Second option of pension for VRS Optees under Bank's scheme and for resignees

AIBOC has addressed a letter to the Secretary, Department of Financial Services, Ministry of Finance, Government of India, highlighting therein the injustice meted out by IBA to the Officers who retired under Voluntary Retirement Scheme evolved by Public Sector Banks, Exit Option Scheme introduced by the Associate Banks and the officers who resigned from the service of the Bank after completing pensionable service of more than 20 years, etc., by denying another option to join the Pension Scheme. 

Click on the link below to view detailed circular

AIBOC circular dated 26th Dec. 2011

UFBU takes up pensioners issues with Government

United Forum of Bank Unions (UFBU)  leaders met  Mr. D K Mittal, Secretary, Dept. of Financial Services, Ministry of Finance, Government of India and submitted  detailed memorandum to him in  the month of Nov. 2011.  They  have addressed a letter to him on 20-12-2011 as a follow up action. In that letter UFBU  has requested to take up pensioners' issues  also along with working employees' issues. The letter contains mention regarding  improvements in bank employees pension scheme on the lines of Government Scheme in matters like quantum of pension, updation, uniform DA formula, commutation formula, quantum of family pension.

Click here to view UBFU Circular 

UFBU 's delegation to IBA

All the representatives of Constituent Unions/Associations of UFBU met the Chairman, Indian Bank’s Association on 16.11.2011 in a delegation. All the current issues and demands of Officers/Employees in the Banking Industry were explained in a threadbare manner and IBA was urged upon to resolve the same expeditiously. 

In this connection, UFBU submitted a letter to the Chairman, IBA covering all the issues taken up with them. Along with the issues of serving employees pensioners' issues were also taken up. Para 8 of the said letter which has covered pension  scheme issues is reproduced below.

  Pension Scheme :- Bank employees’ Pension Scheme was agreed upon and introduced in 1993 exactly on the lines and basis of the Central Government Pension Scheme.  Even the New Pension Scheme that has been introduced for the Government employees has been made applicable to banking industry.  But the various improvements that have been made in the Government scheme as per the 5^th & 6^th Pay Commission Report have not yet been extended to the banking sector. Hence, issues like periodical updation of Pension Scheme along with wage revision for serving employees, 100% DA compensation for all pensioners, improvement in Pension, Commutation, Family Pension, etc. are very genuine demands that need to be resolved expeditiously.  Even the Ex-Gratia Pension of Rs.300 per month being paid to the pre – 1986 retirees remained the same.

Source - AIBOC Circular (Click to view the circular)

LIC to revise pension in four weeks : Rajasthan HC

Rajasthan High Court today (i.e. 02/11/11)granted four weeks time to LIC to comply with its earlier order directing the company to implement a November 2001 board decision to revise pension and dearness allowance of its retired employees.
Hearing a contempt petition, the single bench of Justice Mahesh Chandra Sharma directed the LIC to revise the pension and DA payable to its retired employees corresponding to the successive revisions of pay scales that took place in 1986, 1993, 1997, 2002 and 2007.

Counsel for LIC Ajay Tyagi prayed before the court to grant four weeks time to comply the order. The court, however, directed A K Das Gupta, Managing Director LIC and D Vijaylaxmi, Executive Director (personal) to remain present before it on December 1 in case the order is not complied with. The order came on a contempt petition filed by petitioner Krishan Murari Lal Asthan. The board resolution was passed to meet the demand of parity in pension raised by the All India Retired Insurance Employee's Association. Retired employees of LIC across the country are drawing pension based on the last pay at the time of their retirement. The "inaction" of the the LIC in implementing the board decision was challenged by Krishan Murari Lal Asthan, General Secretary of Retired Insurance Employees' Association of LIC. The LIC board did not implement the resolution on the ground that the Finance Ministry has not given its approval. Disposing of the writ petition filed by Asthana, single judge bench of Justice Munishwar Nath Bhandari in its order dated January 12, 2010 had asked LIC to take immediate steps to implement the resolution of LIC board and held, "In the present matter, there was no reason to seek approval of the central government". The SLP filed by the LIC was also dismissed by the Supreme Court and subsequently the division bench has also dismissed a review petition filed by LIC but still the order of High Court was not complied with.

Source : PTI

Writ Petition by Resigned Bank Employees Association admitted by Delhi High Court

Resigned Bank Employees Welfare association had filed WP in Delhi High Court ( WPC 7413 of 2011) for pension option.

 

The petition was heard today 17/10/2011 & honorable justice after arguments, admitted the petition & issued notices to 33 respondents.

 

The next date is 11/01/2012.

100 % D.A. neutralization to pensioners - AIBOC letter to IBA

There is long pending demand for 100 % neutralization of DA to pensioners/ family pensioners retired from the services of the bank prior to 1/11/2002. AIBOC addressed a letter to IBA highlighting the need to extend 100% DA neutralization to pensioners and family pensioners in the banking industry who retired before 01.11.2002 on par with RBI scheme w.e.f.,  01.05.2005. Click on the link below to view the circular on this subject.

AIBOC  Circular

Bank loses Rs 5 Lakhs in bid to deny 9 Lakhs VRS benefit

MUMBAI: The Central Bank of India spent Rs 5.33 lakh in a 10-year legal battle to avoid paying Rs 9.5 lakh as retirement benefit to an employee on the grounds that she died two days before they cleared her name for the voluntary retirement scheme (VRS). But both the Bombay High Court and the Supreme Court have ruled that Homai Darayas Postwala - an officer in the investment department - was entitled to the benefits.
Postwala, who served the Central Bank for 30 years, died on June 23, 2001. The bank argued that as it accepted her in the VRS retirement scheme on June 25 - two days after her death - her heirs were not entitled to the benefits of the scheme.
Eight years later, the HC ruled that as the bank had failed to provide the family any record or notification of her acceptance (or rejection) under the scheme, "it would have to be held that the application was accepted when she (Postwala) was alive".
When her husband and son filed an RTI application in June 2011, they learnt that the bank had spent nearly half the amount due to Postwala fighting the case. They have now moved the Bombay High Court to enhance her pension from Rs 4,700 to Rs 6,700 per month after the Supreme Court accepted her rights under VRS.
Postwala had applied for the bank's VRS scheme on February 22, 2001- the day it was announced. The bank did not include her in the first list, but her name appeared on the second list on June 30, 2001. The bank claimed that they had approved her name for the second list on June 25, two days after her death.
While arguing their side of the case in court, Postwala's heirs said the bank had failed to communicate their decision, be it an acceptance or rejection, as is the norm. In fact, the family learned of her acceptance under the scheme only when they enquired with the bank after her death. They were told that she was not eligible for VRS.
The HC in July 2009 directed the bank to pay retirement and other dues under VRS to Postwala's legal heirs in three months. The bank then appealed to the Supreme Court, which upheld the HC order in April 2011.
Postwala's family has now filed a contempt petition in the HC since the pension amount has not been increased retrospective from July 2001. The family has also filed an appeal against the RTI order because the bank refused to provide receipts showing money paid to the lawyers. 

Source - Times of India, 18th Sept. 2011

Supreme Court notice to Governmet on PNB employees demand of medical benefits after retirement

New Delhi, Sep 13 : The Supreme Court today issued notices to the Union Government and four other respondents on a petition filed by a PNB bank employee seeking medical aid to the retired employees of the country.

A bench comprising Justices Dalveer Bhandari and Deepak Verma issued showcause notice to the Union of India, the Punjab National Bank Chairman, Indian Banks Associations and United Forum of Bank Union on a special leave petition, filed by All India PNB Workers Federation general secretary J K Sawhney against the Delhi High Court order which had dismissed the bank employees demand. 

The High Court had on March 14 this year dismissed the bank employees' petition saying, "It will be for the bank employees and the management of the banks to sit together and decide as to how best such medical facilities can be extended to the retired employees." The petitioner has raised the question of constitutional validity of the state's duty under Article 21 of the Constitution to safeguard the right to life of every person and demanded medical facilities not be denied to the employees after retirement as grant of medical facilities to a person is a fundamental right. 

The petitioner said when the medical bills of full-time directors of the banks can be reimbursed then why there is parity between the retired employees of the bank.

Demanding their fundamental right of life to healthcare, the petitioner said it is the obligation of the state to look after the health of the employees who have served the banks for 60 long years. 
- UNI

Finance Ministry rejects Khandelwal report for bankwise wage talk and stock option.

The finance ministry has rejected a suggestion of a government panel to grant stock options to top-level employees in state-run banks, saying that such an incentive could not be given until a wider assessment mechanism was put in place.

It, however, supported a proposal for a rural stint for newcomers. The committee, set up to look into human resource issues at state-run banks, had recommended that 15% of the performers could be given employee stock options. Headed by formerBank of Baroda chairman A K Khandelwal, the panel had suggested sweeping changes in changes in remuneration and employee-related practices "First we need to set up a mechanism to monitor the performance of employees across different banks and then make it an all-inclusive process before offeringESOPs," said a finance ministry official requesting anonymity. ESOPs, or employee stock options, grant the right, but not the obligation, to buy a certain amount of shares in the company at a predetermined price. 

REFIXATION OF BASIC PAY TO THE OFFICERS WHO RETIRED BETWEEN 01.04.1998 TO 30.04.2005

In the case filed by Bank of Baroda retirees in Madras High Court , the Hon’ble High Court has ordered to pay pension to all the officers who retired from service of the Banks after 01.04.1998 on the revised salary as per the VI Bipartite settlement. The Hon’ble Court has also ordered payment of differential commutation to all the affected officers. In this regard AIBOC has taken up matter with IBA and written a letter to IBA chairman requesting implementation of High Court  order. To view circular issued by AIBOC and letter to IBA, click on the following link.

AIBOC  Circular

AIBOC takes up matter of resignees with IBA in light of recent Supreme Court Judgement

Recently Honorable Supreme court has delivered a  landmark judgement  regarding  eligibility of pension  for  officers of New India Assurance Company Ltd  who had resigned after completing pensionable service. In this regard AIBOC has taken up matter with IBA . Click on the link below to view the circular. 

AIBOC Circular

Pension for Resignees - Supreme Court Says YES

In a recent judgement of Supreme Court in the matter of Sheelkumar Jain  Versus The New India Assurance Co. Ltd. & Ors.  ( Civil Appeal No.6013 of 2011 arising out of SLP No.(C) 3777 of 2007)  held that Resignees are eligible for pension & directed respondent to consider the claim within three months of Judgement . Judgement dated 28/07/2011.

The Supreme Court also referred case of Union of India & Ors. v. Lt. Col. P.S. Bhargava wherein noted that " Once an officer has to his credit the minimum period of qualifying service, he earns a right to get pension and as the Regulations stand that right to get pension can be taken only if an order is passed under Regulations 3 or 16."

The  aforesaid  authorities  would  show  that  the  Court will have to construe the statutory provisions in each case to find out whether the termination of service of an employee was a termination by way of resignation or a termination by way of voluntary  retirement   and   while   construing   the   statutory provisions, the Court will have to keep in mind the purposes of the statutory provisions.    The general purpose of the Pension Scheme, 1995, read as a whole, is to grant pensionary benefits to   employees,  who   had   rendered   service   in   the   Insurance Companies   and   had   retired   after   putting   in   the  qualifying service in the Insurance Companies.  Clauses 22 and 30 of the Pension Scheme, 1995 cannot be so construed as to deprive of an employee of an Insurance Company, such as the appellant, who had put in the qualifying service for pension and who had voluntarily given up his service after serving 90 days notice in accordance   with   sub-clause   (1)   of   Clause   5   of   the   Scheme, 1976   and   after   his   notice   was   accepted   by  the   appointing authority.

In this matter RESIGNED BANK EMPLOYEES WELFARE ASSOCIATION ( Registered Body) has filed writ petition in Delhi High Court & notices have been served on 31 respondent. At present RBEWA has more than 270 Resignee members from 31 Banks spread all over India.

The "RBEWA"s founder member Advocate Pathak R K ( Resignee from Dena Bank) has taken lead since December 2009 & interested / affected bank employees can contact him on 09373053695 or email id rbef2010@gmail.com to strengthen his fight for justice.

Pensioners Participation - 5th August Bank strike.

Serving bank unions gesture to include the vital demands of Pensioners, such as updation of Pension,100% DA neutralisation for pre 2002 retirees etc among other things for the strike call ,evoked a  good response from pensioners from various parts of the country in  participating in demonstrations and dharnas conducted  at important  centers with support of bank unions as per available reports in media

              If MOF/IBA takes these reports in its right spirit a positive dialogue with serving unions should take place in coming days.from our experience same cannot take place immediately.As we find,the last minute efforts of Finance  Secretary and Chairman IBA  with union,was only for withdrawal of strike and not for a meaningful dialogue.
               AIBOC vide their Cir. No. 78 dt 5th Aug, has acknowledged the involvememnt of Pensioners, in the actions programmes related to strike as follows:- 

"We also wish to place on record here that a huge number of
representatives from the Pensioners’ Associations participated in the demonstrations and extended their moral support to the cause of the United Forum of Bank Unions. These veterans of our movement have assured to extend their fraternal support to all our future
struggles."

            The United Forum of Bank Unions is meeting on 10th August 2011 at  Bangalore to chalk out our future course of action.

Source - P. Mohan - Chennai

              Bankpensioner google group member

Bank strike on 5h August 2011

As per the call given by   UFBU  bank workmen and officers comprising about ten lakhs , from  all banks  will be  going  ahead with the nationwide bank strike on  5th August  after failure of two rounds of conciliation talks with the Chief Labour Commissioner, Union Labour Ministry GOI,. held on  1st Aug and 3rd Aug. in the presence of representatives of the Indian Banks Association (IBA) in Delhi, and UFBU Convener C H Venkatachalam

Out of 21 demands made by unions,in notice for strike call, major demands are against the policy decisions of central Govt’s move towards privatization of PSBs, dilution of Govt;s equity,merger of associate banks with SBI, foreign capital,and outsourcing etc apart from recruitment to other service conditions of serving employees.
   As far as pensioners are concerned, the welcome move is  inclusion  of  the vital demands of pensioners as furnished hereunder  found place in the demands for the strike call.

Improve Pension Scheme in banking sector on the lines of Central  Government Scheme –
1)  Updation of Pension along with wage revision of in service   employees,
2)  Uniform D.A. neutralization,
3)  Improvement in commutation,
4)  Family Pension,
5)  Ex-Gratia of pre – 1986 retirees, etc.

As per reports,momentum has  already been  gained in good number of centres,where Dharnas and mass demonstrations were conducted by Retirees along with  serving  employees  by extending  all support to fight against the policies of Govt and management.

Every bank pensioner should   extend all support and move ahead  to continue the fight for   justice.

Increase in D.A. from Aug 2011

D.A. Rates for Pensioners (%) – 27 Slabs more
Retired prior to 01-11-1992 - 919 Slabs over 600 points
     Upto 1250    1251-2000    2001-2130    Abv 2130
     615.73%        505.45%      303.27%      156.23%
After 01-11-1992 upto 31-03-1998 - 782 Slabs over 1148 points
     Upto 2400    2401-3850    3851-4100    Abv 4100
     273.70%        226.78%     132.94%        70.38%
After 01-04-1998 upto 31-10-2002 - 648 Slabs over 1684 points
     Upto 3550    3551-5650    5651-6010    Abv 6010
     155.52%       129.60%       77.76%        38.88%
Retired on or after  1-11-2002 - 497 Slabs over 2288 points
For the entire Basic Pension Amount    89.46%
Retired on or after  1-11-2007 - 360 Slabs over 2836 points
For the entire Basic Pension Amount    54.00%

D.A calculator is available for calculating revised D.A. and difference. For calculating D.A , enter basic ( original basic without reducing commutation amount) and click on the calculate button. Revised D.A , Present D.A. and difference will be displayed on the calculator. Select appropriate retirement date range according to the date of retirement.

 Click here for D.A. Calculator 
Click here for IBA Circular on D.A
Click here for revised IBA Circular on D.A. for pre 98 retirees 

Dharana by bank pensioners oganisation in Trivandrum for various demands of bank pensioners

 Following is the report on Dharana by bank pensioners at Trivandrum by ABROA Unit State Bank of Travancore.

Quote

 

Friends

We are glad to report that a Dharna was organised in Trivandrum yesterday by the Kerala Unit of the Retired Bank Officers' National Confederation for drawing attention of the powers-that-be to the most important of the issues confronting the membership, namely, updation, 100% neutralisation, increase in ex gratia and family pensions, medical benefits etc. The focus was on the most vital issues.

Timed to coincide with the anniversary of bank nationalisation, the dharna was addressed by Mrs Jameela Prakasam MLA (herself a bank retiree), Mrs K Chandrika (Worshipful Mayor of Trivandrum), Shri Pannyan Raveendran Ex MP (National leader of CPI), Secretary of the State Civil Pensioners' Association, Divisional Secretary of the LIC Pensioners' Association and several leaders of the unions/associations of the serving employees and officers. 

A memorandum highlighting the plight of retirees and their families (The widow of a retired General Manager getting a consolidated pension of Rs 1,000, a retired Assistant General Manager receiving a basic pension of just Rs 300) etc had been drafted and was circulated among them. All those who addressed the Dharna (but are not/were not bankers) were surprised and shocked at these revelations. Pledging all support to our cause, they have promised to take up the matter with the authorities.

Let the dharna in Trivandrum not be a solitary instance; let the initiative be sustained elsewhere. Let all MPs know about the sad plight of retirees so that when the matter is raised on the floor of the Parliament, the matter will receive unanimous and whole-hearted support. For that, the lead has to be taken by retirees at other centres. Our request is to organise similar events at all centres in order to create a groundswell. 

A copy of the memorandum is attached with you could modify incorporating facts of similar cases in the your geographical area (instead of the details of Mr C John Jacob, Mr S S Menon, Mr V Balachandran etc) and send to the MPs in your respective areas.

--
Associate Banks' Retired Officers' Association Unit: State Bank of Travancore

  

Unquote 

 

Click here to view the memorandum 

 

 

 

 

RBI wants all PSBs to have uniform pension provision

After coming down heavily on banks for not making adequate provision for increased pension liabilities arising out of wage revision, the Reserve Bank of India (RBI) now wants all public sector banks to have uniform pension liabilities.

According to sources in the banking industry, the central bank sees no reason why each public sector bank should have different pension liabilities, since the inputs which go into calculation of pension provision are nearly the same.

“RBI says the salary structure is same, the mortality rate is similar and the attrition rate is almost the same for all government-owned banks—at around 0.5 per cent. There is no reason for different actuarial estimates for banks. It feels all public sector banks should have similar actuarial estimates,” said a banker after discussing the matter with RBI officials. The basic pension of retirees from all government banks is 50 per cent of the last salary drawn.

RBI Unions demand pension at par with Central Govt.

The employees' union of Reserve Bank of India demand equal pension benefits on par with those of their counterparts working in central government departments.
A chalking-a-strategy meet organized by joint body of all the unions operating in the country's apex bank is to be held on July 7 in Chennai, which in later stages would be followed by a protest march on Tuesday. There is a special stress on increasing the family pension, a dole given to the dependent spouse after the employee's death. The family pension in RBI does not go more than Rs 7,688 a month for even for a senior officer's kin, which is too less to compare it to the rising cost of living, say unions. Family pension beneficiaries in RBI are expected to run in a few thousands.
"RBI has enough funds to increase the pension but the government is creating a hurdle. It feels that unions in other financial institutions may raise a similar demand too but there are some organizations which cannot afford a pension revision," alleged Secretary of All India RBI Employees Association (AIRBIEA), Bidyut Chakraborty.
However, RBI unions contend that if the central government employees get a benefit even without any specific provision of funds, why should not those serving the apex bank. The pay commission has increased family pension to 30% of the last drawn pay.
The unions say RBI has a corpus of Rs 5,000 crore as collections towards provident fund. A part of it can be easily diverted to pension payment.
AT RBI, the dependents of senior officers get a maximum pension of Rs 7,688 a month which is Rs 23,604 in the case of central government. The minimum monthly family pension for an RBI officers' dependent is Rs 5,533 which is Rs 16,599 in the case of a central government employee.
It is worse for the Class IV workers where the family pension does not exceed Rs 3,715 a month while their counterparts in central government get a maximum pension of Rs 11,145 per month, he said.
Chakraborty said the union has demanded a second option for pension too. There are around 2,000 RBI employees who did not go in for pension option the first time and many of them want to change their decision, added Chakraborty.
A second option will enable them getting a monthly pension payment or else a lumpsum provident fund is handed over. The pension is paid from the bank's contribution towards an employee's PF. 

Source : Times of India - Nagpur

BOB retirees forum has won an appeal in the Madras High Court for implementation of 50% BP as pension from the date of retirement (instead of May 2005)

We reproduce below  the circular issued by All India Canara Bank Retirees' Federation on the above subject.

Ref. No:55:2011                                                     June 29, 2011

To: All Affiliated Units/Office Bearers/Central Committee Members    

Dear Sir,

DIVISION BENCH OF MADRAS HIGH COURT DELIVERS JUDGEMENT IN FAVOUR OF RETIREES IN RESPECT OF DEVIATION IN BASIC PENSION

Regulation 35 (2) of Pension Regulations states that ….” The amount of Basic Pension shall be calculated at 50% of the average emoluments”

In the VII Bipartite Settlement, a new definition of “Pay for the purpose of Pension” was introduced, in contravention of  Regulation 35 of Pension Regulations stating that  “Pay for the purpose of pension shall be aggregate of pay drawn by the member in terms of Joint Note/VI Bipartite Settlement dated 14-02-2005 and the Dearness Allowance thereon calculated upto Index Number 1616 points in the All India Average Consumer Price Index Numbers of Industrial Workers (Base 1960 = 100) This definition was applied to all the persons who have retired after 01-04-1998. This resulted in reducing the Basic Pension payable to the pensioners from 50% of basic pay to about 41% of Basic Pay.

This anomaly was rectified in the VIII Bipartite settlement/Joint Note which restored the definition of Pay and re-fixed Basic pension of retirees to 50% of the actual average emoluments drawn by the retirees covering all Post 01-04-98 retirees, but only with prospective effect from 01.05.2005.

As this is only a correction of an earlier distortion, retrospective effect has to be given from the date of retirement of the pensioner concerned and the difference in commutation of pension also has to be paid.  Urging these points, Bank of Baroda Retirees in Chennai filed Writ Petition in 2002. Against adverse judgement in this regard, they preferred writ appeal before the Division Bench of Madras High Court which delivered the judgement on 28.06.2011 in favour of retirees, ordering the BOB management to pay the arrears of pensionary benefits from the date of retirement. Full details of judgement are awaited.

Our Writ  Petition on the subject matter is still pending before the Madras High Court and we are actively pursuing the case through our Advocate at Chennai.

We heartily congratulate the Bank of Baroda retirees for their patience and sustained efforts in pursuing the case.

With Warm Greetings,

Yours sincerely,

(S V Sinivasan)

General Secretary 

--
Source -Shri Mohan.V.R.  Chennai

BANKING SECTOR REFORMS – Where the industry heading to?

Mr.Montek sing Ahluvalia, ,the  Planning Commission Deputy Chairman pitches for more financial sector reforms. He agreed with the view expressed in the OECD's latest Ind-ia economic survey that financial sector reforms should be continued.

'On the banking sector, the OECD's (Organisation for Economic Co- operation and Development)second India Economic Survey, which was released today, has recommended that the Government should reduce its stake in public sector banks to 33 per cent, as suggested by the Narasimham Committee report, to make them more dynamic. The report pointed out that the 2000 budget proposed such a measure but in the face of strong opposition from the unions it was not implemented.

“It is high time to push it through now and to go further by
completely selling smaller public sector banks in line with the Rajan Committee (2009) recommendations,” the OECD survey said. The recent performance of these banks suggests that in addition the Government should become passive shareholders and let private shareholders run these banks, the survey said. Reduction in the Government share should also apply to the State Bank of India, it added.

Public sector banks, with reduced Government holding, should no longer be governed by social objectives. The employees of the nationalised banks should have the same employment status as those in private banks.

Reducing the Government shareholding to one-third would be
insufficient. The corporate governance norms too have to be improved so that directors and chief executives are appointed by shareholders and not the Government. Also, restrictions on the voting rights of large shareholders need to be removed, so that ownership can equate with control, the Survey has said.
On the asset management industry, the OECD survey has suggested that the maximum expenses allowed for unit-linked policies should be aligned with those of the mutual fund sector.' 
Source - Business Line - 15th June 2011
Click here to view the news item

Bankpensioner page on FACEBOOK

Facebook is a powerful social networking platform on the WEB and has become very popular now a days.  
Facebook page for bank pensioners has been launched. Click on the following link to view bankpensioner page on Facebook
 Click on the "Like" box provided on the facebook page.

Pension liabilities force JP Morgan to cut price targets of PSU banks by 10%

MUMBAI: JP Morgan cut price targets for state-run banks by as much as 10% as their pension liabilities may be many times what the market has currently factored in. It downgraded Bank of India to underweight from neutral.
"Optimistic wage inflation and mortality assumptions raise the risk of future provisions, and enhanced funding of plans threaten NIMs," analysts including Seshadri Sen at JPMorgan wrote in a report. "Pensions are putting pressure on PSU banks' poor cost-efficiencies and hampering competitiveness. Cheap valuations discount this only partially - prospects of negative surprises.''
 

Many analysts and investors are turning negative on banks mainly due to rising interest rates that could lead to higher bad loans. For state-run banks, the pension liabilities could be bigger. State Bank of India shocked the market with a 99% drop in earnings in the fourth quarter of last fiscal, partly due to such provisions. The BSE Bankex has fallen nearly 7% since January while the benchmark Sensex fell 10% during the same period.

"We think the current assumptions ignore the impact of the bi-decadal wage increases from collective bargaining, probably because it's not a certainty" said Sen. The agreement with the unions expires in Sep 2012, and another lumpy provision is likely in FY14. PSU banks and unions renegotiate wages every five years - wages expanded by 18% during the previous settlement for 2007-12. The report also says, with non-pension benefits (post-retiral medical, for one) adding to the pressures, the recent pension changes have blunted the cost efficiencies. "We estimate pension liabilities to expand at 20% against the discount unwind of 8%, with the risk of periodic capital shocks."

The provisions will be uneven, and we estimate that obligations will have to rise by 20% per annum for the next five years to adjust to realistic assumptions. Also, the provisions for state-owned lenders have risen consistently for the past seven quarters as they are migrating to a more stringent computer-based system of identifying bad loans and have set aside more money for restructured loans. PSU banks are more at risk because of their comparatively high exposure to small agriculture loans below 50 lakh which can register as NPAs if not repaid for more than 90 days.

Source - Economic Times dtd 2nd Jun 2011

AIBOC letter to IBA regarding pension to officers retired under VRS scheme of bank or retired under exit option scheme by subsidiary banks

We reproduce below the letter by Shri G. D. Nadaf, General Secretary AIBOC

Quote

No.1452/229/11                                                   30.05.2011

To, 
Shri M.D.Mallya, 

Chairman,
The Indian Banks’ Association,
World Trade Centre Complex,
Centre 1, 6^th Floor, Cuffe Parade, 
MUMBAI – 400 005.

Dear Sir,

PENSION TO OFFICERS WHO “RETIRED UNDER THE VOLUNTARY RETIREMENT SCHEME OF THE BANK” OR “RETIRED UNDER EXIT OPTION SCHEME” INTRODUCED IN SUBSIDIARY BANKS

         We draw your kind attention to our letter No. 1452/156/11 dated 09.03.2011 wherein we have made out a case for granting another option to join the Pension Scheme to those officers who sought Voluntary Retirement from service of the Bank as provided in OSR 19(1) to 19(7) and who did not opt for pension earlier due to various reasons. As you have not responded positively to our earlier letters i.e., Letter No. 1452/302/10 dated 28.08.2010 & Letter No.1452/482/10 dated 29.12.2010, we were compelled to invoke the provisions under clause No.14 of the Joint Note signed by IBA and AIBOC and other officers’ organisations on 27.04.2010. But to our chagrin neither you have furnished us your points of view on the issue as to how and why the above category of officers have been denied the opportunity to join the Pension Scheme nor have arranged for a Meeting to resolve the issue in an amicable manner to the satisfaction of all concerned.

Letter by Shri C. H. Vekatachalam, GS - AIBEA, to FM on various issues pertaining to Pension and Retirees

Mr.C.H.Venkatachalam, General Secretary of  AIBEA has written a letter to or FM,on important issues pertaining to retirees:

Same is reproduced here below for the information


AIBEA/GS/ 2011/52
25th May, 2011

To
Shri. Pranab Mukherjee,
Hon’ble Minister for Finance,
Government of India,
North Block,
New Delhi

Dear Sir,
                        Reg : Grievances of Bank Retires

The All India Bank Retirees Federation and United Forum of Bank Retirees Organisation have been representing to the Government and Indian Banks Association to redress some of their genuine grievances and demands but with no effect so far.  You are well aware that the Pension Scheme evolved and introduced in the Banks is exactly on the lines of Central Government Pension Scheme and hence some of the improvements that have been incorporated in the Government Pension Scheme consequent to the 6th Pay Commission need to be extended to the bank retirees also.  The recent extension of one more option to join the Pension Scheme has brought great relief to number of retired employees and officers who are today covered by the Pension Scheme and we are thankful to the Government for the same.
But the following issues of the bank retirees deserve the special attention of the Government and your sympathetic consideration.

1.      For the Government employees, on occasions of salary revision, pension revision is also given and accordingly their pension is updated.  But in the case of bank retirees, the Pension remains static as sanctioned at the time of their retirement and does not undergo any change thereafter.  The periodical updation of pension along with salary revision of in-service employees is very genuine and fair expectation, especially when the same is available to the Government
employees.

2.      Since their pension is fixed based on their pay at the time of their retirement, there are currently 5 different price index (600,1148, 1684, 2288 & 2836) on which DA is paid to the retirees depending upon their period of retirement i.e. 1-1-86 to 31-10-92,  1-11-92 to 31-3-98, 1-4-98 to 31-10-2002, 1-11-2002 to 31-10-2007 and from 1-11-2007 onwards.  Their pension needs to be adjusted and upgraded to a common price index by merging the DA upto that level .  This will bring in uniformity of indexing the Pension of the retirees.

3.      In payment of DA, after introduction of 100% neutralization against price rise from 1.11-2002, those who have retired after this date are being given 100% neutralization for price rise while the past retirees continue to be paid DA on a tapering basis with 4 slab formula of the
earlier system.  There is a genuine need to extend 100% DA
neutralization to all the retirees atleast from a prospective date.

4.      While the in-service employees get DA variation on quarterly basis,  for retirees, DA on Pension is paid on half yearly basis.  This needs to be changed to quarterly basis for retirees also.

5.      Under the 6th Pay Commission Report, there are improvements in the rate of pension for very aged senior citizens, in the commutation of pension, eligibility service to get full pension, etc for the Government pensioners and these need to be extended to the bank retirees too.

6.      It is also experienced that the quantum of Family Pension is very inadequate and this requires a sympathetic approach from the Government to revise the same suitably.

7.      Since the Pension Scheme was introduced in the Banks from 1.1.1986, the pre-1986 retirees are being given a Ex Gratia of Rs.300 per month + DA and their widows are being paid a fixed lumpsum Ex Gratia of Rs.1000 per month.  These pre-1986 retirees are aged 85 years and above and are very few in number, may be around 6000 persons in the entire banking sector. Considering their age, ill-health, etc. the Government should kindly increase the Ex Gratia amount.

8.      There are number of grievances of the retirees at the Bank Level regarding delay in sanction of Pension, delay in disbursements, etc. and hence Government / IBA should give proper guidelines to all Banks to put in place a regulated mechanism to redress these grievances. This will help in avoiding / reducing litigations, etc. on the part of the retirees.

9.      Government has already advised the Banks to set apart a portion of  the amount allocated for Staff Welfare from the Net Profit of the Banks towards benefiting the retirees. Still it is not being implemented properly. Hence Government may consider advising the Banks to set apart an uniform percentage of funds from out of the profits towards Welfare Schemes for the retirees.

10.     The in-service employees are entitled to reimbursement of medical  expenses on occasions of hospitalisation but after retirement, the retirees are not covered by such facilities.  In the context of ever increasing cost of medical treatment, retirees become extremely vulnerable when they fall ill and hence some uniform medical expenses reimbursement scheme needs to be made available to them.

These are some of the important grievances and demands of the bank  retirees.  We request you to take a positive view of their grievances and advise necessary steps to be taken by the Government / IBA in this regard.

Thanking you,
Yours faithfully,


C.H.VENKATACHALAM
GENERAL SECRETARY

Copy to :-
Chairman,
Indian Banks Association,
Mumbai.

The letter does not cover plight of pension option to VRS retirees of PF optees and of Resigned staff. PRESUMABLY, THE matter is subjudice and hence possible exclusion. Lets hope good things happen to all.

Source: Shri Mohan V. R.  - Chennai . 

                       Bankpensioner google Group Member