Tuesday, April 3, 2018

letter to IBA by Forum of Retired Bank Employees (FORBE) regarding commutation while implementing Supreme Court Judgement and pension to CRS employees

We reproduce below the letter to IBA by Forum of Retired Bank Employees (FORBE) regarding commutation while implementing Supreme Court Judgement

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,