Dear Sirs,
I have gone through English translation of the news on 'Pension Revision for Bank Employees' published in the Malayalam newspaper 'The Mathrubhoomi'. The point raised therein explicitly tell about the agony of PSU Bank Pensioners. However, discussion on 'Pension Fund' needs more clarity. It is true that Pension is the most important retirement benefit which is earned by rendering long and efficient services. It is a statutory liability on the employer. Pension is deferred wage and thus, a right earned by the employee. So, it is the duty of employer to make payment of pension consistent with the Rules, Laws of Land and the Constitutional provision of equality and dignity.
As per Regulation 5 (3) of BANK EMPLOYEES' PENSION REGULATIONS, 1995, the Bank shall be a contributor to the Fund and shall ensure that sufficient sums are placed in it to enable the trustees to make due payments to beneficiaries under these regulations. To ensure sufficiency of the Fund, the Bank is required to make additional contribution.
PSU Banks, established under the Central Act, are 'State' as per provisions of Article 12 of our Constitution. Their Rules and regulations have to consistent with the Constitutional provisions enshrined in Article 14,16 and 21. Discrimination in payment of pension among similarly placed employees but retiring on dates falling in different wage revision period is caused due to non-updation of basic pension with subsequent wage revisions. As per the current ideology of pension parity among similarly placed pensioners, irrespective of date of retirement and practices followed by CG/States/UTs/several other state-owned institutions, the pensioners are as much entitled for pension revision as the servicing employees are entitled for wage revision.
Coming to the issue of Pension Fund, we have to keep in mind that amount in Pension Fund pertains to those servicing employees also who have opted for pension. At the time of retirement:
1. Regular contribution equivalent to 10% of Basic Pay of the retiring employee is stopped,
2. Amount of commutation of pension is paid, and
3. Annuities for payment of regular pension/Family Pension are purchased.
So, roughly, the funds meant for pension of the retiring employee is utilized on his retirement. Whenever, there is additional payment of pension due to increase in DR, additional annuities are required to be purchased and for that purpose additional contribution has to be made by the Bank for each pensioner. Interest or any dividend or any other type of yield on the Pension Fund is accounted for while assessing the total liability by way of actuarial valuation of the Pension Fund. Interest accrued to Pension Fund belongs to the employees who are to retire in future.
In my opinion, Bank Pensioners should not indulge in analysis of the Pension Fund nor they should depend on actuarial valuation. Purpose of actuarial valuation is to assess the future liability based on certain assumptions with regard to expectancy of lives, rate of yield, etc. and to make good any shortage, if revealed by actuarial valuation.
It is obligatory on the part of the Bank to make payment of the regular contribution and additional contribution to the Pension Trust. The Regulations also provides that the fund shall be used only for payment of pension or family pension in accordance with these regulations to the employee or his family. Keeping in view these provisions, two alarming situations are seen in the news - not payment of regular contribution to the fund and using pension fund for purposes other than Pension Payments by some banks. If it is so, it is clear cut violation of Pension Regulations and a criminal offence.
Associations of Bank Pensioners may take up the issue with the banks -concerned as well as with IBA/RBI to set it right forthwith, otherwise it would affect payment of pension in the days to come.
My response is based on my limited knowledge of bank's rules and regulations and meant for academic discussions. Well-meaning people and Learned brothern from PSU banks may take cognizance of whatever is relevant to them.
With best wishes,
M P Agnihotri.
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