Post of letter of Shri C N Venugopalan

Even though  Mr C N Venugopalan has strongly argued for upgradation of pension,I do not agree with his statement that Pension Funds of Banks have enough corpus and can foot two to four times the present pension to all pensioners without touching the corpus in the funds.

His view negates the very purpose of actuarial valuation of the Pension Funds at the end of every financial year prescribed to estimate the pension liabilities on an annual basis and make additional contributions to the Pension Funds to make them adequate  for meeting the pension liabilities to all employees who are covered by the BEPRs so that the fund is used to pay the last pensioner/family pensioner till his/her death.

Even though the balance in the  Pension Fund may be a huge amount in comparison with the pension outgoes,the Fund represents the present value of all the future liabilities of existing employees eligible for pension and pensioners & family pensioners already receiving the pension.It doesn't mean that there is a surplus amount in the Pension Funds.May be the actual liabilities turn out marginally more or less than estimated liability, say ,to the extent of 5% either way ,on account of deviation of actual mortality and interest from assumed levels.But that doesn't create a surplus in the fund.If the actuaries ,based on actuarial valuation of the fund conducted in any year,certify that there is a surplus in the fund,the Trust can transfer such surplus amount to the revenue account of the concerned Bank.But I wonder whether any such transfer would have happened considering that normally there will always a need only  to make additional contributions.

Also any amount can travel out of the Pension Fund only after due process of authorization by the Trustees and following the prescribed accounting procedure which will be subject to periodical audits.

In this context,I invite the attention of the  visitors of your blog to the recent detailed note published by the State Bank of Mysore Pensioners' Commune on Pension Funds etc which makes things very clear.

C H Mahadevan