Tuesday, May 4, 2010

Pension Scheme certain developments why? and how? - AIBOA version

We reproduce below circular issued by AIBOA .

Circular No.14/V/2010
April 30, 2010
                              PENSION SCHEME
For the AIBOA who along with INBOC gave a letter to IBA / Govt., on 02.06.2005 on the heels of the last settlement getting one more option to PF optees with the same quality of pension was the only priority and with this we kept along all compromises in the matter of costing on pension-incremental cost as also the determination of deficit amount on account of Actuarial intervention which AIBOA never wanted.  But one of the constituents secured it at Calcutta with great zeal which ultimately resulted in our share as 1800 crores recovery for one more option.

Pension Scheme which is operated in Govt., Sector on 10% basis [exchange with PF] because of budget leverage available was difficult to come in banks in view of the first 15 years of funding being difficult and all Balance sheets may not take the extra load every year.
Knowing this fact only, only AIBOA faced with severe opposition from all Unions in the name of 3rd benefit, in order to bring the scheme to Banks on same terms of Govt., scheme accepted and agreed to contribute a share of incremental cost of wage revision which other unions also agreed.
However as the option was not given by 100% employees, due to adverse propaganda and only about 50% opted for Pension making the cost go up.  Despite this in every Bipartite incremental costing was shared by Management Union in 70-30 manner with management.  Despite efforts the cost are going up and we had to be content with it.  Slowly from0.6% it has increased to 5.91%ie; 70 crores to 756 crores [roughly 10 times]
Due to one more option issue and Actuarial valuation the funding gap has also come on the head of bankmen when UFBU negotiated the liability of Rs,1800 crores, forcing management to fund 4200 crores for the PF optees account for one more option.
Thus now in this Bipartite we have to pay incremental cost of pension due to wage rise and funding cost due to deficit of corpus to give one more option, which takes about an additional 1.42% for every year for 5 years besides incremental cost.
While incremental cost identification depends on basic pay etc., another element also figured this time is SBI pension balancing.  IBA earmarked an amount of Rs.129.15 crore in the 17.5% load ;ie 1%.  This was not mentioned in the MOU or figured in the inputs of cost for distributing 17.5% load.  This was decided unilaterally by IBA under pressure from SBI.  Even SBI unions only wanted “comfort” in the agreement for leaving the matter with SBI.  IBA gave 300 crores from both categories notwithstanding the fact
1.                  This was not discussed by IBA in the negotiations at all
2.                  There was no input in costing of heads of items when MOU was signed on 27.11.2009
3.                  There was no pension sharing by settlement in the last 2 bipartite settlements
4.                  IBA agreed not to discuss new pension scheme in SBI as per the demand of SBI unions when SBI management wanted IBA to discuss.  IBA said and incorporated in MOU that the Pension agreement does not relate to SBI.
This is how from 17.5% on account of 5.91 + 1.42 a percentage of 7.33% was appropriated towards pension cost from employees by IBA for 17.5%.   IBA on its part also agreed to contribute 70% of incremental cost +  Rs. 4200 crores for PF optees as “deficit funding” on account of pension.
In this background of the pension option issue, the moment deficit cost of Rs.1800 crores was decided,  AIBOA wanted clarity on sharing and raised the matter with UFBU forum.  When MOU was signed on Pension on 27.11.2009 AIBOA raised the matter with the Chairman who said details on sharing may be discussed by UFBU themselves.  Earlier when we had discussed the matter with CEO of IBA and others they also said that UFBU could decide.  In fact during in our Small Committee meeting prior to 13.4.2010, IBA enquired that whether unions have deiced the modalities of sharing.
UFBU convenor also agreed with our views all along and said that something will have to be done to decide cost sharing on equitable basis and in the last meeting on 13.04.2010 of UFBU proposed a little lesser contribution by Pension optees and it was accepted and he placed the proposal before IBA which rejected it.  After IBA rejection UFBU informed IBA that they are freezing the issue and AIBOA told IBA that we do not agree to their changing earlier stand of accepting UFBU decision on cost sharing.
It has to seen that right from the beginning AIBOA wanted a lesser sharing by pension optees not merely because Pension optees gave the option 15 years back, not merely because pension optees do not receive any benefit in one more option pension issue now.  But then AIBOA took the line of lesser contribution by pension optees say @ 70% / 80% : 30% /20% only in the interest of PF optees and for saving the option scheme from challenging from any quarters including pension optees before or after the settlement.
Our view was that sharing equally by all instead of with some discrimination would lead to constitutional violation for one section and when any workman of officer can take recourse to law and ground the settlement at anytime in which case everybody including 9 unions will be put to innumerable problems.  Once IBA signs with unions on sharing cost on differential basis and implemented the settlement any challenge can be warded off as we have done it always.  So when IBA was not forced to accept UFBU decision and UFBU was not willing to go on action to pursue UFBU decision for equal sharing also we informed the Convenor, UFBU that we are seeking legal opinion and obtained a legal opinion from our Lawyer and sent it to IBA with our covering letter clearly stating our stand that both PF optees and Pension optees will share the cost of deficit with a little differentiation despite whatever be the legal report.
Further since getting pension option was very important when UFBU wanted to reiterate sharing by all equally on 26th   April 2010 because of IBA decision rejecting lesser sharing AIBOA agreed and signed the letter incorporating on record the IBA’s non acceptance of UFBU proposal with differentiation and asking for equal contribution
We are sure by our action in opposing equal sharing, we have saved the one more option scheme itself and interest of entire PF optees because it is common knowledge that real and naked discrimination between two groups on the same benefit will invite constitutional questions of importance definitely and seriously.  A sense of proportion to keep a slight difference would be enabling for IBA and unions to prevent any blocking of the scheme by anybody at any stage and help to deny or disprove the charge of discrimination.
Even on the recovery of 1800 crores from arrears, AIBOA suggested instead of taking the fund from arrears, monthly installments from salary with irrevocable mandate will be better. However UFBU informed that Govt., is not accepting this either.
Comrades!  This is how AIBOA intervened,  for the saving of the Pension option from being a non-starter, on grounds of fair and tenable approach and even agreed to share cost by all in the last minute to avoid IBA’s unilateralism in order to get the option for about 330000 people who are waiting for the option.[both in service and retirees]
If at all anything AIBOA’s only concern was ensuring option without hindrance and to make PF optees switchover to better retiral benefits on account of settlement being signed by all the 9 unions with IBA.
We call upon all PF optees to submit option and avail the scheme including Junior officers notwithstanding arrears being less on account of reduction of Basic pay by Rs.500/= every month, as pension today is opposed by Govt., and supported by all workers and unions including those who opposed it 15 yeas back.
Be a proud Pension optee and discharge your obligation to your family and children without hesitation.  Once you missed the right guidance on interest consideration now you do not again miss on cost consideration.  Cost will come down and unions will ensure this in times ahead.
With Victory Greetings


       PF optees were given the benefit of PF for the full term of 5 years of the Bipartite period from 01.11.2002 to 31.10.2007 by extending PF @ 10% for 5 years; ie.,  50% on the applicable pay.
0    2.   But Pension optees were given the benefit of Pension for a period of 2 and half years ie., from 01.05.2005 to 31.10.2007 because the additional Pension load of 9.25% was shared from the Bipartite Load.  Hence, the load of Pension was 19.25% for two and half years (10% in lieu of PF and 9.25% towards additional cost of Pension) which works out to 48.12%  (19.25 x 2 and half years).
0    3.   From the above, it is evident that in the 8th BP Settlement, PF Optees’ load was 50% for 5 years and 48.12% for Pension optees.
0    4.   But for Pension optees, due to additional cost caused by BP going up in wage revision, Bankers have to provide additional contributions on yearly basis based on acturial calculations.  That is how Pension became more costly.
0    5.   The Bankers’ contribution of 70% ie, Rs.4,200 crores,  now in the 9th BP Settlement is for PF Optees only.  This is on account of extending one more Pension option.
0    1.   The PF optees were given benefit of PF on revised pay at 1684 points of consumer price index after loading from the BP load.
0    2.   The Pension optees were not extended the benefit of fitment at 1684 points of consumer price index.  The Pension was revised only at 1616 points of consumer price index.  Further, no loading was done for Pension at 1616 points out of the BP load.
0    3.   The net effect of the fitment of Pension at 1616 points without loading was that the Pension was reduced to 43% of the last pay for the employees/officers who retired/went on VRS/SVRS/passed away during the period from 01.11.1997 to 31.10.2002.  The same was however restored in the last Bipartite [VIII] giving benefit from01.05.2005 without retrospective effect or payment of difference in commutation / arrears of Pension.
0    4.   Further, the employees/officers retired/went on VRS/SVRS during the period from 01.11.1997 to 31.10.2002 got much less in commutation.
0    5.   From the above, it is very clear that Pension load in the 7th BP Settlement was at par with PF optees from the BP kitty.
The Pension was introduced from 01.11.1993 as per the Pension Settlement dt 29.10.1993.  Out of 6th BP Settlement total kitty , nothing separate was provided for Pension as the settlement was signed separately and load of Pension was also separate.  Everybody was given the opportunity at that time to opt for the Pension.  Further, the benefit of PF was extended to PF optees at 1150 points of consumer index ie ., actual CPI by merging DA into Pay at that time.
[Note by: Canara Bank Employees’ Union]

Circular No.13/V/2010
April 30, 2010


We are to furnishing hereunder the salient features of the developments in respect of Wage revision and Pension settlement integrating therewith our clear perspectives consistent with our records and notings of proceedings of meetings held wither with Bankers or within UFBU.
We are sure that our membership will go through these aspects to better appreciate the settlements and explain it to officers and employees in Banks.
We call upon all our Units / State Committees to profusely circulate this document amongst Bankmen.
With Greetings


  •             1.    AIBOA was the only organization to speak out from the beginning that idea of contribution / sacrifice by all towards 30% share of pension cost gap was unfair and violative of Pension Regulations.  Any such agreement even if accepted by IBA would have been fraught with legal unsustainability.  It would have led to plethora of court cases, a few samples of which were beginning to surface even before signing of settlement signing.  These would have jeopardized the settlements itself causing delay and disruption.  As a responsible trade union, AIBOA was first to realize the potential dangers and safeguard the Industry as well as Bank employees and officers there against.


  •             2.    Even in the present form Pension option is a fair deal to non-optees with additional cost contribution it may be average 116% of Bank’s PF contribution, whereas the retirees are offered pension at 156% of PF balance.  Moreover the additional contribution would be set off from the arrears causing no direct burden.


  •             3. AIBOA considered introduction of Pension for all as the prime issue of this wage revision.  In the given context it was now or never situation.  Informally, Bankers and Govt., sources were commenting on real pension cost being quite high.  Any delay would have led to available complications.  AIBOA was firmly against any further dithering on this issue.


  •              4.    When the 2nd Pension option cost exercises were being undertaken, AIBOA had objected to our being party to actuarial calculations etc.  AIBOA had foreseen that it might lead to endless process of cost escalations, which could not be met, from the wage kitty.  Having overlooked this, our current wage revision is the victim of pension costing.  Inspite of best ever deal of 17.5% the rise could not freely flow due to Pension provisions.  AIBOA had advocated pension option to be secured as a one time negotiated deal as the safer way for the future.

  •             5.   Unions, advocating pension option 30% cost to be shared by all employee, did not insist on SBI staff also sharing it.  Why such double standards.  The valuable support extended by all bankmen to secure 2nd pension option, through their unflinching participation in Pension option struggles including strikes can not be undermined.  Pension option is the final out come of this united struggle only in which pension optees too have made their selfless contribution.


  •             6. It is for the unions /people advising against “pension” during 1993-95 to introspect and answer the grave folly committed by misguiding the bank employees.  If the 2nd pension today is taking additional costs from Banks and employees, onus is on the wrong judgement/direction of such people.  Such wrong advices not merely imposed additional burden of struggles to secure very same benefit of ‘Pension’ but the wage revision package itself has been distorted being linked to pension and additional conditionalities in the form of New Pension Scheme have also crept in.


  •            7. AIBOA has always been in favour of continued united approach of all bankmen, even towards meeting 30% pension cost gap.  AIBOA merely advocated a differential approach so that pension optees could bear the burden in comradely spirit and to avoid any legal position of the scheme at any stage.  AIBOA maintained this position till the very end.  In fact AIBOA signed the letter from 9 unions to IBA given on 26.4.2010 suggesting contribution for all once IBA refused our proposal and UFBU was not for any action in the matter.  In fact, it’s the rigidity of some people to understand the logic of differential approach that perpetrated widespread ground reactions with some people already moving for legal actions, while AIBOA never supported legal intervention the failure to timely remedy the approach precipitated IBA taking an uncompromising stand in the contribution matter.  We have to however see the inevitability and compelling logic of the IBA approach and welcome the pension option achievement.

  •            8.    According to AIBOA the principal issue, which got lost in these negotiations, was the issue of parity in service conditions between SBI and other banks.  For the first time additional amount of Rs.130 crores in officers settlement Rs.155 crores in workmen settlement has been exclusively kept for SBI in the name of ‘pension balancing cost’ and has been made part of the signed Joint Note / Settlement as never before.


  •             9.    It is in everybody’s knowledge that 5 months delay between June 2009 to November 2009 in clinching the MOU was due to pressures from certain quarters to make IBA/Govt. agree to this special SBI pie.  It is unfortunate that instead of forging an united struggle to achieve the ‘parity’ demand, compromises of convenience were made with the big brothers totally killing the ‘parity issue’.  Bank officers can not fail to see that this SBI pocketed money of Rs.130 crores would have provided the minimum Rs.500/= jump in the pay scales across the Board benefiting everybody including SBI.  Unfortunately first the kitty got cut and thereafter-Junior officers got trampled in as sacrificial goats.

  •             10.  There is also a feeling that but for most untimely ‘SBI distraction’ the time available for UFBU to negotiate with Govt., for further shifting the New Pension Scheme date beyond 01.04.2010 could not be fully explored.  AIBOA has been vehementally opposed to introduction of NPS but had to ultimately abide by the ‘common view’

  •             11.  The pension – wages package now finalized is substantially the same as was available in June 2009.  There are hardly any improvements, why this delay and for whose benefit,  must be properly understood.

  • .          

  •             12.There was an argument raised that in the previous settlements PF optees were required to bear the pension cost.  This is not true.  First of all pension was there as a superannuation scheme.  Those voluntarily not opting for it was getting their share of PF. Secondly the earmarking of ‘incremental pension cost’ were not substantial.  “Incremental cost” is altogether a different concept as against ‘initial corpus cost’.  In this settlement too incremental cost is provided assuming all optees would opt for pension.  Even to SBI staff equivalent amount has been given as ‘balancing cost.’

  • .          

  •             13.Some organizations believed that they could monopolise the negotiations and decisions.  While outwardly they spoke of coordination in practice, they tried to do off stage sole negotiations.  This deprived officers of best results through collective wisdom. Such sole efforts miserably failed to secure anything.  Even anomalies like excessive HRA costing, higher rise at Executive stages, and stagnation increments at lesser periodicity taking its cost into account could not be corrected.   Negotiators of these organizations had different view regarding higher pay start, resultantly IBA offered starting BP of Rs.15000/= starts getting lowered to Rs.14500/= is obviously due to their insistence.  In SBI direct recruits getting 4 additional increments means real start being 16900 for them.  Over 60000 Junior officers in non-SBI placed in between 1st - 10th stages suffered due to this lack of priority. Accorded by separate negotiations carried on behind the back of other officers organizations.

    Source - AIBOA Website

1 comment:

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