By : Dr.Indrajit Sanyal
Pension Regulation has been effective in public sector banks in terms of Bank Pension Regulation 1995. This covers all the retired bank staff of both the categories officer staff and award staff. Since inception there has been inherent defect in the manner of calculation of basic pension. As per clause 35(1) updating of pension is considered only for the retirees between the period 1st January 1986 and 31 st October 1987. The clause is silent about others who retired afterwards. In the subsequent bi-partite settlements the basic pay has been calculated after 100 % DA neutralization in respect of working employees. But for retirees the basic pension has remained same throughout. The incidence of DA neutralization was not in place in case of pensioners.
This has resulted in slow growth of total amount of pension payable to the retirees against the steady growth of consumer price index. This has resulted in creating a big gap of pension amount amongst the same cadre of employees retiring in a gap of five years commensurate with bi-partite settlement years. For example a general manager of a public sector bank, retired in the year 2004, gets much less pension amount today than the person who retired in the year 2013. AIBOC/UFBU did not look into theses discrepancies before finalizing the settlement agreements. Had there been 100 % DA neutralization perhaps the gap in total pension amount in the same cadre would not have been so wide. There was no forum to consider the genuine difficulty. Some of the senior retirees were agitated and approached the respective high courts by filing writ petitions. The present status of the individual cases and the acceptance of the judgments in individual banks are not known. In one of the writ petitions filed by the retired Syndicate Bank employees the honourable Court has given judgment on 17 th February 2017 in favour of the retirees with a direction to implement the same within 12 weeks by the bank. It is not clear what the status is thereafter. Therefore, the grievances of bank retirees are on the rise.
As a result of wave of movements in the social sites of different bank retirees expressing their feelings the All India Bank Retirees Welfare Association (AIBRWA) has been formed. The beginning was in Kolkata on 7 th Nov 2017 by some retired bank officers. They formed a small committee and meetings of fat different centers Delhi, Mumbai, Patna, and Chennai are planned.
Rationalization of pension and family pension structure.
There should be 100 % DA neutralization for all bank retirees since inception. In case the calculation is complex a multiplication factor of 2.57 on the existing pension amount as on 31 st October 2012 may be considered similar to Govt. pensioners. Upon the recommendation of the 7 Th pay commission Govt of India vide letter dated 12 th May 2017 has given instruction. As per the govt instruction the pension /family pension amount w.e.f 1 st January 2016 for pre 2016 retirees will be fixed by a multiplication factor of 2.57. This has given a substantial growth in pension / family pension amount for Govt. retired employees of all cadres. . PSU banks can also think of such a scheme to be implemented w.e.f 1st Nov.2012 as one time measure. This will give substantial relief to bank retirees. Considering the present balance on pension fund of Rs.2.35 lac crores and annual growth on account of interest income, member contribution and actuarial gain/loss after netting the outgo the incremental load on account of enhancement in pension amount can be calculated.
The multiplication factor can be set even little lower level at 2.25. AIBRWA can take up the matter with IBA for their direction to the respective banks. Family pension now is at the rate of 15%, 20% and 30% whereas it should be uniform rate of 30%.of original pension as per recommendation of 6 th Central Pay Commission.
Reduction of Income Tax on the Pension Salary of Bank Retirees..
Income Tax on pension amount must be softer in case of bank retirees. The retirees have demanded that there should not be any income tax on pension amount. But the type of pension bank retirees get is occupational pension as it is termed globally. Govt of India has described the pension as pension salary in the Govt. Pension Regulation. Therefore, waiver of income tax may not be possible. Instead we may suggest different slabs for bank retirees. During last three years the interest rate of bank deposits has come down by 250 bps. On a deposit of Rs.15.00 lacs the drop in interest income is now Rs.37, 500/-annually. To compensate this loss we may suggest tax structure as no tax up to the taxable income of Rs. 5.00 and 10 % tax between the slab of taxable income above Rs. 5.00 lacs and up to Rs. 7.00 lacs. . This will save Rs.40, 000/- annually and will compensate for interest income loss.
Health Insurance Scheme of Bank Pensioners..
IBA-DHS has introduced health insurance plan for bank retirees. The premium is about Rs.4, 300/- per lac including GST and this is almost equal to the premium charged by private insurance companies for similar plans for senior citizen.
The annual premium amount is about Rs.17, 000/-without domiciliary treatment and Rs.36, 000/- including domiciliary treatment. Why should there be component of GST on the health insurance premium of retirees as this is welfare measure.
The profit making public sector banks can provide subsidy to the premium as a part of the activities in Corporate Social Responsibility (CSR) scheme under Companies Act 2013. Punjab and Sind Bank has already fixed the premium at Rs.8, 000/- i.e. subsidized 50%. As per latest news Bank of Baroda is also considering the subsidy in the matter. Other profit making public sector banks can be persuaded by AIBRWA to consider subsidy on health insurance premium.
Financial Resolution and Deposit Insurance (FRDI)
Bill 2017
Bill No. 165 of 2017 is introduced in the LOK SABHA.
The clause no. 52 of the bill includes bail- in provision that mentions cancelling a liability owed by a specified service provider. Customers Deposits are a type of liability. There are interpretations in different social forum that the depositors money will be converted to equity in case of loss making bank even without the consent of stake holders. Customers will get back only the amount of Rs.1.0 lacs as covered under DICGC. However, the shape and implications of the bill is difficult to predict at this stage. In the meantime Govt. has come out with a Press Note on 7 th December 2017 that interest of the depositors will be protected. But there is no mention of refund of deposit to the customers in case of collapse of the bank due to heavy loss. However, we bank retirees need to be vigilant and consider legal course of action if there is some indication as expressed by experts in the social sites.
A large number of retiree members are of the opinion that UFBU should not be involved in the process of solving the problems of bank retirees and AIBRWA should take up the issues. Even a few of them has expressed in the social sites that writ petition should be filed immediately seeking injunction on the wage settlement process. But the reality is different. More than one third of the public sector banks are running on loss for last two years. Is it possible for the loss making public sector banks to absorb the incremental financial load consequent upon wage settlement? Therefore, wage settlement talk for the working class is perhaps difficult at this stage. On the contrary the subjects of pension revision, subsidy on health insurance premium etc of the retirees are established on logic and negotiation can be initiated. The AIBRWA must consolidate the issues on urgent basis and ensure steps expeditiously. At the same time if the organization is not registered it cannot c approach IBA, Govt. authorities and even the apex court for redressal of the grievances in the areas mentioned in the preceding paragraph. But most important is our aim should be to keep in mind the health of the bank and not cause any unnecessary financial load on the organization where we have put in 30 -35 years of our efforts to build up the organization. Pension fund management is done by bank management and additional financial load on the fund in case of rise in pension must be carefully considered also. Prudent thinking and immediate logical steps are the need of the hour.
Lastly AIBRWA is a welfare organization and logic and persuasion are of prime consideration and not the militancy.
-Dr.Indrajit Sanyal
(The author is ex-IIT- KGP ian, fellow in Institution of Engineers, ex AGM Bank of India and ex-faculty IBPS Mumbai).
