Wednesday, April 14, 2010

Talks with IBA on 13th April 2010 - AIBEA version

"We reproduce herein the text of UFBU Circular No. 3 of date on the details of the discussions held between UFBU and IBA today (13th April, 2010) at Mumbai.

Pension related issues: While the draft of the Pension Option Settlement has been discussed and finalised, important issues of sharing the deficit / gap were discussed today. Various proposals of sharing method were discussed by us in the UFBU meeting including differential formula for pension optees and PF optees and taken up with the IBA. However, having regard to certain legal and other implications, it has been finalised to have a uniform sharing formula. The details are given in the UFBU circular herein.

Improvements in pension scheme: UFBU has also decided to take up various issues relating to 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.

Final Settlement: Various informations are being floated amongst the employees that the 9th Bipartite Settlement would be signed on 15th, 17th, 25th, etc. As of now, IBA has proposed that the final settlement can be signed on 20th April, 2010 since according to them all the issues stand resolved and the draft is also getting finalised. However, from our side, there are very important issues like IBA’s proposals on outsourcing and increase in duties of Single Window Operators, Head Cashiers and Special Assistants without increase in Special Pay on which there are serious differences with the IBA. Without resolving these issues it would not be possible for AIBEA to sign the Settlement.

We will keep members informed of all developments. Units and members are requested not to be carried away or provoked by attempts from any quarter to create confusions and diversions.

Text of UFBU Circular No.3 dated 13th April, 2010.

Another round of bipartite talks was held between IBA and UFBU constituents at Mumbai today. IBA was represented by Mr. Ramakrishnan, Chief Executive, Mr. Unnikrishnan, Dy. Chief Executive and Mr. M. Venugopalan, Officer on Special Duty. From UFBU, representatives of all the 9 Unions were present.

In today’s meeting, issues relating to settlement on pension option were taken up. The draft Settlement was discussed in details and finalized.

Regarding retirees, the formula for contribution of Rs. 934 crores ( 30% gap ) of the deficit after refund of the PF amount (Bank’s contribution), it has been decided that the retirees will contribute as under:

Refund of PF amount (Bank’s contribution) actually received at the time of retirement (no interest is payable on this amount)   -    Rs. X

Plus: 56 % on this amount of Rs. X  - Rs. Y

Less: Commutation amount Receivable from the Bank - Rs. Z

Net Amount refundable to the Bank ( X+Y - Z )    Rs ...

Regarding existing employees / officers, out of the net gap of Rs. 6000 crores, Banks would contribute 70 % i.e. Rs. 4200 crores. For the balance of Rs. 1800 crores ( 30%) employees / officers would contribute as under: ( This will be a onetime contribution and would be recovered from the arrears.)

For existing employees/officers - 1.6 times of “ Pay ” payable for the month of November, 2007.

For employees who have joined the banks after 1st November, 2007 their contribution would be proportionately reduced.

Date of effect of pension option: IBA reiterated their stand that pension option would be effective from the date of the Settlement while we have explained our viewpoint that it should be w.e.f. 1-4-2008. Difference on this issue persists. UFBU decided to take steps to find a solution to this issue.

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  Website


  1. the provision of contribution towards the gap by retirees and those who would retire after the settlement gets signed, is very discriminatory.
    For example a pf optee who retired in mar 2010 would pay 56%of employer's contribution (say Rs 5.6 lakhs if the EC is Rs 10 lakhs), while for a person retiring in Apr 2010 it would be 1.2 times of nov 2007 salary ( say Rs36000). Following alternatives may be relevant. Consider the entire gap ( retirees and existing staff) together and arrive at a formula
    Consider all employees in service as o 01 Nov 07 as 'existing' employees ( recover pf contribution paid with interest at pf interest rate)and apply the contribution provision

  2. I am still at a loss to understand how this 56% has been arrived at by UFBU and IBA for retired pensioners to be refunded. Can anybody clarify.

    There is an MOU dt 27.11.2010 where in it is clearly agreed that the gap for pension fund of retirees is Rs.3140 crores and there are around 65000 retirees.It is agreed by IBA and UFBU that out of this Rs.3140 crores 70% will be brought in by Bank Managements and 30% has to be shared i.e Rs 934 crores is to be shared by the 65000 retirees.

    When one divides Rs.934 crores by 65000 each retiree has to contribute only Rs.144000/- towards pension fund gap. This again if you treat all the retirees on equal footing which definitely is not justified.

    In any case the maximum contribution by a retiree should not be more than Rs.144000/=plus the Bank contribution of PF received at the time of retirement minus the amount of commutation calculated based on the age on the previous birth day of the date of settlement.

    I feel the formula arrived by IBA and UFBU combine is totally to the detriment of retired employees in the sense that banks share of 70% of pension fund gap is not made available to retirees.I feel UFBU and IBA have totally ignored the retired employees as retired employees are not having any representaion in the negotiationg team which UFBU and IBA do not want.

    Now because of their formula agreed which is highly discriminating it is now a big question mark as to whether retirees will go for second option at all in case date of option is date of settlement as strongly wanted by IBA and GOI.

    The overall picture I get from the above is that IBA and GOI want to make pension option very difficult for retirees and many will opt out on their own .This is because they will not be able to find the resources and if at all they find they have to find out with meticulous calculation and so many other connected factors like age,rate of interest,immediate need of lump sum for urgent needs like daughters' marriage or sons'education etc. whether it is worth opting for 2nd option.

    I feel this is a dirty game played by leaders and IBA towards retired employees.

    I would like to draw the attention of my fellow retirees the officers'service regulation where in if a retired employee is given option for pension he has to refund to the Bank, Bank's contribution of PF and interest as on the date of retirement plus 6% simple interest on the Bank's contribution till the date of refund.Then bank has to give you pension from the date of retirement and commutation based on the age on last birth day.

    When there is a service regulation the author of which is IBA/GOI why UFBU should go for a different formula which is highly detrimental to the retirees.

    I would request every one of the retirees to ponder over what all I have stated above and if I have gone wrong somewhere please correct me.

  3. Dear Sirs,

    Gap on pension fund for retirees estimated at Rs. 934 Cr. by IBA. It is supposed to be shared by 65000 already retired PF optees.

    Per optee's contribution to fill the gap is 934 Cr./65000 = Rs. 1.44 lakhs

    As per the understanding between IBA/UFBU, 56% 0f CPF should be surrendered in addition to CPF already received by the retirees,.

    Retirees are spread over a period of 9 years from 2001- 02 to 2009-10 and estimated at 65000.


    I In 2001, the average BPF contribution received by the majority of retirees is assumed as around Rs. 3,00,000 (Conservative estimate)

    II In 2010, the average BPF contribution received by the majority of retirees is assumed as around Rs. 8,00,000 (Conservative estimate)

    (I wish to point out that very few opted for VRS in 2001 by PF optees as they were not eligible for pension benefits. )

    III 65% of I = Rs. 1,95,000

    IV 65% of II =Rs. 5,20,000

    Average of III & IV = 3,57,500 (Average is taken as the retirements took place gradually over a period of 9 years)

    This is assumed as the average inflow to the pension fund for filling the shortfall gap per retiree.

    It is further assumed that at least 15% will prefer to continue as PF optees reducing the number of retired PF optees to 51000.

    If they opt for pension now, the collection for short fall in the pension fund gap works out to 59000x Rs.3,57,500=Rs. 2109.25 Cr

    as against the gap of Rs. 934 Cr. being the share of retired PF optees. which is 2.25 times the gap envisaged.

    Therefore, the basis of arriving at 56% of PF contribution to be surrendered by retired PF optees appears to be incorrect even on

    conservative basis.

    Please go through the above working and please offer your comments. The contribution by retired PF optees should be max. around

    Rs.1.59 lakhs (Rs. 934Cr/ 59000 ) that too without commutation adjustment.


  4. Hi,

    Still there is a confusing existing in the communication. My mother has quit from the services of Bank on 31-12-2008. Will she be considered as a retiree for the second pension option. My mother was telling me she will be considered as an employee because she was on roll of the bank on 1-11-2007. Can someone clarify on this.

  5. Dear Sreenath,

    So far as my knowledge goes your mother will be treated not as a retired employee as she has rightly said that she was on the rolls of the bank as on 1.11.2007