Pension FAQS

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Who is eligible for pension?
   For becoming eligible for pension an employee should have opted for pension when the pension scheme was implemented in bank in the year 1995. A second option of pension was subsequently given . Employees who had given option for pension at the time of second option, are also eligible for pension.
    An employee with 20 years of qualifying service is eligible for pension. An   employee who has completed 33 years of qualifying service is eligible for full pension. An employee with less than 33 years of service is eligible for pro rata pension.

Following types of employees are not eligible for pension on account of forfeiture of service clause in the pension rules
1. Employees who have resigned from the service.
2. Employees who are  dismissed, terminated or removed from bank’s services
3. An interruption in the service of bank employee entails forfeiture of his past services except in the cases of authorized leave of absence and suspension followed by reinstatement.

What are the types of pension?

Superannuation Pension
Superannuation pension is granted to an employee who on his attaining the age of superannuation . Presently age for retirement on superannuation is 60 years.

Pension on Voluntary retirement
An employee who has completed 20  years of qualifying service may retire from service by giving proper notice to the employer bank. The notice should be given  not less than three months in advance to the appointing authority. There are certain procedures like giving three months notice, acceptance of the application for vrs etc are to be followed which are prescribed in the pension rules of the respective banks.
The qualifying service of an employee retiring voluntarily under this regulation shall be increased by a period not exceeding five years subject to the condition that the total qualifying service shall not exceed 33 years

Invalid Pension
Invalid pension may be granted to an employee who has rendered minimum ten years of service and retires from the service on account of any bodily or mental infirmity which permanently incapacitates him for the service. In this case an employee has to submit  medical certificate of incapacity from a medical officer approved by the bank.

Compassionate Allowance
In the case of an employee who is dismissed or removed or terminated  from the service, bank may sanction a compassionate allowance not exceeding two third of the eligible pension , if the case is deserving special consideration.

Premature Retirement Pension
This type of pension is sanctioned to an employee who retires from the service on account of the orders of the bank to retire prematurely in the public interest or for any other reason. In this case minimum service required is 10 years.

Compulsory Retirement  Pension
When an employee is retired from the bank compulsorily as a penalty, a competent authority may grant him a pension at a rate not less than two thirds and not more than full pension.


What factors determine the pension fixation?

1. No of years of qualifying service
2. Average of last 10 months basic and allowances qualifying for  PF (i.e. Average Emoluments) preceding the date of   retirement.

What is the meaning of qualifying service?
Qualifying service of an employee commences from the date he takes charge of the post to which he is first appointed on a permanent basis. Service in probation period is counted in qualifying service. All leave during the service in bank for which leave salary is payable shall count as qualifying service. Leave on loss of pay shall not count as qualifying service barring few exceptions given in pension rules.  If the period of service of an employee includes broken period less than one year, then if such a broken period is more than six months, it shall be treated as one year and if such broken period is six months or less it shall be ignored.

How to calculate / fix pension ?
Following formula is used for calculating basic pension

    
                            Basic Pension  = 

(Average emoluments) X ( No. of years of qualifying service (max 33 yrs))
    —————————————————————————————
                                             66
In case of VRS  five years are added to qualifying service subject to the maximum of 33 years. For example if qualifying service is 27 years , in case of vrs optees 5 years will be added to the qualifying service and it will be taken as 32 years for pension calculation purpose. In case of vrs optee having 30 years service, his qualifying service will be taken as 33 years and not 35 years, because of the maximum service clause of 33 years.


What is commutation of pension and how to calculate commutation value?
By commuting the pension the pensioner gets lump sum amount in lieu of the commuted amount of pension. Maximum amount which can be commuted is 1/3 of the basic pension. For every rupee commuted ,commutation value will be determined according to the commutation table, which gives rupee value of commuted pension according to the age on the next  birthday after retirement. Following formula is used for calculating the commutation value (i.e. lump sum amount receivable on commutation)


Commutation value =  Commuted amount of basic X  12  X commutation factor


                                                                         
( Commutation factor is  given in the commutation table according to age on the next birthday after retirement)   
Click here for commutation table.

Commutation is restored after 15 years i.e. deduction of commutation amount from pension will stop after 15 years and pensioner will get full basic pension.

What is dearness allowance on pension?

DA is calculated on original basic pension i.e basic pension without deducting commutation amount. DA is linked to Consumer Price Index and is revised every six months in the case of pensioners, in the months of February and November. There are different rates of DA depending upon the date of retirement. For DA rates refer to IBA circulars.
Click here for latest IBA circular on DA.

Thus a pensioner get following amount of pension
Basic - Commutation Amount + DA on Original Basic


What is Family Pension?
When  an  employee dies –
 (a)  after completion of one year of continuous service; or
 (b)  before  completion  of  one  year  of  continuous  service  provided  the deceased  employee  concerned  immediately  prior  to  his  appointment  to the  service  or  post was  examined  by  a medical  officer  approved  by  the Bank and declared fit for employment in the Bank; or
 (c)  after retirement from service and was on the date of death in receipt of a pension, or compassionate allowance;
    the family of the deceased shall be entitled to family pension, the amount  of which shall be determined in accordance with  Pension Rules


 The period for which family pension is payable shall be -
 (a)in  the case of a widow or a widower, upto  the date of death or  remarriage, whichever is earlier;
 (b)in  the  case  of  a  son  or  daughter  (including  widowed/divorced)  till  he/she attains  the  age  of  twenty-five  years  or  upto  the  date  of  his/her
marriage/remarriage, whichever is earlier
Provided  the  family  pension  payable  to 
sons/daughters  (including widowed/divorced)  shall  be  discontinued/not  admissible  when  the  eligible son/daughter  starts  earning  a  sum  in  excess  of Rs. 2550/-  per month  from  employment in Government/private sector/self-employment, etc.
 
If the son or daughter of an employee is suffering
from any disorder or disability of mind or is physically crippled or disabled so as to render  him  or  her  unable  to  earn  a  living  even  after  attaining  the  age  of twenty-five  years,  the  family  pension  shall  be  payable  to  such  son  or daughter for life subject to certain conditions.

The ordinary rates of family pension shall be as under

PART A

In respect of employees (other than part-time employees) who retired during the period from 01.04.1998 to 31.10.2002, on and from01.05.2005, the ordinary rate of family pension shall be as under: -

Scale of pay per month  Amount of monthly family pension

Upto Rs.4,210 
30  per  cent  of  the  ‘pay  shall  be  the  basic  family pension  plus  30  per  cent  of  allowances  which  are counted  for making  contributions  to Provident  Fund but  not  for  dearness  allowance  shall  be  the additional  family  pension.  The  aggregate  of  basic and additional  family pension shall not be  less  than Rs.1,056 per month.

Rs.4,210 to Rs.8,420
20 per cent of the ‘pay shall be basic family pension plus 20 per cent of allowances which are counted for making  contributions  to  Provident  Fund  but  not  for dearness allowance  shall  be  the  additional  family pension.      The  aggregate  of  basic  and  additional family  pension  shall  not  be  less  than  Rs.1,262  per month.

Above Rs,8,420
15  per  cent  of  the  ‘pay  shall  be  the  basic  family pension  plus  15  per  cent  of  allowances  which  are counted  for making  contributions  to Provident  Fund but  not  for  the  dearness  allowance  shall  be  the additional  family  pension. The aggregate of  basic and additional  family pension shall not be  less  than
Rs.1,687  per  month  and  more  than  Rs.3,521  per month.


PART B

In respect of employees (other than part-time employees) who retired/retires from
service on or after  01.05.2005, the ordinary rate of family pension shall be as under: -

Scale of pay per month  Amount of monthly family pension

Upto Rs.5,720
 30  per  cent  of  the  ‘pay  shall  be  the  basic  family pension  plus  30  per  cent  of  allowances  which  are counted  for making  contributions  to Provident  Fund
but  not  for  dearness  allowance  shall  be  the additional  family  pension.      The aggregate of basic  and additional  family pension shall not be  less  than  Rs.1,435 per month.



Rs.5,720 to Rs.11,440
 20  per  cent  of  the  ‘pay  shall  be  the  basic  family  pension  plus  20  per  cent  of  allowances  which  are counted  for making  contributions  to Provident  Fund  but  not  for  dearness  allowance  shall  be  the  additional  family  pension.      The  aggregate  of  basic  and additional  family pension shall not be  less  than  Rs.1,715 per month.

Above Rs,11,440.
  15  per  cent  of  the  ‘pay  shall  be  the  basic  family  pension  plus  15  per  cent  of  allowances  which  are  counted  for making  contributions  to Provident  Fund  but  not  for  dearness  allowance  shall  be  the additional  family  pension.      The  aggregate  of  basic and additional  family pension shall not be  less  than  Rs.2,292  per  month  and  more  than  Rs.4,784  per  month.

Note: -

i)  Family  pension  in  respect  of  employees who  retired  or  died while  in  service  on  or  after  01.11.2002  but  before  30.04.2005  shall  also  be  revised in terms of Part B above with effect from 01.05.2005.

ii)  In the case of part-time employees, the minimum amount of family  pension and  the maximum amount of  family pension shall be  in proportion to the rate of scale wages drawn by the employee.

8.  The amount of minimum pension  with effect from 01.05.2005 shall be as  under: -

(a)  In  respect of employees, other  than part-time employees, who  retired  on or after 01.04.1998 but before 31.10.2002, the amount of minimum pension  shall  be  Rs.1,060  p.m.      In  respect  of  part-time  employees who  retired during  this period,  the Minimum pension payable shall be Rs.355  p.m.  in  respect  of  part-time  employees  drawing  1/3  scale wages, Rs.530 p.m. in respect of part-time employees drawing ½ scale wages and Rs.795 p.m.  in  respect of part-time employees drawing ¾ scale wages.

(b)  In  respect of employees, other  than part  time employees, who  retired  on  or  after  01.05.2005,  the  amount  of  minimum  pension  shall  be Rs.1,435 p.m.  In  respect of part-time employees, who  retired on or after 01.05.2005,  the minimum pension payable shall be Rs.480 p.m. in  respect  of  part-time  employees  drawing  1/3  scale  wages,  Rs.720 p.m.  in  respect  of  part-time  employees  drawing ½  scale  wages  and Rs.1080  p.m.  in  respect  of  part-time  employees  drawing  ¾  scale wages.
Note:  -    Minimum  pension  being  paid  to  retirees  of  the  period  01.11.2002  to 30.04.2005 may also be  revised with effect  from  to  01.05.2005 with reference to paragraph (b) above.