale VII General Manager. 7BPS 35640 10BPS 68450 11BPS 85329 Please note that the pension of a Scale VII Officer working as General Manager retired during 7 BPS is less than the pension of a clerk retired during 9 BPS. The concept of “Special Allowance” was introduced only with the malafied intension of reducing the super annuation benefits. PENSION REVISION IS FEASIBLE- NO PAUCITY OF FUNDS The demand for periodical revision of pension is dragged by bank managements citing the reason that it will bring additional financial burden to the banks. The major difference between bank pension scheme and that of government employees is that bank pension scheme is a funded scheme and the payments are made out of a corpus called the pension fund. This fund is constituted mainly with a) Contribution by the employer at the rate of 10 percent per month of the pay of the employee. b) The accumulated contributions of the employer to the Contributory Provident Fund and interest accrued thereon c) Returns on investments and interests d) Additional contribution made by the employers in accordance with the clause 11 of the pension regulation. Out flow from the fund will be towards payment of pension and fam

Kerala Bank Retirees Forum (AKBRF) made a study about the viability and financial feasibility of the pension scheme. Data from all nationalised banks including SBI and RBI was collected through the provisions of Right to Information (RTI) Act. Details such as the total number of pensioners including family pensioners, Funds available in the Pension Fund, Amount of pension disbursed, interest and gains received, other inflow to and outflow from the fund, etc. was collected. Details of employees likely to retire in the coming five years was also collected. The study was first conducted in 2018 and thereafter it was revised for the subsequent years up to 2022. As on 31-032022, total number of employees in service was 779021 and out of it, only 209920 are coming under the old pension scheme. Important data for the years 2018 March, 2021 March and 2022 March are given below. (Rupees in crores) 2018 PENSIONERS 2021 2022 540974 FAMILY PENSIONERS 604569 615777 122196 TOTAL 143358 158738 663170 PENSION FUNDS 747927 774515 223588 INTEREST EARNED 322402 357891 17037 CONTRIBUTIONS & PROVISIONS 19686 21496 6575 TOTAL INFLOW 20408 39937 23612 PENSION OUTFLOW 40094 61433 13779 From the above table, it is evident that o Balance in pension fund is increasing every year 20086 24409 o Payment of pension per year is less than the inflow every year. o Outflow to inflow ratio is 0.58 for 2018, 0.50 for 2021 and 0.39 for 2022. From the above data, it is evident that the claim that any upward revision of pension will cause considerable strain to the financial position of the banks is baseless. There is sufficient balance available in the pension fund, and only part of the inflow is sufficient enough to meet the current pension obligation. As the demand for pension revision is gaining momentum, the bankers have come out with an offer of Ex-Gratia payment. Retirees are not asking for any alms, but are demanding their legitimate right of pension revision. This demand is not to be addressed in an ad hoc manner but has to be resolved scientifically. Pension scheme and subsequent revision in Reserve Bank of India is the model before us. In the Supplementary Pension Settlement of 1993, it is mentioned that the scheme will be similar to the RBI Pension Scheme. Another important factor to be noted is that only employees joined before 1st April 2010 are covered under the old pension scheme. All entrants after 1st April 2010 are coming the National Pension System (NPS). (NPS is another form of gross exploitation; we have to take all steps to bring all those covered by NPS under defined Old Pension Scheme). Both the schemes are covered under different funding system. It can be seen that the balance in pension fund is going on increasing every year. While calculating the financial viability of the scheme, this aspect has also to be taken into consideration. EX-GRATIA IS NOT A SUBSTITUTE The issue of pension revision of bank retirees cannot be prolonged and dragged for ever. Almost all (except a few voluntary retirees and family pensioners) are above the age of 60 and running the last lap of their life. This legitimate demand will not cause any additional financial burden either to the banks or to the Government. Sufficient funds are available in the corpus which was contributed by the retirees when they were in service and the present staff members. It is high time that the organisations of the serving employees and retirees’ organisations come up strongly to fight against this injustice of not updating the pension. With enhanced life expectancy and escalating cost of living, the pensioners of earlier years are under the threat of being thrown into the grips of poverty. Definitely it should not be the reward for the services rendered by them to the banking industry and to the nation during their days in service. Ex-gratia is not a substitute. Let us resolve to continue to fight for updation of pension till it is achieved.

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