For pensioners, little to bank on

Some six months back, bank pensioners were pleasantly surprised when Finance Minister Nirmala Sitaraman had expressed her concern about their well being. The Finance Minister, in an interview to a newspaper and later in a talk on November 10, 2020, expressed her concern on unresolved issues of bank retirees.

She said: “I want bank employees to be given their due. A lot of pensioners are waiting for very long time. Yesterday, I had meeting with Rajkiran Rai of IBA. I spoke to him, too. We need bank employees to be attended to, particularly their families and the pension of retired employees”.

But there has been no progress in resolving the issues which have been pending for three decades. Retired bank employees’ pension has not been revised since the inception of the scheme unlike government pensioners whose pension is revised with every pay revision.

An updation of the pension scheme is necessary because a bank staff who retired in 1990s gets a fraction of the pension that a recently retired employee draws. This is because the pension is linked to the last drawn basic salary which was capped at ₹10,000 in the 1990s.

Similar to RBI Pension

Originally, banks had two retiral benefits schemes — Contributory Provident Fund and Gratuity. Employees were demanding pension as a third retiral benefit.

In the Reserve Bank of India, the pension scheme was introduced from November 1, 1990. On October 29, 1993, an industry level settlement was arrived at between the Indian Banks Association and bank employee unions and this paved the way for the introduction of pension scheme in lieu of the Contributory Provident Fund, as in the RBI. A similar joint note was signed with the federation representing officers also.

Para 12 of the settlement provided for the formation of a committee consisting of representatives of the IBA and the unions to work out the details on similar lines as the RBI pension regulation and the Central Civil Services Pension Rules, applicable to Central Government employees.

The committee recorded the following as part of the minutes of the meeting held on March 26, 1994: “Formula for updating pension should be on the lines of the same given in the Reserve Bank pension scheme. Any change therein should be introduced only after mutual agreement.”

However the pension regulation subsequently adopted by banks are without provision of periodical revision and this has made life difficult for pensioners. Pensioners who retired at very senior levels in banks 25 years back, are drawing far less pension than a clerk retiring today on account of non-revision of pension.

The amount is so meagre that even to get coverage under the group medical insurance arranged by the bank, they have to shell out more than two months’ pension.

Working employees unions’ demand for pension revision for retirees at every wage negotiation round has so far fallen on deaf ears. It is an irony that retirees are not part of the wage negotiations and, hence, the IBA does not discuss their issues.

Government retirees are paid pension out of the tax collected every year.

No pension fund has been created for them. However, banks have a created pension fund out of the Contributory Provident Fund surrendered by the employees and also with contributions by banks for the serving employees based on an agreed percentage. Banks are supposed to maintain the pension fund based on an actuary report.

The IBA always pleads that banks do not have enough balance in the pension fund for a pension revision though it has not revealed the working of funds required for any pension revision. One of the reasons for the insufficient balance in the pension fund is the fact that when more than one lakh employees left banks under the special Voluntary Retirement Scheme in 2001, the banks had started debiting pension fund to pay them pension. Actually, the pension until the superannuation age should have been provided as part of the VRS package from banks’ revenues.

The government has sanctioned a revision of pension for the RBI and Nabard pensioners. When the original agreement signed by the bank management provided for pension revision as applicable for RBI employees, the bank retirees are also justified in demanding the same. However, nothing has been conceded so far.

When periodical pension revision is provided for government retirees out of tax-payers’ money and when RBI and Nabard retirees’ pensions were recently revised, bank retirees expect some dignified pension updation. They hope the Finance Minister will walk the talk.

The writer is a retired banker

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