We reproduce below the letter to IBA by Forum of Retired Bank Employees (FORBE) regarding commutation while implementing Supreme Court Judgement
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No.
FOURM/Pension/2018-19 31.03.2018
The
Chairman,
Indian
Banks’ Association,
Centre
1, World Trade Centre,
6th
Floor, Cuffe Parade, Mumbai 400 005
Dear
Sir,
Reg: Bank Employees
Pension Regulations, 1995.
Please refer to
your circular No. CIR/HR&IR/SKK/2017-18/4439 dated 01.02.2018 regarding
implementation of Hon. Supreme Court Judgment in Civil Appeal No. 9371 – 9374
of 2017 in respect of Regulation 26 of Bank Employees’ Pension Regulations,
1995.
In your circular
dated 01.02.2018 you have advised all the Public-Sector Banks to implement the
Judgment and pass on the benefit of Regulation, 26 of Bank Employees Pension
Regulations, 1995. However, while implementing this, following aspects need to
be taken in-to consideration to have uniformity and justice to all the
beneficiaries.
1) Most of
the beneficiaries of this circular are retired from the services before 15 – 20
years or even before that in some cases.
2) At the
time of retirement all of them had received the commutation amount of commuted
portion of basic pension.
3) The
basic pension was reduced in all these cases and the period of 15 years for
such reduction is already over in almost all of these cases.
4) While
paying the commutation factor for 59 years and 61 years is Rs. 10.46 and Rs.
9.81 respectively (as the age of retirement for officers was 58 years till 1999
and 60 years thereafter) and as such had received the commutation value at the
rate of Rs. 125.52 and Rs. 117.72 for each rupee commuted by them.
5) Against
this payment of Rs. 125.52 / Rs. 117.72 the banks have already recovered an
amount of Rs. 180 for each rupee commuted during the 15 years after retirement.
6) The IBA
circular is silent regarding the treatment of additional commuted basic,
additional commutation value, commutation factor to be considered for arriving
the commutation value, date and period of reduction of additional commuted
basic.
7) As per
the IBA guidelines, the banks have been treating that the additional
commutation value has been paid to the pensioner on the date of his retirement
only and are reducing the basic pension from the first date of pension for a
period of 15 years from that date. If this practice is adopted now, all the
pensioners will be required to repay Rs. 180 as against payment of Rs. 125.52 /
Rs. 117.72 for each rupee commuted. Thus, on the first day itself the bank will
recover Rs. 54.48 / Rs. 62.28 for each rupee commuted from the pension arrears.
The Hon. Supreme
Court of India on 13.02.2018 pronounced judgment in Civil Appeal No. 5525 of
2012 whereby the Hon. Bench has struck down explanation (c) added to Regulation
2(s). This addition of explanation was carried in the year 2003 to the Bank
Employees Pension Regulation, 1995 as a result of joint note / agreement signed
in 1999 / 2000 with Officers’ Associations / Workmen Unions on wage settlement.
The officers /
award staff members retired from 01.04.1998 to 31.10.2002 were sanctioned
pension on the basis of pre-revised basic pay (settlement effective from 1993
to 1997 / 1998) plus dearness relief thereon at 1616 basis points. All these
employees are now eligible to receive pension on actual basic drawn by them
during last 10 months of their retirement.
At the time of
implementation of this judgment following points need to address to avoid confusion.
1) As the
explanation (c) to Regulation 2(s) is struck down by the Hon. Supreme Court,
its applicability to the employees and officers who retired from 01.11.2002 to
30.04.2005 also comes to an end and the pension for this group also needs
refixation on actual basic drawn by them during last 10 months of their
retirement.
2) Regarding
commutation the points narrated above in case of Regulation 26 are equally
applicable to this group as most of them have completed 15 years of their
retirement.
In case of Central
Government, Railways, Defense pensioners the additional commuted basic is
reduced only after making the payment of additional commutation value.
Moreover, such provision exists in Central Civil Service Rules, 1972 or Central
Civil Services (Commutation of Pension) Rules, 1981 which has a referral value
to Bank Employees’ Pension Regulation, 1995 as per Regulation No. 56.
State Bank of India
in its circular No. CDO/P&HRD/PPFG/5/2017-18 dated 13.04.2017 at point No.
5 clearly states that “Recovery on account of commutation will be made for 15
years from the month of payment of commutation amount.” (Copy Enclosed)
Bank of
Maharashtra, at the time of refixation of pension subsequent to pay revision
effective from 01.11.1997 / 01.04.1998 referred this issue to IBA way-back in
2001-2002. Our affiliated unit Bank of Maharashtra Retired Employees’ Welfare
Organization, had raised this point and IBA that time had made it clear that
the commutation will become absolute from the date of actual payment of the
commutation value and the additional commuted amount will be reduced from the
basic pension after the date of actual credit of the commutation value to the
pensioner’s account. While implementing the judgment of Hon. Supreme Court
regarding grant of addition of notional service of 5 years to VRS 2000 optees
under Regulation 29(5) Bank of Maharashtra has observed these guidelines
whereby commutation arrears paid in 2010 will be recovered in 15 years up-to
2025 after date of actual credit. A copy of circular issued by Bank of
Maharashtra under reference No. AX1/A&A/BEP/Cir.No.51/2002 dated 30.05.2002
is enclosed to this for ready reference.
We therefore
request you to consider these points and guide afresh the banks suitably to
implement the judgment smoothly without creating more problems for the retired
staff members.
Thanking you,
Yours faithfully,
President.
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