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ALLAHABAD BANK RETUREES’ WELFARE SOCIETY, BHOPAL (M.P.)

UNITED WE CAN

ALLAHABAD BANK RETIREES’ WELFARE SOCIETY Registration No. 33020/17 under M.P.Society Act -1973

Affiliated with All India Allahabad Bank Pensioners & Retirees Association

Collection of THOUGHT PROVOKING & INFORMATIVE LETTERS WRITTEN BY S.K.MISHRA TO BANK PENSIONERFS

PRESENTED BY SHRI K.K.DOGRA

VICE PRESIDENT

All India Allahabad Bank Pensioners & Retirees Association

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FOREWORD

Dear Comrades, Bhopal – 04-01-2018

The retirees and pensioners of Banks, started to unite & form associations only when a group of pensioners found that they have been deprived of some

benefit by the Bank & or I.B.A. Very few vigilant sufferers started individual

scattered efforts for getting the legitimate dues through judiciary.

The first such joint effort was started by Late Shri Jaigovind Rai, one of the

most respected leaders of Officers of Allahabad Bank, by forming an Association of Allahabad Retirees. It apparently was for the cause of Gratuity to the Old

Scheme Pensioners of Allahabad Bank. Other pensioners hardly knew this development; for the reason that the legal battle started by him prolonged for

years in judiciary.

Even after the industry wide Pension Regulations 1995, the pensioners did

not think for unification in Allahabad Bank and it was only after VRS 2000 Scheme, when pensioners confronted with injustice by denial of benefit of Reg-

29(5), the efforts were restarted for unification of pensioners of Allahabad Bank. Shri S.K.Mishra with 20 pensioners decided to fight against the injustice and filed

the Writ Petition in High Court to get the justice.

Here after he started making parallel efforts to awaken the retirees and

pensioners of Allahabad Bank, by writing letters in the matter of pension and e-

mailing these letters to the colleagues. I used to receive his e-mails, while I was in service and representing Officers of Allahabad Bank as General Secretary of All

India Allahabad Bank Officers Association. Having personal association with me, Shri S.K.Mishra used to contact me in person and always discussed the issues

and concerns of Bank Pensioners. He had always been suggesting me to float the Retirees & Pensioners Association with patronage of AIABOA / AIBOC. Thus I

admit that the idea of Shri S.K.Mishra worked as seedling in my mind for taking up the matter with AIBOC for formation of the Association of Bank Pensioners,

which could ultimately take shape in late 2012, with the help of AIBOC and AIABOA, after the Second Option for Pension when due to demand & pressure

from affiliates, AIBOC decided to float Pensioners & Retired Employees

Association.

Shri S.K.Mishra continued his mission of awakening the Bank Pensioners by witting thought provoking and informative letters & e-mailing the same to me

also. These letters, I think now must be given a form of collection as guide &

memory to the bank pensioners. I am therefore presenting this collection through Allahabad Bank Retirees’ Welfare Society. Hope this will help and inspire all

concerned.

Comradely yours

K.K.Dogra

Ex-Director of Allahabad Bank, Former General Secretary & President of AIABOA

Vice –President of All India Allahabad Bank Pensioners & Retirees Association

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Comrades, Bhopal – 20-01-2018

I feel honored by being part of this book of collection of letters, e-mails and

articles of Sh. Shivkumar Mishra on the various matters concerning Bank Pensioners. I have been deposed with a difficult responsibility of giving critical

comments on this collection. For last many years, I have close association with Bank employees, while being office bearer of All India Allahabad Bank Officers

Association and now got opportunity of continuing the association with retirees also as General Secretary of AIABPARA. I have always been confronting with the issues

of working employees/officers while in service, but could come to know the more difficult issues of the bank pensioners, through the e-mails and letters written by

Shri S.K.Mishra.

Shri Mishra after his voluntary retirement way back in 2001 had started

writing on the issues of the Bank pensioners. He fought the case of benefit of Regulation -29 to SVRS pensioners and approx.800 such pensioners were benefited

by the pursuit stared by Shri Mishra. He never appeared tired while studying and pointing out the injustice towards pensioners, done by IBA/Banks in pay revisions.

He had written on several such matters to bank pensioners by his e-mails and letters. Some of these are very much relevant even to-day and these will certainly

work as awakening drive for the common cause of bank pensioners.

Through these letters Sh. Mishra has not only analysed the issue confronted with , but also informed to the pensioners, the way-outs and the remedies that can

be adopted for bringing the justice to the Bank pensioners.

Some other articles of Sh.Mishra, particularly on history of labour movement

and also on the recommendations of Pay Commissions Vs Paying Capacity of Common Men of our Country, has surprised me on the hidden side of his thinking

and ideology. Besides the letters of Sh. Mishra on Bank Pensioners issues, these articles are worth giving a deep thought by one and all. I conclude with my salute

to Sh. Mishra on his informative and awakening letters. Hope the bank pensioners will be benefited with such enriched informative letters and will unite for achieving

the goals that we all dream about.

With best wishes for the success

(S.K.Verma)

General Secretary


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INDEX

S.NO SUBJECT PAGE

1 What Is Pension 5

2 Retirees Ditched By IBA in Past Settlements 6

3 Cost of 100% DA Neutralization to Pre-2002 Pensioners & Cost of Revision of Family Pension and Pension Updating

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4 Analysis Of Bank’s Action in Giving Benefit of Reg.29 (5) 16

5 Letter to FM Injustice with Pensioners of Banks by IBA in B.P.S 20

6 Issue of Pension Updating By Any One Of Four Options 23

7 One Rank One Pension & Cost of Updating Pension of Bank Pensioners 28

8 Self Sufficiency of Pension Funds for Updating Pension - AIBOC View 31

9 Bank’s Profits Under Pressure For The Year 2015-16 36

10 Increased Load As On Feb-2016 on P.S. Banks on Giving 100% DA

Neutralization to Pre-02 Retired Pensioners 38

11 Whether Pension Funds are Sufficient to Absorb Updating Pension? 40

12 The Ray of Hope after Supreme Court Dismissed SPL In 100% DA Neutralization Matter of Bank Pensioners

44

13 Banks Saved Rs. Rs.11666.93 Crores by curtailing benefits Of

Employees & Pensioners 52

14 How Bank’s Complied with the Rule of Pension Regulations 1995 60

15 Legal Battle On 100% DA Neutralization is Unavoidable 63

16 Fate of Filing Too Many Writ Petitions in Courts by Individuals 65

17 The Fight for Justice by Old Pensioner of Allahabad Bank 67

18 Bank Had To Pay Both – Pension & Gratuity with Interest 71

19 History of Labor Movement & Minimum Wage/Pension Concept 73

20 History of Delaying Dues of the Pensioners by Banks 78

21 Need of United Legal Efforts for Getting Justice to Bank Pensioners 80

22 Whether We Will Ever Care For Paying Capacity Of the People? 82

23 How Pay of Central Govt. Employees Increased Extra By 161% 88

24 The Rule Found As Injustice to Central Govt. Employees, Still Continues to Employees of Banks for More Than 21 Years

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25 Pension Fund Of Allahabad Bank 97

26 Eligibility Of Benefit Of Reg-26 To SVRS 2000 Scheme Pensioners 100

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Dear Friends, 15-01-2014

Subject – WHAT IS PENSION

We often discuss the matters related to the Pension Rules and seek correct

implementation of the provisions under Pension Regulations 1995. The basics of the Pension

are always to be kept in mind, which were well defined by the Hon’ble Supreme Court, in a

judgment in WP No. 5939-5941 of 1980 (D. S. Nakara and Others Vs Union of India),

decided on 17.12.1982.These are as under -

Purpose - At Para 24. Quote-

“A political society which has a goal of setting up of a welfare State, would introduce as a

welfare measure wherein the retrial benefit is grounded on 'considerations of State obligation

to its citizens who having rendered service during the useful span of life must not be left to

penury in their old age”

Defination – At Para 29. Quote –

“The pensions is not only compensation for loyal service rendered in the past, but pension

also has a broader significance, in that it is a measure of socio-economic justice which

inheres economic security in the fall of life when physical and mental prowess is ebbing

corresponding to aging process and, therefore, one is required to fall back on savings. One

such saving in kind is when you give your best in the hey-day of life to your employer, in

days of invalidity, economic security by way of periodical payments is assured.”

Necessity of Rules for Pension - At Para 30. Quote-

“The discernible purpose thus underlying pension’s scheme or a statute introducing the

pension scheme must inform interpretative process and accordingly it should receive a liberal

construction”

Pension Rules Statutory In Character- At Para 31. Quote -

“That pension is neither a bounty nor a matter of grace depending upon the sweet will of the

employer and that it creates a vested right subject Pension Rules which are statutory in

character because they are enacted in exercise of powers conferred by the proviso to Article

309 and clause (5) of Article 148 of the constitution”.

Conclusion –

(i) Pension is neither a bounty nor a matter of grace depending upon the sweet will of the

employer and that it creates a vested right subject to Pension Rules which are statutory

in character because they are enacted in exercise of powers conferred by the proviso to

Art. 309 and clause (5) of Art. 148 of the constitution;

(ii) The pension is not an ex gratia payment but it is a payment for the past service

rendered; and

(iii) It is a social welfare measure rendering socio-economic justice to those who in the hey-

day of their life ceaselessly toiled for the employer on as assurance that in their old age

they would not be left in lurch. It must also be noticed that the quantum of pension is a

certain percentage correlated to the averages emoluments drawn during last ten

months under pension scheme. Its payment is dependent upon an additional condition

of impeccable behaviour even subsequent to retirement, that is, since the cessation of

the contract of service and that it can be reduced or withdrawn as a disciplinary

measure.

S.K.MISHRA – BHOPAL – 15-01-2016

**************

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Dear Shri Bishwabndhuji, Bhopal - 25-04-2014

The General Secretary, AIABPARA, Kolkata

RETIREES DITCHED BY IBA IN PAST SETTLEMENTS.

The charter of demands for 10th Bipartite Settlement includes demands of retirees and

pensioners and there appears main focus is on two points viz. - Pension Revision and 100%

DA neutralization to Pre-2002 pensioners. I have studied the points relating to the

retirees/pensioners settled by IBA in past settlements, particularly after introduction of

pension to bank employees on industry level. If analyzed with the angle of benefits to

retirees in these settlements the history goes as under –

1. 5th Bipartite –

In joint Note dated 23-06-1995 pertaining to salary revision that was due from 1-11-

1992, although the Pay Scales were made effective from 01-07-1993, the Gratuity

Calculations based on revised Pay was made applicable only for the employees who retired

on or after 1-11-1994. Thus while the retirees of date from 1-11-1994 were paid

gratuity based on revised pay scales, but those who had retired between 1-7-0993 to 31-

10-1194, the calculation of gratuity was on old pay scales and thus they were not paid

difference of gratuity amount consequent upon their pay revision given to them from 1-7-

0993. The retires had to per force follow the legal route and fortunately the High court of

Karnataka in WA No 1758-1785 of 2003 decided the matter on 25-5-2012 in favour of the

retirees.

Here I would like to reproduce the comment of the respected judge at page No 29 of this

order-

“It does not require a paranoid mind to suspect that the Unions or

Associations were not as receptive or assiduously loyal to the cause of the

older employees as were of officers and employees in harness.”

Further while recording the final order the judge has written this also-

“The numbers of pensioners have dwindled over the years; their demise has

liberated them from their relative penury”

Though a period of almost 20 year is gone by but these retires have not yet received the

justified and legal dues of gratuity. The matter is pending in Supreme Court where IBA is

representing the Banks in Special Leave Petition (Civil) 28332 -28362 Of 2012 BY IBA .Vs

Y.R.SHENOY & ORS.

Similar was the position of LIC retirees of the corresponding salary revision period. The

Retirees Association of LIC fought the case and in Appeal (civil) 1289 of 2007 by Supreme

Court order dated 12-02-2008 it was decided in favour of retirees of LIC.

I request you to please take up the matter of above Gratuity Case of Bank retires for

discussion in Pensioners Associations platform and suggest the apex leaders to become

intervener in the said case pending in Supreme Court so that all such pensioners are

benefited .

2. 6th Bipartite -

It was to expire on 31-10-1997 but for pensioners the revised Basic Pay effective from 1-

11-1997 was not considered and it was made effective for retirees who retired after 31-3-

1998. Thus pensioners retired during 1-11-97 to 31-3-1998 were at loss, in respect of

B.Pension. None of the retiees or pensioner fought against above injustice and Banks were

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benefitted by paying lower pension to the approx. 5000 retirees of the period from 1-11-

1997 to 31-4-1998.


The Basic Pay for the pensioners was accepted at 1616 CPI where as the Pay revision was

at 1684 CPI. Thus employees retired during the period were given lower Basic Pension at

around 41% instead of 50% of Basic Pay.

During the block period of this settlement the SVRS -2000 Scheme was offered by Banks

and approx 80000 employees retired under VRS 2000 scheme during the year 2001.

Banks subsequently amended Pension Regulation 28 and denied benefit of Reg.29 (5) to

VRS Pensioners. They were put to double loss in pension – One by Fitment at Pre-revised

Basic Pay with DA at 1616 CPI and Other by not giving benefit of notional addition of 5

years as per Reg.29(5)

A large number of the pensioners (Approx.800) filed WPs in high courts. In the

meantime Supreme Court in Bank of India Vs K.Mohandas case on 27-03-2009 decided

the issue of Reg.29 (5) in favour of pensioners. Union Bank of India, Punjab and Sind

Bank, Punjab National Bank, United Bank of India were also parties in the above case,

thus these only five banks implemented the order in the Month of Sept -2009.

The different high courts based on this order of Supreme Court decided this issue of

Reg.29 (5) in favour of pensioners.

IBA in the Month of August 2009, issued circular to all banks to follow the apex court

order, but most of the Banks ignoring the circular of IBA, preferred appeals in Division

Benches /Supreme Court against applicability of Reg29(5).A large Number of Appeals of

such Banks (Canara Bank, Syndicate Bank, Union Bank of India ,Indian Bank, Indian

Overseas Bank, UCO Bank, Bank Of Baroda, Vijay Bank State Bank of Mysore Central

Bank,) were dismissed in WA No 4279 of 2011 on 8-3-2012 and thereafter only these

Banks passed on the benefit of Reg.29(5) to pensioners; saving cost of interest on due

amounts.

But Vijay Bank & State Bank of Mysore still preferred appeals in Supreme Court and

so was the line of action of Allahabad Bank after orders of High Courts of Delhi, Jabalpur

and Bombay. It was only in the month of March 2014, when Allahabad Bank and Vijaya

Bank passed on the benefit of Reg.29 (5) to VRS pensioners. SBM is still in Supreme Court

and none of subsidiaries of SBI have yet given the benefit of Reg.29 (5) to their VRS

pensioners.

I am going a bit in details of Bank’s actions on the above, to point out that despite

Apex Courts Order and Circular of IBA all other Banks dragged the matter for years just

to earn profits from the unpaid dues of old pensioners. With this attitude IBA/ Banks have

ditched the retirees in every settlement.

In respect of fitment of pension on the basis of pre-revised pat with DA at 1616 CPI,

in above WA No. 4279 of 2011 the appeals of Banks have been dismissed on 8-3-2012.

Some of the quotes from the orders are as under –

“Memorandum of Understanding cannot meddle with the statutory prescriptions.

Nobody can agree by way of a settlement at the behest of an organisation

taking away the benefit conferred on individuals by way of statutes or statutory rules”

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“Therefore, without any hesitation we can say that the impugned amendment

brought in by the respondents (Bank) is, quite against the Regulations 2(d) and 35 (2)

and the very intent and purport of the Regulations is null and void.”

Various Banks have files appeals in Supreme Court against above orders of different

High Courts and at present such appeals of Canara Bank, Vijay Bank, Syndicate Bank,

State Bank of Mysore, Indian Overseas Bank, are connected with Civil Appeal No 5525

of 2012 of Bank of Baroda Vs. G.Palani & Ors. & also with Civil Appeal No. 5611

of 2012 of Bank of Baroda Vs Geetha Bhatt.

With the history and track records of all the Banks as is evident from their action in

the matter of Reg29 (5), even after the Supreme Court deciding the issue in favour of the

pensioners, only the Banks that are party in the case will implement the order and all

other Banks will wait for any such order from Supreme Court only. Therefore I request you

to consider intervention by Pensioners Associations in the said Civil Appeal so that all

Banks follow the judgment of court.

The case was last heard on 20-07-2012 and pending thereafter. As intervener

pensioners Association may request for early hearing as the matter relates to approx 1 lac

pensioners in the age group of 70 to 74 years.


The mistake at point no.3 was corrected in this settlement but effective from 1-5-2005

and no arrears or increased commutation was paid to pensioners. Here 100% DA

neutralization was given to employees and retirees retired after 1-11-2002, but all existing

pensioner prior to that date continued to at tapered DA rates.

Some of the pensioners filed Writ petitions in Madras High Court against Canara Bank,

Bank of Baroda & Indian Overseas Bank. On 14.12.2012 single judge from Madras High

Court passed order that petitioners who are retirees prior to 01.11.2002 are eligible for

100% neutralization in Dearness Relief as the similar benefit is granted to retirees after

01.11.2002. Further details are in separate letter on this matter.


Second Pension Option was given to CPF optees.

A. In actuarial valuation of pension liability for CPF optees was in reference to number of

CPF optees as on 31-03-2008, who will opt for second pension option. Accordingly the

effective date for these should have been 1-4-2008, but it was taken as 27-11-2009.

Loss of Pension of 20 months & decreased commutation amount to the retirees of this

period (1-4-2008 to 26-11-2009), whereas they contributed for the gap at 156%, that

was estimated on 31-3-2008.

B. The CPF optee employees who retired during the period from 1-4-2008 to 27-4-2010

were counted in actuarial valuation as on 31-3-2008, as working employees thus

contribution from these would have been 2.8 months of Pay of Nov 2007, but they have

to pay 156% of CPF. This was loss to these pensioners. In this matter also several

petition filed by pensioners /employees are pending in different courts.

C. As per Joint Note the second option was also for retirees, but IBA by inserting the word

“Retired On Superannuation” in its circular to Banks created the scope to Banks for

denying to other types of retirees and finally many of the retires had to go to courts

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and they could get the chance but with much delay and in the meantime Banks earned

profits from the unpaid dues of pension of these retirees.

It is really very much pleasing to know that the apex leadership of three

organisations of Retirees in the Banking Sector viz. All India Bank Pensioners & Retirees

Confederation, All India Bank Retirees’ Federation and Federation of SBI Pensioners’

Associations met together and developed coordination for common cause of Bank

Pensioners.

Hope our organisation (AIBPARC) will put forth the above points for resolving the

issues at appropriate forum and in cases of Gratuity for pre-1994 retirees (Point No 1) in

Special Leave Petition (Civil) 28332 -28362 Of 2012 BY IBA Vs. Y.R.SHENOY & ORS and

also in case of lower fitment of pension at 1616 CPI (Point No. 3) in Civil Appeal No 5525

of 2012 of Bank of Baroda Vs. G.Palani will convince the apex leadership to become

intervener in these two case in Supreme Court.

From Bhopal I assure contribution of Rs.25000/ for legal fund for above cases.

With Regards

S.K.Mishra – Bhopal – 25-04-2014

**************

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Dear Shri Dograji, Bhopal 25-08-2014

Former Director, Allahabad Bank & Former -Vice President - AIBOC

Subject- Cost of 100% DA Neutralization to Pre-2002 Pensioners

Cost of Revision of Family Pension and Pension Updating

I came to know from the SMS of Shri Harvinder Singh, forwarded by you to me mentioning

that IBA has asked the Banks for cost of Revision of Family Pension and Pension Updating. At

the outset I am surprised to hear that IBA has shown such indication for updating the

Pension also, whereas it has declined the demand for the reason of high costs involved.

In the background that on the proposal of 100% DA neutralization to pre-2002 pensioners,

that is said to be forwarded to Ministry of finance for approval of GOI, I have grounds to

believe that the officials of Ministry of finance might have asked the IBA for the costs of

improvement in Family Pension and also the cost of Pension Updating, for following reasons-

1. The family pension has already been improved for RBI pensioners based on a simple

formula that calculates Notionally Revised Basic Pay for calculation of family pension at

improved rate of 30% and a common DA formula and common DA slabs are applicable to

these family pensioners of RBI. The formula adopted brings the Basic Pay of retirees

proportionately at CPI at which the pay has been last revised.

2. Improvement in family pension is also demanded by Bank Pensioners and this will have to

be accepted in line with RBI pensioners, as the Pension Regulations, speak of following

the said line of RBI in case of Bank Pensioners also.

3. After adopting above formula of calculating Notional Basic Pay, the RBI/IBA have thus

visualized that the pension updating can also be done with very little extra load. IBA and

RBI thus might have already discussed with officials of Ministry of Finance on this

formula.

4. The above formula will automatically cover the cost of 100% DA neutralization and thus

within the cost increased a little more, updating of Pension can also be done

simultaneously in the settlement.

5. The General Secretary of AIBRF has in his communication indirectly shown willingness for

such updation, which he has termed as merger of DA slabs and thereafter adopting a

common DA rate and common DA slabs. This might have been seen as inclination

towards its acceptance by UFBU.

6. Thus while IBA /Banks are almost agreeing to give 100% DA neutralization to pre-2002

retirees, improvement in family pension can also be done in line of RBI pensioners and

AIBRF has demanded merger of DA Slabs to adopt uniform DA formula; by adding a very

little more in the cost of 100% DA neutralization, the BJP lead Government, may have

feather in their cap and take credit for such updating the pension on one hand and on

the other, the IBA once again will succeed in ditching the pensioners, by

depriving them of their TRUE UPDATION, which should be done with DA merger

and effective increase, commensurate with it was given in the past pay

revisions to employees .It is reflected in Annexure – I , please study it carefully.

7. Another reason is that coverage of pension scheme is available to the employees

appointed up to 31-3-2010 and to the retirees from 1-1-1986. The number is thus limited

to approx.7.32 lacs only. 2.87 have already retired and thus remaining 4.45 lacs working

employees have the coverage of pension as on 31-3-2014.The figures of Pension Paid &

Actuarial Valuation of Pension Liability Vs Interest Earned on Pension Funds and Statutory

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Contribution by Banks in Pension Fund for the year ended March 2014 are appearing

favorable. The summary indicates that Valuation of Pension Liability for employees and

pensioners for year ended March -13 was Rs. 101882.51 crores; that earned interest of

Rs.8556.93 crores against pension payment of Rs.7235.18 crores for year 2013-14

(Interest met the pension payments) and Valuation of Pension Liability as on March -14

was calculated to be Rs.113545.67 crores, only, for existing working 4.45 lacs employees

and 2.27 lacs pensioners & 0.47 lacs family pensioners surviving out of 2.87 lacs retired

employees. (See Annexure – II). With the trend of retirement out of the limited pension

opted employees, reduction in number of pensioner with mortality rates at different ages,

it is estimated that from year 2015-16 onwards, the interest and normal statutory

contribution will be sufficient to cover the pension liabilities of ever decreasing numbers.

8. In the present settlement with merger of DA of 401 Slabs at 4440 CPI, the net increase in

pay-slip is almost agreed at 11%, increase compared with 17.5% given in last revision.

But in this revision the incremental cost of Pension Liability for increase in pay to

employees, is not being shared by the employees.

The incremental cost of pension liability for increase in pay to employees is calculated at

approx.11.2%,(Against approx.Rs.56250 Crores for 4.45 lacs employees as on 31-3-2014

= Approx.Rs.6300 crores) out of which Statutory Contribution of Banks would have been

10% = Rs.5625 crores and Banks are to contribute extra 1.2% only = Rs.675 crores,

which is much less than what was contributed by Banks in last pay revision. Thus position

of Banks in this settlement is comparatively comfortable in terms of valuation of pension

liability.

9. In view of above, I am to believe that all the above reasons have given the chance to BJP

lead Government to earn credit for updating the pension of Bank pensioners, hence IBA

might have been asked by Ministry of Finance for cost calculations.

Yours Sincerely

S.K.Mishra – Bhopal - 25-08-2014

The cost calculations are based on rational assumptions and data available/collected from

various sources. There can be difference to acceptable percentage from the calculations

based on actual data available with Banks/IBA. The figures so arrived are as under –

1. Cost of 100% DA Neutralization for Pre-2002 retired Pensioners-

Estimated Number of Pensioners as on March -2014 are as under-

Retirees of Period Retired. No. Survived Slab in Mar-14

1-Jan-86 31-Oct-87 4766 1296 1225

1-Nov-87 31-Oct-93 21970 9286 1225

1-Nov-93 31-Mar-98 12620 7376 1088

1-Apr-98 31-Oct-02 97172 77201 954

Total Pre-2002 Pensioners 95159

Out of above the sub-staff are already getting 100% DA as their basic pension is in first

slab. Clerks are benefited a little and officer has the advantage of 100% DA neutralizations.

Total of such approx 75000 pensioners will be benefited by such DA neutralization and

increased cost is estimated at Rs.1546.70 lacs per month in the March 2014 at above

applicable DA Slabs and incremental cost per DA Slab is calculated to be Rs.1.58 lacs for

these eligible pensioners. Assuming increase of 40 Slab in the year 2014-15 the annual cost

will be approx.Rs.193 crores.

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2. Improvement in family pension - Say at 30% as is given to RBI Family

Pensioners and Cost of Pension Updation at 4440 CPI

Now if Family Pension is improved in line with formula adopted for RBI family pensioners,

which aims at notionally revising the Basic Pay of all past retirees proportionately at the

CPI on which revision is sought i.e at 4440 CPI, then the Basic Pension and Family

Pension may be as under calculated on simple formula as per example here under –

Retirees of Period At CPI Basic Pay at Retirement

Notional Pay at 4440 CPI

Notional Basic Pay

Updated B. Pension

Updated. Family Pension

1-Nov-87 31-Oct-93 600 4650 4650 x 4440/600 34410 17205 10323

1-Nov-93 31-Mar-98 1148 9240 9240 x 4440/1148 35737 17868 10721

1-Apr-98 31-Oct-02 1684 14240 14240 x 4440/1684 37545 18772 11264

1-Nov-02 31-Oct-07 2288 22900 22900x 4440/2288 44439 22219 13332

1-Nov-07 31-Oct-12 2836 31700 31700 x 4440/2836 49629 24815 14889

As DA slabs at 4440 CPI are proposed to be merged the remaining DA slab ( 666-401=

265 ) will be common slab to all pensioners and common DA rate at 0.10% ( 2836 /4440

x 0.15%) will be made applicable to all, in such pension updation if done. It is quite

likely.

But the expectation in pension revision for stage to stage fitment for pension will not

be achieved by this for the reason that it does not include the effect of increase of 17.2%,

13.038%, 12.25%, 13.25% and 17.5% given after merger of DA, in last five settlements.

This difference as above is reflected in resultant calculated Basic Pension of

retirees of different block periods, though retired from same position and it will

be big loss in said updation formula. See Annexure- I

The payment of Family Pension estimated for 2013-14 was Rs.560 crores and if above

formula is adopted the cost is estimated to be approx. Rs. 850 crores, increasing the cost

by Rs.290 crores for approx.47000 family pensioners in March 2014.

The estimated cost for such pension updation (If done with above formula) to

Pensioners is calculated to be approx 320 crores for the year 2014-15, which is just

Rs.127 crores extra than the cost 100% DA neutralization for pre-2002 retired

pensioners.

The estimated cost of Pension Updation (In real sense and is expected) with merger of

DA Slabs and effective increase is calculated at Rs.970 crores per annum as on March

2014.The Summary is given as under –

Head Increased cost as per demands

Increased cost as at 4440 CPI That IBA/GOI may do

A. Cost Family Pension Improvement as done to RBI – 30% of Notional B.Pay.

270 270

B. Cost of Pension Updation with DA merger & increase effect 970 320

C. Cost of DA Neutralization to pre-2002 retirees (Included above in B)

193 193

Total Costs = (A + B) 1240 590

Now question may arise, why GOI, IBA and Bank will agree for such improvement in

family pension and Pension Updation that is costing Rs.590 crores PA additionally. The

reply is simple. After permitting improvement in family pension to RBI, it has to be given

13


to Bank Pensioners also to appear fair to Bank employees. The DA neutralization is long

pending and the demand can be upheld on the test of Equity by Supreme Courts in

pending many cases, including that of LIC. So while meeting two demand costing Rs. 463

crores (270 + 193), it is prudent to GOI to accept updation of Pension on additional cost

of just Rs. 127 crores and earn goodwill and credit at cheaper rate. Banks will be happy

of being less burdened by Rs. 650 crores and put the issue in cold store for at least next

10 years.

Annexure – I

EXAMPLE FOR SCALE II OFICER RETIRED UNDER DIFFERENT SETTLEMENT

PERIODS

Retiree of Period Basic Present Pension at Merged DA Pension on Updating

From To Pay Pension Tap Rate 100% Neut. At 4440 RBI Expected

1-Jan-86 31-Oct-93 4650 18569.11 19044.58 21857.94 21764.33 33293.54

1-Nov-93 31-Mar-98 9240 19305.82 19897.19 22678.92 22603.02 34305.54

1-Apr-98 31-Oct-02 14240 20302.37 21050.87 23900.91 23746.58 34496.55

1-Nov-02 31-Oct-07 22280 27241.76 27738.92 27738.92 27346.77 34498.16

1-Nov-07 31-Oct-07 31700 31684.15 32110.76 32110.76 31390.98 35088.57

1-Nov-12 Onwards 31700 31684.15 32110.76 32110.76 35293.50 35293.50

Retiree of Period Basic Present Resultant Increase in Pension PM on all four options

From To Pay Pension A. At Tapered Rate

B. With 100% Neut.

C. At 4440 CPI = RBI

With effective Incr.Expected

1-Jan-86 31-Oct-93 4650 18569.11 475.47 3288.83 3195.22 14724.43

1-Nov-93 31-Mar-98 9240 19305.82 591.37 3373.10 3297.20 14999.72

1-Apr-98 31-Oct-02 14240 20302.37 748.50 3598.54 3444.21 14194.18

1-Nov-02 31-Oct-07 22280 27241.76 497.16 497.16 105.01 7256.40

1-Nov-07 31-Oct-07 31700 31684.15 426.61 426.61 -293.17 3404.42

1-Nov-12 Onwards 31700 31684.15 426.61 426.61 3609.35 3609.35

Thus there are four options/ways for updating of pension -

1. By Merger of DA at present applicable rates (Tapered for retirees of period up to 31-10-

2002) and bring all the pensioners at common DA rate and common slabs as has been

suggested by AIBRF, but it will not be bringing 100% DA neutralization to pre-2002

Retirees and should not be accepted .The increase in this case will be nominal as appearing

above in Col A.

2. By Merger of DA at present applicable rates (With 100% DA neutralization to retirees of

period up to 31-10- 2002) and bring all the pensioners at common DA rate and common

slabs. This will not bring effect of proportionate increase that has been given in past pay

revisions.

3. The formula adapted to RBI for family pension purpose may be thought of by IBA as this is

least costing to Banks. By this formula all retirees will again be ditched. IBA stating that this

gives improvement in family pension hence can also be applied for updation of pension. If

pension is updated by this it will be the worst position for pensioners. Please see above

table.

4. Updating of pension on a formula of proportionate increase commensurate with increase in

pay in past settlement is the best option. For this “THE MULTIPLYING FACTORS” for the

14


retirees of different settlement periods can VERY EASILY BE CALCULATED BASED ON THE

COMPARATIVE INCREASE IN LAST STAGE OF ANY PAY SCALE.

EXAMPLE - In the proposed settlement DA of 401 Slabs is being merged. It means the

Basic Pay after merger will be 160.15% and 11% Increase is to be given thus the revised

Basic Pay will be approx 176% of present Basic Pay for the employees in Bank as on 1-11-

2012 and for the pensioners retired from 1-11-2012 also. Thus multiplying factor for the

retirees of immediate preceding Settlement Period, can be 1.75 to bring them at par with

those retired after 31-10-2012. Extending the same ration, the position of all retirees of

different five settlement periods can be updated.

FOR SCALE –I AND SCALE II

Retiree of Period Maxim Pay At Last Multiplying Factors Multiplying

Factor

From To Scale I Scale II Scale I Scale II To All

1-Jan-86 31-Oct-93 4260 4650 12.11 12.00 11.32

1-Nov-93 31-Mar-98 8550 9240 6.04 6.04 5.87

1-Apr-98 31-Oct-02 13220 14240 3.90 3.92 3.83

1-Nov-02 31-Oct-07 21040 22900 2.45 2.44 2.48

1-Nov-07 31-Oct-07 29300 31700 1.76 1.76 1.75

1-Nov-12 Onwards 51600 55800 1.00 1.00 N/A

Based on calculations of such multiplying factors for all category of employees (Sub Staff to

Scale VII) applying rational adjustments the multiplying factors shown above are arrived, to

bring retires at logical updation of pension. The expected pension shown above for Scale II

retirees of different settlement period in example above is calculated with these factors.

Hope this can be a formula that will convince all and increased cost is calculated accordingly.

For Family Pension Improvement - Basic Pay to be Notionally Revised at CPI of 4040 as is

done for RBI Family Pension Purpose – Position will be as under for Scale II retirees’ Family-

Retirees of Period Basic Pay N.B.Pay at

4440 CPI Basic Family

Pension DA/Slab Slabs DA Pension

1-Nov-87 31-Oct-93 4650 34410 10323 10.323 265 2735.60 13058.60

1-Nov-93 31-Mar-98 9240 35737 10721 10.721 265 2841.07 13562.07

1-Apr-98 31-Oct-02 14240 37545 11264 11.264 265 2984.96 14248.96

1-Nov-02 31-Oct-07 22900 44439 13332 13.332 265 3532.98 16864.98

1-Nov-07 31-Oct-12 31700 49629 14889 14.889 265 3945.59 18834.59

This formula is likely to be adopted for improvement in family pension at 30% of Notional

Basic Pay at 4440 CPI. This is acceptable to pensioners.

ANNAEXURE II HERE UNDER

15


ANNEXURE - II

As Per Balance Sheets of Banks Excluding SBI as it has separate different Pension Scheme.

Bank Pens. Liab.

March-13 Contributed by

Banks 13-14 Interest

Incm.13- 14 Pens. Paid

13 -14 Closing Bal-14

Pens. Liab. Mar-14 Gain/loss

Allahabad Bank 3697.49 590.92 312.89 243.27 4358.03 4143.65 214.38

Andhra Bank 2834.32 177.85 230.15 157.54 3084.78 3180.74 -95.96

Bank of Baroda 7502.04 1080.10 616.31 502.76 8695.69 8259.48 436.21

Bank of India 7404.65 804.95 658.35 605.48 8262.47 8038.24 224.23

Bank of Maharashtra 2772.84 457.90 226.87 207.40 3250.21 3216.27 33.94

Canara Bank 8584.93 149.83 672.06 596.28 8810.54 9035.86 -225.32

Central Bank of India 7190.56 166.74 600.80 578.07 7380.03 8139.02 -758.99

Corporation Bank 2148.55 71.34 184.63 77.00 2327.52 2473.20 -145.68

Dena Bank 1761.94 202.02 149.98 190.88 1923.06 1917.94 5.12

Indian Bank 4521.26 57.07 406.55 318.32 4666.56 4930.31 -263.75

Indian Overseas Bank 4865.10 82.45 408.30 397.65 4958.20 5426.49 -468.29

Oriental Bank Com. 3342.17 106.29 284.08 91.14 3641.40 3832.78 -191.38

Punjab & Sind Bank 2419.87 211.77 209.92 174.73 2666.83 2493.33 173.50

Punjab National Bank 13559.18 358.28 1118.17 652.83 14382.80 15162.79 -779.99

State B of B. & Jai. 2335.53 53.48 216.50 154.01 2451.50 2694.25 -242.75

State Bank of Hyd. 2588.59 126.46 208.64 167.48 2756.21 2892.51 -136.30

State Bank of Mysore 1152.24 222.93 96.26 104.17 1367.26 1323.29 43.97

State Bank of Patiala 2252.73 64.32 208.83 109.17 2416.71 2480.48 -63.77

State Bank of Travc. 2216.64 37.70 207.23 125.44 2336.13 2235.53 100.60

Syndicate Bank 4550.04 572.10 366.94 466.09 5022.99 5048.83 -25.84

UCO Bank 3863.62 472.04 310.84 413.28 4233.22 4655.28 -422.06

Union Bank of India 5991.02 194.81 509.62 380.68 6314.77 6683.81 -369.04

United Bank of India 2317.55 386.66 191.53 301.79 2593.95 3148.70 -554.75

Vijaya Bank 2009.65 268.90 161.48 219.72 2220.31 2132.84 87.47

Total 101882.51 6916.91 8556.93 7235.18 110121.17 113545.62 -3424.45

S.K.MISHRA – BHOPAL - Date 25-08-2014

**************

16


AN ANALYSIS OF BANK’S ACTION ON ORDER DATED 13-02-2014 OF SUPREME COURT IN MATTER OF GIVING BENEFIT OF REG.29(5) & ARREARS TO VRS 2000

SCHEME PENSIONERS WITH INTEREST THEREON

Dear Friends,

After a long legal battle Bank has to pay arrears of Regulation 29(5) to VRS -2000

Scheme pensioners.

The summary of the payment figures is as under –

Type of Pensioners Number Arrears Amt. Intt. Amt. Total (Rs Lacs) Intt. Part as % of Arrears Amt.

I Optees’ 454 754.44 243.91 998.35 32.33%

II Optees’ 339 230.56 42.47 273.03 18.42%

Total 793 985.00 286.38 1271.38

Bank has interpreted the order as it suited to Bank. The words in final order of Hon’ble

Supreme Court were --

“We, therefore, deem it appropriate to direct that difference in pension on

recalculation shall be paid with interest at the rate of 9 per cent from the date of

the judgment of the High Court till payment. It is made clear that all employees

are entitled to receive their pension in terms of the Circular issued by the Indian

Banks' Association and in terms of the present order “

Thus the order was on three points-

1. “ …pension in terms of the Circular issued by the Indian Banks' Association “

The circular of IBA on pension payment reads - “.. be paid the arrears of pension based

on the revised calculations from the date of retirement till date.. “

The revised calculations from the date of retirement clearly means that whatever

calculations were done for pension fitment must be done again by giving benefit of Notional

addition of service.

The calculations obviously included commutable 1/3rd of Basic Pension and

commutation value it’s of. But the very brilliant officers of the Bank who dissected the order

have taken the word “ difference in pension “ that suits the Bank and these officers

have been trying to convince that interest is ordered to be paid on this difference in

pension as such if commutation is given interest will not be payable on that amount. THIS

IS THE CASE OF LETTER PERFACT OBEDIENCE OF OREDR BY THE BANK. According to them

difference of commutation value is not pension.

We should be thankful to them that they have not applied their sharp mind further, in

a way that interest is payable only on difference of Basic Pension, therefore it must not be

paid on resulting difference of DA. Thakns to them they paid interest on DA amount also.

2. The second point of order was in respect of interest payment as under –

“… interest at the rate of 9 per cent from the date of the judgment of the High

Court till payment.. “

In a reply to application under RTI in the payment of interest, Bank has in letter no.

HO/RTI/CPIO/724 of 7-6-2014 replied as under –

17


“Difference in pension on recalculation has been paid with interest at the rate

of 9% from the date of judgment of Hon’ble High Courts in respective cases…”

But here the obedient and brilliant officers have not followed it in the spirit of above

LETTER PERFACT OBEDIENCE OF OREDR , rather used the word “High Court” as High

Courts in respective cases, and applied the same in respective cases.

By application of such sharp minds of these officers , Bank has paid interest for 125

months to only two pensioner petitioners of Calcutta High Court and for 58, 54 and 50

months to the pensioner petitioners (Total 35) , of Bombay, Delhi and Jabalpur High

Courts.

3. The third point of order was in respect of payment to all pensioners as under-

“ It is made clear that all employees are entitled to receive their pension in

terms of the Circular issued by the Indian Banks' Association and in terms of the

present order “

The other pensioners (Total 793 - 37 = 756), who were not parties in the High Courts,

were to be paid interest in terms of order of Supreme Court. Here the brilliant officers did

not applied the spirit of LETTER PERFACT OBEDIENCE OF OREDR, and over-ruling it

preferred to pay interest to all other VRS pensioners from Aug- 2009 (Referred IBA

circular was dated 16-08-2009) for 55 months. The same circular was lying in dust bin of

Bank for last 5 years, but they have taken the date of IBA circular at par with Judgment of

High Court and elevated the status of IBA to the Status of High Court. Thus the non

respondent pensioners, who have been paid interest for 55 months instead of 125

months, should remain obliged to the officers of the Bank, who often mentioned that

pensioners of Vijay Bank have not been paid any interest.

In the process with application of sharp minds of the officers who interpreted the

order of Supreme Court Bank saved money amounting to lacs of rupees that otherwise

would have been paid as arrears and interest to VRS pensioners. The money so saved is

on following counts –

1. Amount of commutation and interest thereon, payable to pensioners still alive, the major

difference here would be of interest portion as the monthly amount paid has already run

153 months, and commutation factor may meet the value now.

2. But amount of commutation and interest thereon, payable to the family of deceased

pensioners is major portion saved by Bank as for deceased the amount would be

payable monthly only up to the death which obviously will not meet the commutation

value.

Example – Incremental portion of commutable pension is sayRs.300 and age at the

retirement was 52 years that calculates commutation factor of 12.66, the arrears of

commutation value comes to Rs. 300 x 12 x12.66 = Rs.45556/- If had died after 50

months, the arrears paid as monthly difference comes to Rs. 300 x 50 = Rs. 15000/ -

Thus bank has saved Rs. 30556/- plus interest thereon for all these years from the dues

of a deceased pensioner. There may be approx. 100 -120 such cases.

3. The other major portion is of interest that has been paid for 55 months to almost all the

VRS pensioners, which should have been for 125 months from 6-11-2003 - the date of

Judgment of High Court Calcutta in WP No. 624 of 2003 – Manik Kundu & Oth. Vs

Allahabad Bank & oth. Saving of interest for 70 months.

18


4. Order was to pay interest till the date of payment of arrears. Arrears were paid on 24-4-

2014 (Important Date in Bank’s History) and as is the objective of the banking business,

these officers have by not paying interest for 24 days saved further amount of Rs.5.83

lacs for Bank.

It has surfaced by obtaining the information under RTI that in the year 2009 after the

Judgment dated 27-03-2009, by Supreme Court in Case of Bank of India vs K.Mohandas,

the same officer has in a note-sheet mentioned that Bank will be required to pay

difference of commutation and payment of interest on arrears. The scan copy of

comments is given hereunder –

But now by a different interpretation the dues of the VRS pensioners have been curtailed,

to save huge amount for Bank. The officer must have been rewarded for his application of

mind.

However it is surprising to note that why he failed to put the position of payment to

arrears of Reg. 29(5) to pensioner of second option in a manner that would have

saved much more funds, if analyzed as under-

1. The VRS retires who opted for pension in second option were neither covered by Pension

Regulation 1995 in 2001 at the time of their retirement nor at the time of Supreme Court

judgment darted 27-3- 2009 or at the time of IBA circular dated 16-08-2009. Thus there

was no question of their dues remaining unpaid as on the date of IBA circular. Hon’ble

Supreme Court has ordered for interest payment because despite the circular of IBA Bank

did no pay the dues of Reg.29 (5) to the eligible VRS pensioners. The second pension

optees were not at all eligible for that amount on that date; hence no interest was to be

paid to them.

2. The judgment by Supreme Court dated 27-3-2009 in case of Bank of India Vs K.

Mohandas, has been applied in present order dated 13-02-2014.

Quote – “In our opinion, the issue involved in all these appeals is squarely covered by

the judgment of this Court in K. Mohandas and others (supra). Consequently, all the

appeals filed by the Banks are dismissed.”

From the decision dated 27-3-2009 following facts emerge-

Quote from judgment dated 27-3-2009 – Para 40 “It was submitted on behalf

of the banks that amendment to Regulation 28 has neither been challenged nor the said

Regulation has been declared ultra vires and, therefore, that provision cannot be

rendered otiose by taking recourse to Regulations 29. It is true that validity and legality

of Regulation 28 has not been put in issue. It was apparently not done because,

19


according to the employees, amended Regulation 28 although made retrospective could

not have affected the concluded contract.

Quote from judgment dated 27-3-2009 – Para 53 “We hold, as it must be, that

the employees who had completed 20 years of service and were pension optees and

offered voluntary retirement under VRS 2000 and whose offers were accepted by the

banks are entitled to addition of five years of notional service in calculating the length of

service for the purposes of that Scheme as per Regulation 29(5) of the Pension

Regulations, 1995.

The VRS retirees with CPF, did not have any contract relating to pension on the

date of acceptance of their VRS application by the Bank, as the contract for pension is

pre-requisite as per above judgment.

Further the Supreme Court has decided the applicability of Reg.29 (5) to those retirees’

only who were pension optees on that date.

With above analysis the VRS retirees who opted pension in second option; were

well aware of applicability of amended Reg.28 to them, were not under any

contract for pension and were not pension optees at the time of their retirement

when the contract of VRS concluded, they could have been put out of ambit of

the orders dated 27-3-2009 and 13-02-2014 of Supreme Court, and Bank could

have not paid arrears of Rs. 273.03 lacs to 339 such pensioners. This is another

angle.


**************

20


Hon’ble Union Finance Minister/ Bhopal – Date 21-6-2014

Hon’ble Union Law Minister

Govt. of India, New Delhi

Subject- Injustice with Pensioners of Public Sector Banks by

IBA in Bipartite Settlements

The Salary and wages of public sector/ nationalized Banks are periodically revised

for a block period of five years generally through Bipartite Settlements between

representative of unions/organizations of employees and Indian Bank Association

representing the Banks.

Prior to Oct 1993, there was no pension scheme to the Bank employees and they

were being given CPF. During the year 1993 pension scheme was introduced in these

banks and employees were offered to exercise their options for the pension that

replaced the CPF. The pension rules were framed and introduced in the public sector/

nationalized Banks.

After the introduction of the said pension scheme, the representative

unions/organizations of employees and Indian Bank Association representing the Banks,

without giving any chance of representation or suggestions by the retirees/pensioners,

changed the pension eligibility of the pensioners in these Bipartite Settlements that

almost every time adversely affected the pension benefits of the

retirees/pensioners of the Settlement Block Periods.

The Bipartite Settlements are said to be for improvement and benefit to the

employees, but if analyzed with the angle of benefits to retirees in these settlements

the fact is otherwise as under –

In 5th Bipartite Settlement

Difference of Gratuity on Revised Pay Denied to retirees

In 6th Bipartite

Date of benefit of increased pension extended to bring loss to 5000

pensioners


(a) Lower Pension to retirees numbering approx 100000

(b) Notional addition of service denied to approx 80000 pensioners


(a) Arrears of Pension & Eligible Commutation Denied

(b) Benefit of improvement in DA formula denied to 1.5 lac pensioners

In 9th Bipartite Settlement –

Extra financial load on Retirees opted for pension in second option.

The details of above matters are given in Annexure enclosed herewith.

From the above history and track record, it is evident of the fact that the

pensioners who have no representation in these Settlements have always been put to

loss by IBA and representatives of the employees’ unions. Aggrieved by such various

type of curtailments in pension benefits many pensioners have to per force follow the

legal route and I would like to reproduced here some of the glaring comments of

Hon’ble Judges in the matter as under-

21


1. The High court of Karnataka in WA No 1758-1785 of 2003 decided the matter of

difference of gratuity of pre-1994 retirees on 25-5-2012 in favour of the retirees. Here

Hon’ble Mr. Vikramjit Sen, Chief Justice has commented in his order at page No 29 as

under-

“It does not require a paranoid mind to suspect that the Unions or

Associations were not as receptive or assiduously loyal to the cause of the

older employees as were of officers and employees in harness.”

Further while recording the final order the judge has written this also-

2. “The numbers of pensioners have dwindled over the years; their demise has

liberated them from their relative penury”

3. In Writ Petition No. OP 37198 of 2001(C) decided by The High Court of Kerala

against Canara Bank on 31-08-2010 following was the ruling of the Court –

“7.Memorandum of Understanding cannot meddle with the statutory

prescriptions. Nobody can agree by way of a settlement at the behest of an

organization taking away the benefit conferred on individuals by way of

statutes or statutory rules.”

But still the IBA and representative unions of working employees continued to negotiate

and decide the pension benefits of the retirees, and in the process brought losses to

pensioners.

The result had been that many a retirees and pensioners have filed Writ Petitions and

hundreds of such cases had remained pending in court of law for many a years. Banks and

IBA has taken advantage of the work load on judiciary for delaying the payment of

legitimate dues of pensioners as in most of the cases the orders of the courts had been in

favour of the pensioners. The tendency of the Banks on this score is ever increasing for

delaying the due payments with sole intention to earn out of the funds so kept unpaid for

years together.

This type of litigation is while taking precious time of judiciary, public money have been and

being spent by Banks un-necessarily. The matters are related to pensioners /retirees where

High Courts have decided the matters in favour of pensioners. But Banks have filed and are

filing appeals in Supreme Court.

The Central Government has issued guidelines for Government Departments and Public

Sector Undertakings not to indulge in unnecessary litigation. Chapter V Para D Sub-Para b

of the National Litigation Policy specifically restricts the filing of appeals against decisions

relating to pension and retirement benefits. Despite above National Litigation policy

Banks/IBA are filing appeals against decisions relating to pension and retirement benefits

and thus a large number of appeals are pending in various High Courts and Supreme

Court.

It is therefore requested that your office would kindly intervene in the matter for

resolving at least following two issues of Bank Pensioners under litigation pending for

around 20 years-

1. Difference of Gratuity on Revised Pay Denied to retirees who had retired

between 1-7-1993 to 31-10-1194 and the cases are pending In Supreme Court as

22


Special Leave Petition (Civil) 28332 -28362 Of 2012 BY IBA .Vs. Y.R.SHENOY &

ORS

2. Initial Lower Pension fitment to retirees of the period from 1-4-1998 to 31-

10-2002 and the cases are pending In Supreme Court as Civil Appeal No 5525 of

2012 of Bank of Baroda & another Vs G.Palani & Others

It is also requested that your office would kindly also issue directions to the Banks

and IBA for -

a. Giving representations to retirees and pensioners associations in bilateral talks

related pension and retirement benefits of Bank Pensioners and

b. Avoiding un-necessary litigation in terms of National Litigation Policy in pension

matters

Yours Faithfully

S.K.Mishra – 130- B, Rajat Vihar Colony, Hoshangabad Road, Bhopal (M.P.) 462026

Copy to –

1. Director of Public Grievances

2. The Joint Secretary (Banking)

Ministry Of Finance, Department of Economic Affairs,

Banking Division, Jeevan Deep Building,

Parliament Street, New Delhi – 1

With a request to kindly look into the matter so that un-necessary litigations are avoided.

**************

23


To, The General Secretary- AIBPARC & General Secretary -AIBRF

Subject- Issue of Pension Updating taken up by Associations

Options Suggested for Updating

In communications of the pensioners associations, following developments in respect

of demands of pensioners, have been advised –

1. After discussion, IBA informed that they are inclined to favorably consider the demand of

100% DA on pension for pre-Nov. 2002 retirees.

2. IBA further informed that cost aspect on improvement in family pension is being worked

out and they would soon take a decision on the same. IBA responded positively on this

issue.

3. As regards updation of pension, IBA informed that in view of the high cost involved, it

would be difficult to agree to the same. On our insistence, IBA agreed that any viable

and affordable proposition from the UFBU in this regard would be examined.

The Pay Revision for the period from 1-11-2012 to 31-10-2017 is being done by

merger of DA at 4440 CPI, which brings up the Basic pay at 160.15% and further

increase, which at present is said to be offered by IBA at 1.5%, if increased to 4% will

upward revise the Basic Pay Scales at approx 166% of the Pay Scales of 2007-12.The DA

formula will thus get changed to say 0.1% in place of 0.15%.

It is expected that by updating the pension of pre - Nov-2012 retirees, the Notional

Basic Pay of these retirees will be brought to the level of 4440 CPI with common uniform

DA formula as above.

If updating of Pension, is thought on above lines, it is most likely that it will be done

on the formula applied for improvement of Family Pension to RBI pensioners. It aims at

notionally increasing the Basic Pay/Pension in proportion of increase of CPI over the

period of past settlements. This results in bringing the Basic Pension at 4440 CPI by

multiplying the present Basic Pension by respective Number as under for different Block

Period Pensioners-

Present Revision At CPI 4440

Number of Times’ Increase In CPI Over The Block Periods

CPI Of Past Revisions & Increase By …Times’ Formula

CPI Over Block Increased By Times’ Multiply by 4440/Base CPI

332 1986-87 13.373 4440/332 =

600 1987-92 7.400 4440/600 =

1148 1992-98 3.868 4440/1148 =

1684 1998-02 2.637 4440/1684 =

2288 2002-07 1.941 4440/2288 =

2836 2007-12 1.566 4440/2836 =

The above formula of bringing Basic Pension at 4440 CPI does not include the effect of

increases given after merger of DA in past salary revisions.

Effect of Increase given in past settlements-

In past pay revisions after merger of certain DA slabs the increase in pay were given to

form the revised Pay Scales. The increase of proposed pay scale for 2012-17, over the

respective block periods had been calculated and the increase is reflected as under for

three categories of Bank employees-

24


Times Increase In Basic Pay Over The Pay of Block Times

Increase In

Effect of

Increase

Taken for

Pay for Times’ Increase In Pay Of Avg. Incre. In

Pay Scale = A

Block Sub-Staff Clerks Officers CPI = B = A / B Calculation

1986-87 22.3690 20.0150 19.3010 20.5617 13.373 53.75% 50.00%

1987-92 11.5950 11.2230 10.7840 11.2007 7.400 51.36% 50.00%

1992-98 5.6377 5.6120 5.3350 5.5282 3.868 42.94% 43.00%

1998-02 3.5364 3.5190 3.3450 3.4668 2.637 31.49% 34.00%

2002-07 2.3660 2.3870 2.3580 2.3703 1.941 22.15% 22.00%

2007-12 1.6341 1.6341 1.6341 1.6341 1.566 2.04% 2.04%

As the formula of bringing Basic Pension at 4440 CPI does not include the effect of above

increases the multiplying factors will have to be increased by above corresponding

percentages for giving the effect of increase in Pay Revision of Past Settlements. This

logic of multiplication factor was applied for Central Govt.Pensioners.

The concept of multiplication factor was adopted in Sixth Pay Commission for

Pension Revision of Central Govt. Pensioners. The recommendation and accepted version

is reproduced here under -

Recommendation- All past pensioners should be allowed fitment benefit equal to 40%

of the pension excluding the effect of merger of 50% dearness allowance/dearness relief

as pension (in respect of pensioners retiring on or after 1/4/2004) and dearness pension

(for other pensioners) respectively. The increase will be allowed by subsuming the effect

of conversion of 50% of dearness relief/dearness allowance as dearness pension/dearness

pay. Consequently, dearness relief at the rate of 74% on pension (excluding the effect of

merger) has been taken for the purposes of computing revised pension as on 1/1/2006.

This is consistent with the fitment benefit being allowed in case of the existing employees.

The fixation of pension will be subject to the provision that the revised pension, in no

case, shall be lower than fifty percent of the sum of the minimum of the pay in the pay

band and the grade pay thereon corresponding to the pre-revised pay scale from which

the pensioner had retired. (5.1.47)

Accepted – Accepted with the modification that fixation of pension shall be base on a

multiplication factor of 1.86, i.e. basic pension +Dearness Pension (wherever applicable)

+ dearness relief of 24% as on 1.1.2006, instead of 1.74.

Circular No. is - 38/37/08-P&PW(A) dated 01.09.2008

In view of the above, as IBA has asked for viable and affordable proposition from

the UFBU in respect of pension updation, the figures of increase in pension cost of

pre-Nov 2012, retirees have calculated and the summary is as under-

1. Increased Cost of 100% DA Neutralization to pre- 2002 retired pensioners –

In the month of March 2014 increased cost is calculated to be Rs.25.137 Crores P.M. for

such approx.80300 surviving pensioners, retired up to 31-10-2002.

2. Increased cost of updating the pension as per formula adopted for RBI ( Multiplying by a

number derived = 4440 / Base CPI of concerned pay revision) and increased by the

percentage as given in the table –

http://persmin.gov.in/WriteData/CircularNotification/ScanDocument/Pension/pensiontable_sixthpc.pdf

25


Retirees of Period Formula for updating pension Viable

From To Multiply by 4440/Base CPI Increase By - A Increase by 50% of A

1-Jan-86 31-Oct-87 4440/332 = 13.373 50.00% 25.00%

1-Nov-87 31-Oct-92 4440/600 =7.400 50.00% 25.00%

1-Nov-92 31-Mar-98 4440/1148 = 3.868 43.00% 21.50%

1-Apr-98 31-Oct-02 4440/1684 = 2.637 34.00% 17.00%

1-Nov-02 31-Oct-07 4440/2288 = 1.941 22.00% 11.00%

1-Nov-07 31-Oct-12 4440/2836 = 1.566 6.00% 3.00%

a) In the month of March 2014 increased cost of pension for such approx.187000

surviving pensioners, retired up to 31-10-2012.is calculated to be Rs.119.58 Crores

P.M. if increase as per “A “is given. This cost is said to be high by IBA.

b) Therefore viable and affordable proposal may be by reducing the incremental percentage

to half of “A” applicable for all block periods. Thus increased cost of pension is calculated

to be Rs.72.93 Crores P.M. in March 2014 for pre-Nov 2012 retired & surviving

pensioners.

Important points to be noted -

1. It may be noted that in above pension revision, the point of 100% DA neutralization to

pre -2002 retired pensioners is automatically covered. Thus Banks are to bear Rs.72.93

less Rs.25.14 = Rs.49.79 crores over and above the DA neutralization cost, for pension

updating at 50% of actual needed.

2. The Actuarial Valuation of pension liabilities of 24 Nationalized banks as on March 2014

was Rs. 113545.62 crores (Estimated Rs.54488.20 Crores for pensioners and balance for

employees covered under Pension Reg.1995) The increased cost of pension as above for

pension updating, being Rs.72.93 crores P.M. in March 2014 will call for additional

actuarial valuation of pension liability of Rs.6590 crores approx. In the year 2011, when

Second Pension Option was given to approx 272000 Employees & Retirees, the increase

in Actuarial Valuation as per Balance Sheets of these Bank was to the tune of

Rs.24258.03 crores, This increase was to be amortized in next four years as permitted

by RBI vide circular letter No. DBOD.BP.BC.80/21.04.018/2010-11 dated 09-02-2011

and Banks have quite comfortably absorbed to the tune of 80% of the same by March

2014. Thus the additional of Rs.6590 crores is very much affordable by these Banks now.

Note- The data derived & calculated is based on information available on various sites of

Bank Retirees Associations, Banks and IBA. The calculations so done for pension

payments by Banks in the year 2013-14 is tallying with the figures available in Balance

Sheets of all 24 Nationalized Banks. Total Pension paid by these Banks for 2013-14 was

Rs.7235.18 crores and the amount of payment calculated came to Rs.7240.38 crores.

Thus it can be relied upon. Please refer the tables given here under.

This is being written for facilitating help you in discussions with UFBU in the matter of

Pension Updating of Bank Pensioners. Present Basic Pension and Total Gross Pension In

March 2014 for three categories of pensioners of all previous block periods has been

calculated by above revision options and is given hereunder. Calculations in excel sheet is

also attached, that includes calculations for pension updating to be at PAR also.

26


BY BRINGING BASIC PENSION AT 4440 CPI & DA

@ 0.1% ON REMAINING 265 SLABS

BY RBI FORMULA Basic Pension Total Gross Pension

Retd.From To Sub Clerks Off Sub Clerks Off

1-Jan-86 31-Oct-87 6050 12101 18580 7653.25 15307.77 23503.70

1-Nov-87 31-Oct-92 6549 12358 18685 8284.49 15632.87 23636.53

1-Nov-92 31-Mar-98 7194 12899 19725 9100.41 16317.24 24952.13

1-Apr-98 31-Oct-02 7712 14343 21277 9755.68 18143.90 26915.41

1-Nov-02 31-Oct-07 8907 16078 23423 11267.36 20338.67 29630.10

1-Nov-07 31-Oct-12 10803 18709 28181 13665.80 23666.89 35648.97

BY BRINGING BASIC PENSION AT 4440 CPI & INCREASED BY %AGE AS BELOW

REVISED POSITION -A Basic Pension Total Gross Pension Increased

Retd.From To Sub Clerks Off Sub Clerks Off By

1-Jan-86 31-Oct-87 9075 18151 27870 11479.88 22961.02 35255.55 50.00%

1-Nov-87 31-Oct-92 9824 18537 28028 12427.36 23449.31 35455.42 50.00%

1-Nov-92 31-Mar-98 10287 18445 28206 13013.06 23332.93 35680.59 43.00%

1-Apr-98 31-Oct-02 10334 19220 28511 13072.51 24313.30 36066.42 34.00%

1-Nov-02 31-Oct-07 10867 19615 28576 13746.76 24812.98 36148.64 22.00%

1-Nov-07 31-Oct-12 11451 19831 29872 14485.52 25086.22 37788.08 6.00%

BY BRINGING BASIC PENSION AT 4440 CPI & INCREASED BY %AGE AS BELOW

REVISED POSITION -B Basic Pension Total Gross Pension Increased

Retd.From To Sub Clerks Off Sub Clerks Off By

1-Jan-86 31-Oct-87 7563 15126 23225 9567.20 19134.39 29379.63 25.00%

1-Nov-87 31-Oct-92 8187 15448 23357 10356.56 19541.72 29546.61 25.00%

1-Nov-92 31-Mar-98 8740 15672 23966 11056.10 19825.08 30316.99 21.50%

1-Apr-98 31-Oct-02 9023 16782 24894 11414.10 21229.23 31490.91 17.00%

1-Nov-02 31-Oct-07 9887 17846 25999 12507.06 22575.19 32888.74 11.00%

1-Nov-07 31-Oct-12 11127 19270 29026 14075.66 24376.55 36717.89 3.00%

WORKING ON THE 100% DA FOR ALL RETIREES PRIOR TO 01.11.2002 AND UPDATION OF PENSION FOR ALL RETIREES UPTO 31.10.2007 RETIREES

DURING THE PERIOD 01.11.1987 TO 31.10.1992

Basic Pay Basic Pension Pens. + DA If 100% DA is paid

50% Updation Pension + DA

40% Updation Pension + DA

1670 835 6581 6581 10680 8544

3220 1610 12244 12688 19148 14773

4520 2260 15765 17359 24594 19675

5050 2525 16493 19394 27572 22058

5650 2825 17316 21698 32508 26007

7000 3500 19170 26883 44252 35402

RETIREES DURING THE PERIOD 01.11.1992 TO 31.10.1997

6420 3210 12777 13209 19148 15318

9200 4600 16597 18929 25274 20220

10450 5225 17723 21501 30806 24645

12650 6325 19704 26027 39827 31861

14000 7000 20920 28805 44252 35402

27


RETIREES DURING THE PERIOD 01.11.1997 TO 31.10.2002

5850 2925 8232 8232 11361 11361

10880 5440 14739 15310 19828 15863

14240 7120 17566 20038 25275 20220

15760 7880 18671 22177 28338 22671

17280 8640 19776 24316 33444 26755

21300 10650 22698 29973 44252 35402

PENSION & REVISED PENSION IN MARCH 2014

EXISTING POSITION Basic Pension Total Gross Pension

Retd.From To Sub Clerks Off Sub Clerks Off

1-Jan-86 31-Oct-87 635 1270 1950 5846.76 11664.13 16925.63

1-Nov-87 31-Oct-92 885 1670 2525 8148.64 14759.13 19185.61

1-Nov-92 31-Mar-98 1860 3335 5100 8942.88 15424.31 20255.84

1-Apr-98 31-Oct-02 2925 5440 8070 9622.08 17174.20 21796.15

1-Nov-02 31-Oct-07 4590 8285 12070 11224.39 20260.14 29515.98

1-Nov-07 31-Oct-12 6900 11950 18000 13793.10 23888.05 35982.00

Data of Pension Liability Valuations On March 2011 - March 2013 AND March 2014

Name of Bank Liab.11 Paid-11 Liab-13 Paid -14 Liab-14

Allahabad Bank 2578.78 141.27 3697.49 243.27 4143.65

Andhra Bank 2084.06 106.95 2834.32 157.54 3180.74

Bank of Baroda 6645.04 199.63 7502.04 502.76 8259.48

Bank of India 6892.06 345.42 7404.65 605.48 8038.24

Bank of Maharashtra 2156.79 107.8 2772.84 207.40 3216.27

Canara Bank 7175.38 373.15 8584.93 596.28 9035.86

Central Bank of India 5997.12 279.44 7190.56 578.07 8139.02

Corporation Bank 1671.9 52.01 2148.55 77.00 2473.20

Dena Bank 1007.03 193.22 1761.94 190.88 1917.94

Indian Bank 3563.00 191.82 4521.26 318.32 4930.31

Indian Overseas Bank 3863.32 222.01 4865.10 397.65 5426.49

Oriental Bank of Commerce 2509.83 52.53 3342.17 91.14 3832.78

Punjab & Sind Bank 2350.23 105.53 2419.87 174.73 2493.33

Punjab National Bank 10590.72 368.07 13559.18 652.83 15162.79

State Bank of Bikaner & Jaipur 1913.19 122.37 2335.53 154.01 2694.25

State Bank of Hyderabad 1719.94 95.21 2588.59 167.48 2892.51

State Bank of Mysore 1232.79 69.16 1152.24 104.17 1323.29

State Bank of Patiala 1895.87 75.05 2252.73 109.17 2480.48

State Bank of Travancore 1434.91 80.50 2216.64 125.44 2235.53

Syndicate Bank 5701.55 266.45 4550.04 466.09 5048.83

UCO Bank 3066.66 276.45 3863.62 413.28 4655.28

Union Bank of India 4771.82 306.64 5991.02 380.68 6683.81

United Bank of India 1861.99 65.95 2317.55 301.79 3148.70

Vijaya Bank 1832.94 102.84 2009.65 219.72 2132.84

Total 84516.92 4199.47 101882.51 7235.18 113545.62

S.K.MISHRA - BHOPAL- 28-10-2014

**************

28


Dear Friends,

One Rank One Pension & Cost of Updating Pension of Bank Pensioners

The concept of one rank one pay has been often discussed in circle of bank pensioners more

particularly after the decision for armed forces. We are to understand the subject before

going for any conclusion or demand. It is in brief advised as under-

WHAT IS OROP?

“One Rank, One Pension” is the demand for the same pension for the same rank and

for the same length of service, irrespective of the date of retirement.

How is pension rate determined currently?

Currently, the pension of retired personnel depends on the Pay Commission

recommendations at the time of retirement. So a pensioner, who retired before the Pay

Commission of 2006 came into effect, draws less pension than a junior pensioner, who

retired after 2006, even if both of them served at the same rank for the same duration.

How are the armed forces affected?

Unlike civil servants who retire at the age of 60, most soldiers are compulsorily retired

between the age of 35 and 37. Moreover, military personnel can be discharged anytime on

the grounds of disability, unlike civil servants. Thus, soldiers are dependent on their pension

for a longer duration and are affected the most if pension is not revised with each pay

commission.

Government has announced one-rank one-pension for ex-servicemen on 05/09/2015:

UNDER THE OROP SCHEME:

The benefit will be given with effect from 1st July, 2014.

The present government assumed office on 26th May, 2014 and therefore, it has been

decided to make the scheme effective from a date immediately after.

Arrears will be paid in four half-yearly instalments. All widows, including war widows, will be

paid arrears in one instalment.

To begin with, OROP would be fixed on the basis of calendar year 2013.

Pension will be re-fixed for all pensioners retiring in the same rank and with the same length

of service as the average of minimum and maximum pension in 2013. Those drawing

pensions above the average will be protected.

It is estimated that the expenditure on arrears alone would be ten to twelve thousand crores

of rupees.

PENSION UPDATION OF BANK PENSIONERS:

If you go through OROP demand of Military Personnel carefully, our demand for

UPDATION OF PENSION is also same and similar. In the case of Central Government

Pensioners, budgetary provisions are made, whereas in our case, we are getting our pension

on surrendering CPF benefit.

The said Fund In banks is called PENSION FUND, which is to be wisely invested and

earn on such investments.

29


Name of Banks PVO& Pension Paid as Shown in Balance Sheet of 2014 & 2015

PVO as on Pension Paid for PVO as on Pension Paid for

March 2014 2013-2014 March 2015 2014-2015

Allahabad Bank 4143.72 243.27 4582.02 297.29

Andhra Bank 3180.72 157.54 3749.44 197.50

Bank of Baroda 8259.53 502.76 8949.66 617.01

Bank of India 8038.33 605.48 9420.03 712.15

Bank of Maharashtra 3216.32 207.4 3729.84 246.19

Canara Bank 9035.90 596.28 9633.14 660.39

Central Bank of India 8139.06 578.07 9713.80 682.27

Corporation Bank 2473.25 77.00 2779.59 104.45

Dena Bank 1917.96 190.88 2158.66 214.78

Indian Bank 4930.31 318.32 5306.22 373.23

Indian Overseas Bank 5426.57 397.65 6007.72 423.11

Oriental Bank of Commerce 3832.83 91.14 4323.04 112.7

Punjab & Sind Bank 2493.35 174.73 2537.12 216.8

Punjab National Bank 15162.94 652.83 18217.40 821.16

State Bank of Bikaner & Jaipur 2694.34 154.01 2661.64 181.21

State Bank of Hyderabad 2892.56 167.48 3483.45 189.52

State Bank of Mysore 1323.28 104.17 1584.66 136.84

State Bank of Patiala 2480.49 109.17 2677.68 140.47

State Bank of Travancore 2235.52 125.44 2506.07 151.59

Syndicate Bank 5048.84 466.09 5360.18 546.18

UCO Bank 4655.37 413.28 5293.58 491.61

Union Bank of India 6683.93 380.68 8218.73 452.00

United Bank of India 3148.79 301.79 3543.16 346.06

Vijaya Bank 2132.84 219.72 2407.14 218.99

ALL P.S BANKS 113546.8 7235.18 128843.97 8533.50

On the basis of the PVO of 24 Banks at Rs.113546 crores as on 31-3-2014, there were

many discussions in the matter that the same is sufficient to cover future pension payments

and can meet the increased pension payments of pension updating also. The PVO as on 31-

3-2015 increased to Rs.128844 crores as is reflected in Audit Reports.

The PVO (Present Value of Future Obligations) is actuarial valuation of pension

liability, calculated on the basis of certain data (viz- No of employees covered under

pension, No of Surviving Pensioners, Future Increase in DA, average age of the employees &

also of pensioners and some more factors) as on year ended March every year. As the data

changes every year for obvious reasons of changes in number of surviving pensioner, new

30


retirees, increase in DA etc, the PVO gets changed and based on these factors, for the

changed valued liability, banks are to meet the gap.

As per trend from 1995 onward banks had to contribute much on these and as we are

aware that for second pension option the PVO for 24 Banks increased by Rs.28821 crores in

the year 2011 and Banks had to contribute for the same in 5 years in phases as permitted by

RBI.

With increase in salary and other factors the PVO is on increasing trend. The most

important factors are DA Increase & yield on Pension Funds.

With an estimate as on March-2015 for above 24 banks, there are approx. 268000

pensioners & approx. 59000 family pensioners (Surviving as against total approx 341000

retired from 01/01/1986 with Pension Option. Pre-86 retired surviving pensioners are

approx. 4000 and family pensioners are approx 8000. As we know that pension is eligible

only to the employees appointed till 31/03/2010, the number of such pension covered

employees is approx. 385000 as on 31/03/2015. Thus number under pension, including

covered employees, is fixed and cannot increase, rather will go on reducing with deaths of

covered pensioners / employees.

For updating of pension to surviving pensioners the estimated load is worked out to be

approx.1500 crores per annum as on March-2015 for all pensioners of above 24 Banks.

S.K.Mishra – Bhopal – 25-10-2015

**************

31


Dear Shri- Bishwabandhhu- Patron, Bhopal – 10-12-2015

Shri Dogra - Vice President

Shri Sudhir Verma - General Secretary


Subject - Sufficiency of Pension Funds for Updating Pension - AIBOC View

AIBOC in letter No. 2015/ 123 dated 13.11.2015 addressed to Chairman of I.B.A. has

written as under -

“While on several aspects of pension improvement, IBA has been repeatedly

forwarding the plea of cost burden but at no point of time during negotiations, authentic data

has been presented in support of its contention. On the contrary, authentic pension fund data

categorically reveals that as on 31.03.2014, the corpus of Pension Fund stood at about Rs.

1,14,000/- crores. More importantly Pension Funds of Banks are in surplus consecutively

over the years and such surplus is growing year by year despite the fact that Banks have

failed to provide for the required sum in pension funds as agreed in Bipartite Settlements.

Under these circumstances, demands of retirees for improvement in Family Pension in line

with RBI, 100% DA neutralization to pre Nov 2002 retirees as also updation of Pension,

cannot be delayed/ denied. “

AIBOC has thus concluded that Pension Funds of the Banks are in surplus

consecutively over the years and such surplus is growing year by year despite the fact that

Banks have failed to provide for the required sum in pension funds.

TREND OF FIGURES OF PVO, INTEREST EARNED & PENSION PAID BY 24 BANKS

FROM 2008 TO 2015 IS AS UNDER -

For Opening Bal Interest Pension Balance Will Reqd.PVO Reqd.addition

Year of PVO (A) Earned (B) Paid (C) Be A + B - C At Year End By Banks

2008 31012.41 2548.90 2025.10 31536.21 34655.90 3119.69

2009 34655.90 2862.80 2439.91 35078.79 46450.60 11371.81

2010 46450.60 3900.30 2870.46 47480.44 60258.89 12778.45

2011 60258.89 5060.03 4199.47 61119.45 84516.92 23397.47

2012 84516.92 6923.24 4469.20 86970.96 94565.33 7594.37

2013 94565.33 7811.69 5610.26 96766.76 101882.51 5115.75

2014 101882.51 8556.93 7235.18 103204.26 113545.62 10341.36

2015 113545.62 9222.68 8533.50 114234.80 128843.67 14608.87

TOTAL 46886.57 37383.08 TOTAL 88327.77

The above figures are drawn from the audited balance sheets & audit reports of 24 Banks.

The PVO is the corpus required to meet the obligation of pension payment for full life period

of the pensioners & employees covered under pension that may retire & will be paid pension

after they retire for their life also.

The study of above Data of PVO from the year 2008 indicates that the Banks have

contributed in pension funds every year and the contribution of the Banks had been to the

tune of Rs. 88300 crores during last 8 years, to meet the PVO assessed being statutory

responsibility/liability at the end of every year in March.

For the year ended March -15, the PVO was assessed to be Rs. 128843.67 for 24

Banks that has shown an increase of Rs.15298.05 crores over the PVO of March -14 that

was at Rs. 113545.62 crores. During the period 2014-15 these banks had paid pension to the

32


tune of Rs.8533.50 crores and interest earnings on pension funds were of Rs.9222.68 crores.

Thus Banks had to contribute Rs.14608.87 crores to meet the gap of PVO as of March-15.

With analysis of above data it cannot be said that the Banks have not contributed to

Pension Funds & fund have grown only by the surpluses of interest earning over the amount

of pension paid yearly.

The AIBOC leadership is aware that for the second option of pension to approx 272000

employees, who were under CPF, the PVO was assessed at Rs.17533.80 crores & CPF

balance of these employees was Rs.11532.00 crores and thus gap of Rs.6001.80 crores was

agreed to be met in 70:30 ratio by Banks & employees for second pension option. Thus

leaders of AIBOC are supposed to be in full knowledge of the mechanism of PVO and the

statutory liability of the banks to meet the same by funding it as per Pension Regulations

1995.

By giving an impression that the AIBOC leaders think that pension fund is growing by

surpluses over the years, they will be proved wrong by IBA & thus it will dilute the efforts of

achieving the demand of pension updating & 100% DA neutralization to pre-2002 retirees.

Instead of talking of pension fund, the leaders may plead that the increased cost of

pension updating/ DA neutralization & improvement in family pension is not much. It is

assessed to be at approx.1500 crore per annum as on March 2015 for all existing pensioners,

and is very meager percentage of establishment costs of the banks. Further in the light of

the fact that Banks are writing off the huge sums on account of Large NPA Accounts by way

of compromises & settlements, this amount is just negligible and is affordable within the

present net profits of the Banks.

Further the Associations of Pensioners may on the other hand assess the strength of

the case of filing W.P. for updating the pension on the following basis.

Bank Employees' Pension Regulations, 1995 provide for updating / revision in basic Pension.

In terms of provisions contained in Regulation 35 (1) thereof, the employees retired between

01-01-1986 and 31-10-87 have already been given benefit and their Basic Pension with

Additional Pension was updated on the basis of formula prescribed in Annexure – 1 under

Regulation 35 of Bank Employees' Pension Regulations.

But thereafter with further salary revisions such updating was never done by the

Banks despite above regulation & precedence.

In regard to 100% DA neutralization to pre-2002 retired pensioners, Associations of

Pensioners should become the intervener in the SLP already pending in Supreme Court and

IOB Retirees Association have already become the intervener and admitted by Supreme

Court. The case will certainly be decided in favor of pensioners if pleaded by giving case laws

of following judgments of Supreme Court –

a. D. S. Nakara and Oth Vs Union of India - Writ Petitions Nos. 5939-5941 of

1980 DATE OF JUDGMENT: 17/12/1982

In above case the formula adopted for improvement in quantum of pension was the

issue to be decided as applicable to the existing pensioners, retired prior to the specific date.

On May 25, 1979, Government of India, Ministry of Finance, issued Office

Memorandum No. F-19(3)-EV-79 whereby the formula for computation of pension was

liberalised but made it applicable to Government servants who were in service on March 31,

1979 and retire from service on or after that date (specified date for short). The formula

33


introduced a slab system for computation of pension. This liberalised pension formula was

applicable to employees governed by the 1972 Rules retiring on or after the specified date.

Earlier average emoluments of 36 months' service were considered for fixing of

pension .It was amended to be at average emoluments of 10 months service With a view to

giving a higher average emolument. By the liberalised scheme the eligible pension at a

glance would be on the higher side.

The petitioners challenged only that part of scheme by which its benefits were

admissible to those who retired from service after a certain date.

At para 42 of the judgment the court concluded as under-

“If the State considered it necessary to liberalise the pension’s scheme, we find no

rational principle behind it for granting these benefits only to those who retired subsequent

to that date simultaneously denying the same to those two retired prior to that date. If the

liberalisation was considered necessary for augmenting social security in old age to

Government servants then those who retired earlier cannot be worse off than those who

retire later. Therefore this division which classified pensioners into two classes is not based

on any rational principle and if the rational principle is the one of dividing pensioners

otherwise equally placed, it would be discriminatory”

It was concluded by the court that the changed formula adopted for determining last

average emoluments drawn had an impact on the quantum of pension. The change of

formula for determining average emoluments was treated as liberalisation or upward revision

of the existing pension scheme and was allowed to all the existing pensioners, even if retired

prior to the specific date, but benefit was made available from the certain specific date.

b. V. KASTURI Vs. STATE BANK OF INDIA, BOMBAY & ANR.

DATE OF JUDGMENT: 09/10/1998

In this case on parity of reasoning drawn from the case of D.S.Nakara Vs

Union of India, it was held that if a person was eligible for pension at the time of his

retirement and if he survives till the time of subsequent amendment of the relevant

pension scheme, he would become eligible to get enhanced pension or would

become eligible to get more pension as per new formula. Accordingly, he would be

entitled to get similar benefit from the date it is given to other members.

In this case the petitioner had resigned from the Bank service on 31St July, 1984. By

that time he had completed 20 years and 9 months of pensionable service. At the time of his

resignation which was treated as voluntary retirement, he was not entitled to get pension

under the aforesaid Rules as the eligibility requirement for earning pension as per Rule

was to the effect that the employee should have retired from Bank service after 25 years

of pensionable service. However, on account of various representations from the Bank

employees the said eligibility condition was relaxed with effect from 20th September, 1986

whereby the original clause was replaced by another clause which provided that an

employee retiring after completion of 20 years of pensionable service irrespective of the age

could get benefit of the pension scheme by his request in writing.

But bank denied the pension benefit stating that he had retired in 1984 two years

before the change in rule in 1986, thus rule is not applicable to him.

34


The denial of the said benefit to the appellant was purely arbitrary and unreasonable

and was not justified on the touchstone of Article 14 of the Constitution of India. He made it

clear that he was not challenging the cutoff date fixed by the respondent authorities while

amending the pension rules. All that he submitted was that as the appellant falls in the

same class of other Bank employees who had completed 20 years of pensionable service by

the time of retirement the appellant was entitled to earn pension from 20th September,

1986 as he had survived on that date, his earlier retirement notwithstanding.

APPLICABILITY OF ABOVE CASES IN 100% DA NEUTRALISATION MATTER

It was concluded by the court that the changed formula adopted for determining last

average emoluments drawn & length of service had an impact on the quantum of

pension. The change of formula was treated as liberalisation or upward revision of the

existing pension scheme and was allowed to all the existing pensioners, The third factor that

impacts the quantum of pension is DA rate. It is also liberalisation or upward revision of the

existing pension scheme

The Supreme Court in Nakarra Case & V.Kasturi case held that the fixing a cutoff

date for being eligible for the improved pension benefits/liberalization of existing

pension scheme, is arbitrary, if the pensioners form a class. Extending the same

reasoning on applicability of the improved formula of DA with 100% neutralization is also

liberalisation of the pension scheme to Bank pensioners as it gives extended benefit in terms

of quantum of pension. The cutoff date (1-11-2002) will be held as division of classified

pensioners into two classes without any rational principle and it will be held discriminatory.

The estimated number of retirees of 24 Banks retired during different settlement

period till March -2015, & surviving pensioners are as under -

Retirees of Period Retired No. Pensioners Survived

Pre -1986 31-Dec-86

4008 1-Jan-86 31-Oct-87 3773 1213 1-Nov-87 31-Oct-92 12555 5522 1-Nov-92 31-Mar-98 20794 12548 1-Apr-98 31-Oct-02 24401 16885 2001-02 VRS 2000 Scheme 79134 62139 1-Nov-02 31-Oct-07 22296 17649 1-Nov-07 31-Oct-12 105304 88764 1-Nov-12 31-Mar-15 72965 63891

Total 341222 272619

The estimated number of surviving family pensioners as on March-2015 is as under-

Families of Retirees of Period Deaths of Retirees Family Pensioners

Pre -1986 31-Dec-86

7506

1-Jan-86 31-Oct-87 2560 1441

1-Nov-87 31-Oct-92 7033 4562

1-Nov-92 31-Mar-98 8246 6213

1-Apr-98 31-Oct-02 7516 6054

2001-02 31-Oct-02 16995 14466

1-Nov-02 31-Oct-07 4647 3978

1-Nov-07 31-Oct-12 16540 14563

1-Nov-12 31-Mar-15 9074 8131

Total 72611 66914

35


ESTIMATED NO. OF PENSIONERS ,PENSION PAID & PVO OF 24 BANKS IN MAR-15

No. of Pensioners PVO Pension

Name of Bank Including Pre -86 Rtd As On Paid

Pensioners Family Mar-15 2014-15

Allahabad Bank 9324 2022 4582.02 297.29

Andhra Bank 5939 1447 3749.44 197.50

Bank of Baroda 19216 4733 8949.66 617.01

Bank of India 23096 5711 9420.03 712.15

Bank of Maharashtra 7742 1893 3729.84 246.19

Canara Bank 22801 5631 9633.14 660.39

Central Bank of India 22071 5438 9713.80 682.27

Corporation Bank 3035 742 2779.59 104.45

Dena Bank 7666 1878 2158.66 214.78

Indian Bank 11855 2904 5306.22 373.23

Indian Overseas Bank 14801 3626 6007.72 423.11

Oriental Bank of Commerce 3645 902 4323.04 112.70

Punjab & Sind Bank 6513 1595 2537.12 216.80

Punjab National Bank 24203 5929 18217.40 821.16

State Bank of Bikaner & Jaipur 5624 1363 2661.34 181.21

State Bank of Hyderabad 6138 1486 3483.45 189.52

State Bank of Mysore 3860 936 1584.66 136.84

State Bank of Patiala 4042 956 2677.68 140.47

State Bank of Travancore 4569 1096 2506.07 151.59

Syndicate Bank 17946 4453 5360.18 546.18

UCO Bank 15174 3736 5293.58 491.61

Union Bank of India 14175 3473 8218.73 452.00

United Bank of India 11103 2978 3543.16 346.06

Vijaya Bank 8081 1986 2407.14 218.99

24 P.S BANKS 272619 66914 128843.67 8533.50


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36


Dear Friends, Bhopal 03-02-2016

BANKS PROFITS UNDER PRESSURE FOR THE YEAR 2015-16

Now all the Public Sector Banks might be much busy in exercise that Bank must somehow

show the net profit in financial year 2015-16 ending on 31-03-2016.The NPA figures are very much worrying and are not coming down, eroding a major portion of operating profits in provisioning for the same.The operating profits, provisions & contingencies and net profits

for last three years of 24 P.S. Banks were as under-

Financial Year Operating Profits Provisions & Contingencies Net Profits

2012 - 13 85297.82 50703.32 34595.50

2013 - 14 89841.07 64847.90 24995.17

2014 - 15 93424.98 69599.34 23825.64

The provisions & contingencies for last three years were 59.44%, 72.18% and 74.50% of operating profits. The trend had been increasing & alarming for provisioning required for NPA.

Now while pressure of provisioning for increased NPA is already on these 24 Banks, the requirement of funding /provisioning for increased gratuity & pension liability is also another factor for the year 2015-16, as this year, there was salary revision for Bank employees.

In the year 2011 when salary revision under 9th Bipartite Settlement was done, these Banks were required to make increased provision for gratuity & pension liability to the tune of Rs. Rs.28821.13 crores. Banks approached RBI and Reserve Bank of India had vide circular

No.DBOD.BP.BC.80/21.04.018/2010-11 dated 09-02-2011, permitted all these Banks for amortization of such increased liability in five years.

This time also the increase in pension liability alone is estimated at Rs. 24848.19 crores.

Again the Banks might approach RBI for permitting amortization in five years. If not the net

profits that had come down from Rs.34595 crores in 2013 to Rs.23825 crores in 2015 will

not be covering even the increased pension liability for the year 2016.

TREND OF FIGURES OF PVO, INTEREST EARNED & PENSION PAID BY 24 BANKS FROM 2008 TO 2015 IS AS UNDER – (Estimated for 2016 also given)

For Opening Bal Interest Pension Balance Will Reqd.PVO Reqd.addition

Year of PVO (A) Earned (B) Paid (C) Be A + B - C At Year End By Banks

2008 31012.41 2548.90 2025.10 31536.21 34655.90 3119.69

2009 34655.90 2862.80 2439.91 35078.79 46450.60 11371.81

2010 46450.60 3900.30 2870.46 47480.44 60258.89 12778.45

2011 60258.89 5060.03 4199.47 61119.45 84516.92 23397.47

2012 84516.92 6923.24 4469.20 86970.96 94565.33 7594.37

2013 94565.33 7811.69 5610.26 96766.76 101882.51 5115.75

2014 101882.51 8556.93 7235.18 103204.26 113545.62 10341.36

2015 113545.62 9222.68 8533.50 114234.80 128843.67 14608.87

2016 128843.67 10694.02 13286.52 126251.17 151099.36 24848.19

The above figures upto 2015 are drawn from the audited balance sheets & audit reports of 24 Banks, BUT for 2016, PVO, Interest and Pension Payment with Arrears to 1.11.2012 to 31.5.2015 retired pensioners are estimated one.

37


The PVO is the corpus required to meet the obligation of pension payment for full life period of the pensioners & employees covered under pension that may retire & will be paid pension after they retire for their life also.

Bank wise estimates for PVO & pension payments for 2016 are as under-

Name of Actual Interest Total Estimated Increase Funds to Be Net Profit

Bank PVO 2015 8.30% Pen Paid PVO 2016 In PVO Added 2015

Allahabad Bank 4582.02 380.31 463.80 5373.50 791.48 874.97 620.90

Andhra Bank 3749.44 311.20 309.17 4397.10 647.66 645.63 638.44

Bank of Baroda 8949.66 742.82 960.16 10495.58 1545.92 1763.26 3,398.43

Bank of India 9420.03 781.86 1102.57 11047.22 1627.19 1947.90 1,708.92

Bank of Maharashtra 3729.84 309.58 384.41 4374.09 644.25 719.08 450.69

Canara Bank 9633.14 799.55 1012.68 11297.11 1663.97 1877.10 2,702.63

Central Bank of India 9713.80 806.25 1056.64 11391.76 1677.96 1928.35 606.45

Corporation Bank 2779.59 230.71 162.98 3259.78 480.19 412.46 584.26

Dena Bank 2158.66 179.17 324.41 2531.59 372.93 518.17 265.48

Indian Bank 5306.22 440.42 581.88 6222.74 916.52 1057.98 1,005.17

Indian Overseas Bank 6007.72 498.64 651.76 7045.43 1037.71 1190.83 -454.33

Oriental Bank of Commerce 4323.04 358.81 172.92 5069.77 746.73 560.84 777.50

Punjab & Sind Bank 2537.12 210.58 340.64 2975.38 438.26 568.32 121.35

Punjab National Bank 18217.40 1512.04 1293.77 21364.09 3146.69 2928.42 3,061.58

State Bank of Bikaner & Jaipur 2661.34 220.89 284.78 3121.11 459.77 523.66 776.87

State Bank of Hyderabad 3483.45 289.13 295.97 4085.08 601.63 608.47 1,317.13

State Bank of Mysore 1584.66 131.53 216.70 1858.31 273.65 358.82 408.80

State Bank of Patiala 2677.68 222.25 221.89 3140.13 462.45 462.09 362.06

State Bank of Travancore 2506.07 208.00 239.04 2939.02 432.95 463.99 335.53

Syndicate Bank 5360.18 444.89 843.09 6286.09 925.91 1324.11 1,522.93

UCO Bank 5293.58 439.37 772.02 6208.01 914.43 1247.08 1,137.80

Union Bank of India 8218.73 682.15 707.07 9638.38 1419.65 1444.57 1,781.64

United Bank of India 3543.16 294.08 551.33 4155.19 612.03 869.28 256.00

Vijaya Bank 2407.14 199.79 336.84 2822.90 415.76 552.81 439.41

Total for 24 Banks 128843.67 10694.02 13286.52 151099.36 22255.69 24848.19 23,825.64


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38


Dear Friends,

SUBJECT - INCREASED LOAD AS ON FEB-2016 ON P.S. BANKS ON GIVING 100% DA NEUTRALISATION TO PRE-02 RETIRED PENSIONERS.

I have estimated the data of eligible pensioners & cost of 100% DA neutralization and

it is given here under-

Based on rationally derived data of Bank employees covered under Pension Regulations 1995, the estimated number of employees retied during different wage

settlement block periods up to 31-10-2002,and surviving as on March-2015 is as under-

Period of Retirement No. Surviving Pensioners Avg Age

From To Retired In Mar-15 In Feb-16 In Feb 2016

1-Jan-86 31-Oct-87 3853 1239 1108 87

1-Nov-87 31-Oct-92 12839 5647 5232 84

1-Nov-92 31-Mar-98 21278 12840 12295 80

1-Apr-98 31-Oct-02 24970 17279 16770 76

2001-02 VRS 2000 80980 63589 62426 70

Total 143920 100594 97831

The above surviving pensioners are calculated by applying the survival rates as per LIC chart applicable for different ages and the same is further estimated as on Feb-2016 also. Total numbers of such employees retied till 31-10-2002 and are surviving as on March-2015 is

estimated to be 97831 as above.

Further based on the rationally acceptable percentages the category-wise surviving

pensioners as on March-2015 are estimated to be as under-

Retirement Period 1986-87 1987-92 1992-98 1998-02 VRS -2000

Sub Staff 248 1073 2311 3024 6995

Clerks 496 2202 4879 6393 15261

Officers 483 2310 5496 7620 40061

Executives 12 62 154 241 1272

Total 1239 5647 12840 17278 63589

The calculations of increased cost of pension to above pensioners are as under-

A. Calculations of average Basic Pension

Avg B.Pay At Retirement 1986-87 87-92 92-98 98-02 VRS-95%

Sub Staff 1270 1770 3720 5850 5560

Clerks 2540 3340 6670 10880 10340

Officers - I to IV 3900 5050 10200 16140 15330

Executives 4800 6250 12350 19340 18370

Avg .Basic Pension 1986-87 87-92 92-98 98-02 VRS-32 Yrs

Sub Staff 635 885 1860 2925 2696

Clerks 1270 1670 3335 5440 5013

Officers - I to IV 1950 2525 5100 8070 7433

Executives 2400 3125 6175 9670 8907

39


B. Calculation of DA Amount Per Slab On Basic Pension at existing tapered rate

DA Per Slab on B.P. (Rs.) 1986-87 87-92 92-98 98-02 VRS

Sub Staff 4.255 5.930 6.510 7.020 6.470

Clerks 8.485 10.685 11.112 12.300 11.446

Officers - I to IV 12.225 13.601 13.930 14.388 14.006

Executives 13.388 14.621 14.898 15.348 14.890

C. Calculation of DA Amount Per Slab On Basic Pension with 100% Neutralization

DA Per Slab on B.P. (Rs.) 1986-87 87-92 92-98 98-02 VRS

DA Rate on 100% Neutralization 0.67% 0.67% 0.35% 0.24% 0.24%

Sub Staff 4.255 5.930 6.510 7.020 6.470

Clerks 8.509 11.189 11.673 13.056 12.031

Officers - I to IV 13.065 16.918 17.850 19.368 17.839

Executives 16.080 20.938 21.613 23.208 21.377

D. Calculation of difference of (Increased ) DA Amount Per Slab per pensioner

Increase/Slab/Staff- (Rs.) 1986-87 87-92 92-98 98-02 VRS

To Sub Staff 0.000 0.000 0.000 0.000 0.000

To Clerks 0.024 0.504 0.561 0.756 0.585

To Officers - I to IV 0.840 3.317 3.920 4.980 3.833

To Executives 2.692 6.317 6.715 7.860 6.487

E. Calculation of difference of (Increased) DA Amount at Feb–16 Slabs for all assuming that DA will increase by 45 Slabs in Aug & 50 Slabs in Feb-17

Avg.Increase In DA Rs. 1986-87 87-92 92-98 98-02 VRS

To Sub Staff 0.00 0.00 0.00 0.00 0.00

To Clerks 34.18 717.86 722.19 871.92 674.93

To Officers - I to IV 1196.44 4724.51 5046.35 5743.60 4421.19

To Executives 3834.31 8997.51 8644.44 9065.20 7481.21

Increased Load PM 1986-87 87-92 92-98 98-02 VRS

Sub Staff - Rs.Lacs 0.00 0.00 0.00 0.00 0.00

Clerks - Rs.Lacs 0.15 14.64 33.74 54.10 101.12

Officers - Rs.Lacs 5.17 101.10 265.54 424.80 1738.76

Executives - Rs. Lacs 0.42 5.22 12.79 21.30 93.44

For All - Rs. Lacs PM 5.74 120.97 312.07 500.20 1933.32

Total P.A. Crores 0.69 14.52 37.45 60.02 232.00

The total increased load is thus calculated at Rs.348.68 crores for thr years 2016-17, for surviving pensioners of all above five retirement periods. Further the increased cost for

increase in DA slabs is calculated to be approx. Rs. 2.44 lacs per slab per month.


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40


Dear Friends, BHOPAL 15-7-2016

Subject – WHETHER PENSION FUND CAN ABSORB UPDATING PENSION?

I had sent the e-mail to the retirees of my Bank- Allahabad bank with a view that they

should understand as to how the pension fund are to be created and how the banks have to

contribute in funds to ensure payment of pension to all for their full life?

It necessitated only because in one important meeting some of the leaders have

expressed wrong notion on self sufficiency of present value of funds to meet all future

obligation including pension updating, Improvement in family pension and 100% DA

neutralizations also.

Similar view was expressed by LIC retirees association in case pending in court for

100% DA neutralization. The court has in very hard words commented that LIC retirees

association has forgotten that LIC has contributed and will have to contribute further for

meeting the liability. This case of LIC was transferred to High Court by the Supreme Court

and after that it is again in Supreme Court. Thus the case is being shunted in judiciary.

Still there are and may be difference of opinions. It is always welcome for improvement.

For clarity on the subject, I am giving simple example as under –

If the maturity value of an investment after 7 years is Rs.1996/- the net present value

of it will be Rs.1000/ if interest rate is 10% PA with quarterly rests. This every banker knows

and had been canvassing while in service, stating that you will get double the amount after 7

years. So Rs.1000/- is the net present value of Banks obligation of Rs. 1996/- payable after

7years with interest @10%.

Now if the interest rate is changed the Net Present Value of the same amount of

Rs.1996/ will change. The is the very basic concept that what bank should hold at present to

discharge the future obligation /liability. This is called Net Present Value of future obligation=

NPV of Obligation or PVO = Present Value of Obligation.

Now coming to Valuation of Pension Obligation –

If one pensioner is to get monthly pension of Rs.10000/ with DA increase @5% Per

Annum and he is to survive for 10 more years, what provision bank must make to meet this

obligation?

The simple calculation for tenth years pension will be = 1.20 x (1+5%) ^10 will give

the gross amount of Rs.195467/- . But it is not to be paid today. It is to be paid in tenth

year. So net present value of this Rs.195467/- @ 8% discount (The Interest Bank may earn)

will be = 195467 x (1+8%) ^ (-10) = Rs.90539/-

In this way if net present values of first to tenth year obligations are calculated the

sum total of these 10 figures of NPVs will be the net present value of fund needed by bank to

pay pension to this pensioner for his remaining life of 10 years.

If the rate of interest or DA rate changes next year the calculations are made again at

year end, this time for nine years as one year’s pension is already paid. This is the reason

that every year the Value of Pension Liability/Obligation is calculated for data changing every

year.

41


This is in case of only one pensioner. For number of pensioners with different pension

amount, different period of pension payments to each of them, this method of individual

calculation will be very time taking and difficult. Hence for large number of pensioners and

employees covered by pension benefit, the rationale data is taken and assumptions as under

are considered for assessing total present value of obligation of Bank for all of them-

1. Number of pensioners and number of employees as on date of Valuation –31st March

2. Average pension of pensioners and average pay of employees on the date of valuation

with assumed increase in DA rate

3. Average age of the pensioners and average age of the employees as on valuation

date, to calculate the pension payment period.

4. Attrition Rate, Discount Rate on average age for assessing mortality while in service. 5. Longevity & Mortality rate of the group based on IALM ( 2006-08)= Charts for

Longevity in Indian conditions

6. Expected yield on the pension fund based on market condition on date of valuation.

An actuarial valuation is a type of appraisal which requires making economic and

demographic assumptions in order to estimate future liabilities. The assumptions are typically

based on a mix of statistical studies and experienced judgment.

Contribution of Rs. 1.08 lac crores by Banks in Pension Funds during last 9 years

On the point of contribution of by Banks in pension funds during last 10 years, I would like to

give following facts from the history of Salary Revisions-

The chart hereunder gives the increased pension cost accepted and shared by employees’

unions and officers’ association while increase given in pay –

Period Pay Increase Increased Pension Cost Shared by Employees Contributed by Banks

1997-02 12.25% 26.50% 8.25% 18.25%

2002-07 13.25% 30.50% 9.25% 21.25%

2007-12 17.50% 36.00% 13.00% 23.00%

For second option of pension to CPF employee given in 2010 based on valuation of

pension liability for these 2.77 lace employees the deficit was Rs.6000 Crores. This actuarial

valuation was part of MOU, signed by unions/ associations of the employees and officers for

Pay Revision of 2007-12. Under this MOU, the bank employees had contributed 30% of it Rs.

1800 Crores, @ 2.8 Month’s Basic Pay of Nov-2007 as per settlement.

The Salary Revision of 2007-2012 that gave 17.5% increase in pay and second

pension option to 2.77 lac employees increased the Value of Pension Obligation of the Banks

by nearly Rs.29000 Crores and RBI had to permit the banks to amortize the load in five

years.

Data on bank-wise Pension Liability etc for the years 2015-16 is given here under in

table form. The summary for the years 2008 to 2016 is also given.

Hope this will help bankers and retirees to understand the subject.

With best wishes

Sincerely yours

S.K.MISHRA - 15-7-2016 E- Mail address - [email protected]

mailto:[email protected]

42


Table – 1 Pension Liabilities of 24 Public Sector Banks as on Mar-08 to Mar-16

& Amounts Contributed by Banks (Rs. Crores)

For Opening Bal Interest Pension Balance Be Required Contributed

Year of PVO (A) Costs (B) Paid (C) A + B - C PVO at end By Banks

2008 31012.41 2548.9 2025.1 31536.21 34655.9 3119.69

2009 34655.9 2862.8 2439.91 35078.79 46450.6 11371.81

2010 46450.6 3900.3 2870.46 47480.44 60258.89 12778.45

2011 60258.89 5060.03 4199.47 61119.45 84516.92 23397.47

2012 84516.92 6923.24 4469.2 86970.96 94565.33 7594.37

2013 94565.33 7811.69 5610.26 96766.76 101882.51 5115.75

2014 101882.51 8556.93 7235.18 103204.26 113545.62 10341.36

2015 113545.62 9222.68 8533.5 114234.8 128843.67 14608.87

2016 128843.68 9923.43 12629.95 126137.16 146080.58 19943.42

108271.2

Table – 2 The figures of Actuarial valuations of Pension Liabilities of 24 Public Sector Banks

as on March-16 are reported by the Banks in Annual Report. (Rs. Crores)

Actuarial Valuation of Pension Liability of Banks in March -2016

PVO Mar-15

Current Service

Cost Interest

Costs Pension

Paid 15-16 Actuarial

Gain/Loss PVO

Mar-16

Page No of

Report

Allahabad Bank 4582.02 638.89 329.81 368.99 25.89 5207.62 179

Andhra Bank 3749.44 186.54 292.46 317.43 158.72 4069.73 253

Bank of Baroda 8949.66 1261.12 678.81 928.96 1986.54 11947.17 163

Bank of India 9420.03 1097.46 715.46 1088.7 932.23 11076.48 157

Bank of Maharashtra 3729.84 414.02 274.79 368.31 132.14 4182.48 162

Canara Bank 9633.14 924.32 728.17 1062.0 -249.35 9974.28 198

Central Bank of India 9713.80 90.20 743.14 912.59 1518.49 11153.04 358

Corporation Bank 2779.59 74.87 213.69 210.34 118.1 2975.91 165

Dena Bank 2158.66 228.43 161.01 292.09 225.74 2481.75 221

Indian Bank 5306.22 75.54 404.03 562.05 384.4 5608.14 213

Indian Overseas Bank 6007.72 123.81 443.69 667.94 907.77 6815.05 157

Oriental Bank of Comm. 4323.04 123.56 385.84 187.71 304.91 4949.64 175

Punjab & Sind Bank 2537.12 205.27 190.03 323.64 119.14 2727.92 213

Punjab National Bank 18217.40 476.83 1415.01 1191.77 1262.22 20179.68 405

State Bank of Bi.r & Jaipur 2661.64 52.05 214.53 251.84 202.08 2878.46 229

State Bank of Hyderabad 3483.45 156.84 285.99 279.81 162.85 3809.32 31

State Bank of Mysore 1584.67 300.00 130.54 207.00 17.45 1825.66 138

State Bank of Patiala 2677.68 42.37 218.87 182.83 75.06 2831.15 EST

State Bank of Travancore 2506.07 45.64 204.84 203.30 70.25 2623.50 67

Syndicate Bank 5360.18 513.52 416.61 801.17 264.73 5753.87 220

UCO Bank 5293.58 499.65 393.86 740.57 856.09 6302.61 104

Union Bank of India 8218.43 150.00 638.22 681.00 1293.35 9619.00 248

United Bank of India 3543.16 428.75 263.75 492.54 698.09 4441.21 197

Vijaya Bank 2407.14 208.27 180.28 307.37 113.71 2602.03 119

Total of 24 P.S BANKS 128843.68 8317.95 9923.43 12629.95 11580.6 146035.70

43


Note –

1. Annual Report of State Bank of Patiala is not available hence figures are calculated

in line with trends.

2. The Normal assumptions usually taken by actuaries are as under

Discount Increase PA (DA) Attrition Rate Yield on Pension Funds

8.50% 5.0% 1% 8.30%

The weighted average of assumptions taken by actuaries is as under

Discount Increase PA (DA) Attrition Rate Yield on pension funds

8.05% 5.33% 1.04% 8.58%

It is to be noted that major factors effecting PVO valuations are annual increase in

pension payout and rate of yield on pension funds. Higher the rate of yield on Pension

Fund, lower will be the valuation of pension liability, and higher the rate of increase in

pension (DA), higher will be the Pension Liability assessed.

Bank wise details of assumptions considered by actuaries are given hereunder-

Actuarial Assumptions Taken By Actuaries for Actuarial Assumptions Considered Page No of

Valuation of Pension Liability of Bank Discount Increase PA Attrition Yield Report

Allahabad Bank 7.50% 5.50% 1% 7.50% 177

Andhra Bank 8.10% 5.00% 0% 9.00% 257

Bank of Baroda 8.00% 6.00% 2% 8.00% 163

Bank of India 8.06% 5.50% 1% 8.94% 157

Bank of Maharashtra 7.79% 5.50% 0% 8.75% 165

Canara Bank 8.00% 5.50% 2% 9.30% 197

Central Bank of India 8.06% 5.00% 0.50% 8.06% 359

Corporation Bank 7.95% 5.00% 1.35% 8.85% 167

Dena Bank 8.00% 5.00% 0% 9.00% 221

Indian Bank 8.04% 6.00% 1% 9.00% 211

Indian Overseas Bank 7.82% 5.00% 0% 9.00% 160

Oriental Bank of Commerce 8.50% 5.00% 0% 8.87% 177

Punjab & Sind Bank 8.00% 5.00% 1% 8.90% 217

Punjab National Bank 8.17% 5.75% 1% 8.61% 404

State Bank of Bikaner & Jaipur 8.06% 5.00% 8.1% 8.06% 233

State Bank of Hyderabad 8.06% 5.00% 0% 9.00% 32

State Bank of Mysore 8.06% 5.00% 2% 8.00% 140

State Bank of Patiala 8.06% 5.00% 2% 8.00% As above

State Bank of Travancore 8.10% 5.00% 0% 8.10% 68

Syndicate Bank 8.40% 5.00% 0% 8.40% 220

UCO Bank 8.00% 5.25% 0% 8.95% 106

Union Bank of India 8.06% 5.00% 2% 8.06% 248

United Bank of India 8.00% 5.00% 0% 8.90% 197

Vijaya Bank 8.00% 5.50% 1% 9.02% 119

Weighted Average for 24 P.S BANKS 8.05% 5.33% 1.04% 8.58%


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44


Dear Friends, Bhopal - 09-02-2017

The Ray of Hope in 100% DA Neutralization Matter

On 01-02-2017; Hon’ble Supreme Court by a very brief order dismissed the appeals of

Bank Pensioners claiming parity of DA formula to pre-2002 retirees, more commonly known

as matter of 100% DA neutralization to these pensioners. Following were the appeals filed by

pensioners against the order of Div. Bench of High Court of Madras-

1. Civil Appeal No.8420 of 2013 filed by A.B. Kasturian & Oths Vs Canara Bank

2. Civil Appeal No.8424 of 2013 filed by C.R. Chandshekharan Vs Indian Overseas Bank

3. Civil Appeal No.8422 of 2013 filed by T.Valwan & oths. Vs Canara Bank

4. Civil Appeals Nos. 3762, 3763 & 3764 of 2014 filed by R.Balakrishna Bhat & oths Vs

Bank Of Baroda & Ors

The appeals filed by the pensioners were heard by Hon’ble Supreme Court and chronology

of the hearing dates is given here under –

PROCEEDINGS IN SUPREME COURT

1. On 16.09.2013- Civil Appeal No.8420 of 2013 filed by A.B. Kasturian & Oths Vs Canara

Bank, was admitted.- Leave granted. Hearing expedited.

It indicated that there existed constitutional or legal issue that was not properly

interpreted in the judgments of Madras High Court.

2. On 28.02.2014-Civil Appeals Nos. 3762, 3763 & 3764 of 2014 filed by R.Balakrishna

Bhat & oths Vs Bank Of Baroda & Ors,were admitted & tagged with above- These

Petitions were called on for hearing today. Leave granted. Tag with C.A. Nos.8420-

8421/2013

3. On 30.04.2014- This is an application for impleadment of the applicant namely, I.O.B.

Retirees' Association rep by its General Secretary. The application is allowed in terms of

the prayer made.

4. On 01.12.2015 - I.A. 3/2015, I.A. 4/2015 in Civil Appeal No.8424/2013

C.R.Chandrasekaran & Ors. Appellant(S) Versus Indian Overseas Bank & ANR.

Respondent(s) (for impleadment as party respondent and office report) The learned

counsel for the applicants in the applications for impleadment submits that in the facts

and circumstances of the case, the applicants may be permitted to be impleaded in the

proceedings. I.A. Nos. 3 and 4 of 2015 are allowed. Cause title be amended accordingly.

5. On 29.06-2016- I.A. 1-2/2015 In Civil Appeal Nos. 8420-8421/2013 - List the

applications along with main matters in the month of January, 2017.

6. 29.08.2016 - I.A. 2/2016 in Civil Appeal No(s). 8422/2013 T.V.Alwan & Ors.

Appellant(S) Versus Canara Bank Rep.By Chairman & Md & Anr. Respondent(s) (For

impleadment and office report) - Issue notice on I.A.2/2016.

7. On 15.09.2016 - I.A. 3-4/2016, I.A. 5-6/2016, I.A. 7&8/2016 in Civil Appeal Nos.8420-

8421/2013- Let reply be filed to applications for impleadment within fifteen days.

I.A.Nos.5-6 are allowed. Let amendment be carried out with respect to I.A.Nos.5-6

within seven days.

8. On 18.10.2016 - As per tracking report service of notice is complete in I.A No. 2/16 in

respect of proposed impleaded respondent but no one has entered appearance on his

behalf. Ld. Counsel for the parties have failed to file the statement of case within the

statutory period. Filing of Statement of Case is not mandatory as per amended Supreme

Court Rules, 2013. Viewed thus, the matter shall be processed for listing before the

Hon'ble Court for further orders.

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9. On 11.11.2016 - I.A. 2/2016 in Civil Appeal No(s). 8422/2013.Office report dated 20th

October, 2016 indicates that the service of notice is complete. Hence, the application for

impleadment of Indian Banks' Association (IBA) as respondent no. 3 is allowed.

10. On 01.02.2017- Heard learned counsel for the parties. We do not see any ground to

interfere with the impugned order(s). The civil appeals are, accordingly, dismissed. No

costs. Pending applications, if any, shall also stand disposed of.

Facts of the disputed matter –

On 28th June, 2005 pursuant to a Bipartite Settlement/joint note dated 2nd June, 2005 the

terms and conditions for payment of dearness relief on basic pension were altered. The

dearness relief to be paid to those who had retired between 1st April, 1998 and 31st

October,2002 was to be calculated on the basis of 4 points rise over 1684 points in the

quarterly average of the All India Average Consumer Price Index for Industrial Workers in the

series 1960=100. This calculation was to be made on a slab system; the rate of dearness

relief as a percentage of basic pension being different for each slab. However, those

employees who retired after 1st May, 2005 were entitled to dearness relief for 4 points rise

over 2288 points of the CPI at the rate of 0.18 per cent of the basic pension. As a result,

those who retired between 1st April, 1998 and 31st October, 2002 were paid less dearness

relief than those who retired after that date.

The neutralisation granted to the pre November 2002 retirees was less than 100 per cent on

some of the slabs, whereas those who retired post November, 2002 were entitled to 100 per

cent neutralisation of the cost of living index. This became the matter of dispute, and matter

reached to the Courts, by way of Writ Petitions.

The issue involved in the petitions was whether an invidious classification can be made

between employees, who retired before 1st November, 2002 and those who retired later

from the Bank, with respect to payment of dearness relief with their pension.

It is undisputed fact that the benefits of 100% DA neutralization will increase the quantum of

pension of employees retired before 1.11.2002.

The decisions of Hon'ble Supreme Court of India, in D.S.Nakara v. Union of India [(1983) 1

SCC 305], and in V.Kasturi v. State Bank of India [(1998) 8 SCC 30] held that by any

change/amendment in formula of computation of pension, increases the quantum of pension,

such amended formula will be treated as liberalized/additional benefit given under the

prevailing pension scheme and it will not be treated as New Pension Scheme. The benefit of

the liberalized formula will be given to all pensioners falling under the prevailing pension

scheme.

The Supreme Court has long back taking into consideration various judgment have clarified

the difference of New Scheme & Liberalized /Additional Benefit and also decided the

applicability of cut-off date as under- (Reference - Judgment by Hon’ble Justice

S.B.Majmudar and Hon’ble Justice M.Jagannadha Rao, Supreme Court in case of V.Kasturi Vs

State Bank of India on October 9, 1998.)

Quote -

Category I

“If the person retiring is eligible for pension at the time of his retirement and if he

survives till the time by subsequent amendment of the relevant pension scheme, he would

become eligible to get enhanced pension or would become eligible to get more pension as

per the new formula of computation of pension subsequently brought into force. He would be

entitled to get the benefit of the amended pension provision from the date of such

46


order as he would be a member of the very same class of pensioners when the additional

benefit is being conferred on all of them. In such a situation the additional benefit available

to the same class of pensioners cannot be denied to him on the ground that he had retired

prior to the date on which the aforesaid additional benefit was conferred on all the members

of the same class of pensioners who had survived by the time the scheme granting additional

benefit to these pensioners came into force. The line of decisions tracing their roots to the

ratio of Nakara’s case would cover this category of cases.”

Thus based on above ruling of apex court of the country, the improved formula that gives

100% DA neutralization should have been given to all the Bank Pensioners, which was

denied by Public Sector Banks.

HISTORY OF LITAGATION IN THE MATTER

SINGLE BENCH OF MADRAS HIGH COURT

Some of the aggrieved pensioners filed Writ petitions in Madras High Court against Canara

Bank, Bank of Baroda & Indian Overseas Bank.

A Single Bench of Madras Court taking into consideration the Judgment by Hon’ble Supreme

Court in case of V.Kasturi Vs State Bank of India held that improved formula of 100% DA

neutralization is additional benefit and not the new pension scheme; hence it would extend

even to the employees who retired before 1.11.2002. On 14.12.2012 single judge of Madras

High Court passed order that petitioners who retired prior to 01.11.2002 are also eligible for

100% neutralization in Dearness Relief as this liberalized benefit is granted to pensioners

who retired on or after 01.11.2002.

DIVISION BENCH OF MADRAS HIGH COURT REVERSED THE SINGLE BENCH

JUGDMENT ORDER

Aggrieved by decision OF Div Bench – Petitioner Shri A. B. Kasturirangan & others had filed

special leave petitions in 2013 which were admitted on 16.9.2013 in Supreme Court. It

indicated that there existed constitutional or legal issue that was not properly interpreted in

above two judgments of Madras High Court.

But now the order dated 01.02.2017 of Hon’ble Supreme Court by single sentence -

“We do not see any ground to interfere with the impugned order(s). The civil appeals are,

accordingly, dismissed”

It means that the grounds submitted by the pensioners in their appeals were not

such that might have attracted the interference of the Supreme Court. Higher

Courts act only on the basis of the grounds taken by the appellants, which must

elaborate / find & point out the misinterpretation of the law in decision of lower

courts.

I do not have the copy of the appeals of the pensioners filed in Supreme Court., but while

putting hereunder, the observations and findings of Div Bench of Madras High Court; I

submit my grounds that should have been taken up in the appeals before Hon’ble Supreme

Court-

Here are the observations and findings of Div Bench of Madras High Court -

1. The Hon’ble Division Bench had erred by not analyzing the very aspect of the

liberalized/additional benefit (As defined by Hon’ble Supreme Court In V.Kasturi Vs State

Bank of India Case mentioned by Single Judge) given under the prevailing pension

scheme. It was the very important and probably the only basis of judgment by single

bench, in allowing the WP of pensioners.

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The other observation & conclusion of Division Bench were as under –

1. Pension of petitioners is out of settlement and not on account of statutory right.

Grounds-

a. Hon’ble Division Bench had erred in deriving the finding that the Pension of the

pensioners is not account of Statutory Right. The pensioner being paid pension in terms of

Pension Regulations 1995.These Regulations have been framed in consonance and under

the powers conferred on the Bank under the Banking Companies Act. They have a

statutory force of law. The mandate of the Pension Regulations which have a statutory

force of law cannot be altered by a joint note. It had already been admitted by the Banks

before Hon’ble Supreme Court in cases mentioned at para (b) & (c) below, and the fact is

that the Pension Regulations 1995 are Statutory in nature. The eligible pensioners

obviously have statutory right to get the pension under these Pension Regulations and not

on account of any Bipartite Settlement.

b. In Civil Appeal No. 1942 of 2009 in case of Bank Of India & Anr vs K.Mohandas & Ors

decided by Hon’ble Supreme Court on 27 March, 2009, the Banks namely -Bank of India,

Union Bank of India, Punjab & Sind Bank, Punjab National Bank, United Bank of India had

made submissions to Supreme Court as under reflected at para 39 of the judgment-

“39. On behalf of the banks, it was contended that Pension Regulations, 1995, are

statutory in nature and these Regulations cannot be altered, amended or read down in

view of any contract or a contractual scheme.”

c. Similarly in Civil Appeal No. 5398 of 2010 decided by Hon’ble Supreme Court on

13.02.2014 the Allahabad bank had made submissions as under at para 44 of the

judgment-

“44. On behalf of the banks, it was contended that the Pension Regulations, 1995 are

statutory in nature and these Regulations cannot be altered, amended or read down in

view of any contract or a contractual scheme.”

2. Pension of petitioners is not falling under 8th Bipartite Settlement/Joint Note. The plea of

the Banks was that the settlement arrived in terms of the provisions of the Industrial

Disputes Act, 1947 would bind the parties and since the benefit of pension conferred on

the respondents not on account of statutory right but only on account of the settlement,

they are not entitled to the benefits of the 8th Bipartite Settlement/Joint Note.

Grounds –

It is true that pensioners are not entitled to other benefits given in the 8th Bipartite

Settlement, which is meant mainly for Pay Revisions of working employees in service. But

it is equally true that in the subjected 8th Bipartite Settlement, the DA formula on pension

has been revised upward, and the pensioners were subjected to such changed DA formula.

This is the only one area of the Settlement that had benefited the pensioners. DA formula

has been revised upward, making it more beneficial for pensioners. The Pension

Regulations 1995 include the payment of DA on pension. The Pension Regulations 1995

cover the pensioners who retired from 1.1.1986 onwards till date, including those who

retired under the period of 8th Bipartite Settlement. These pension rules are to decide

calculation of Pension and Dearness Allowance payable to pensioners. As all the pensioners

are covered under Pension Regulations 1995, & thus forming a class are entitled to this

upward revision of DA formula introduced in 8th Bipartite Settlement in terms of ruling by

Honb’le Supreme Court in case of D.S.Nakara Vs Union of India decision [(1983) 1 SCC

305] and V.Kasturi Vs State Bank of India- decision dated October 9, 1998.

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The Hon’ble Division Bench had erred in accepting the plea of Banks that the Settlement is

binding on the pensioners. The pensioners are not a party to the Bipartite Settlement

which resulted in the joint note. Therefore, the Bipartite Settlement cannot contain

provisions which would be to the detriment of retired employees. All the retired employees

form a class by themselves vis-a-vis the employees who are working. The circulars or joint

notes issued cannot bind the retired employees especially if they are adverse to their

interest

The Hon’ble Division Bench had further erred in accepting the plea of Banks that pension

conferred on the respondents not on account of statutory right, without analyzing the

Statutory Status of Pension Regulations 1995, as discussed at point no. 1(a) to 1(c)

above.

3. When two sets of employees of the same rank retire at different points of time, one set

cannot claim the benefit extended to the other set on the ground that they are ‘similarly

situated’ and though they are retired with the same rank, they are not of the same class

or homogenous group and hence article 14 of the Constitution of India has no application.

(Article 14 – refers to equality before Law). The division bench further held that the

Nakara decision [(1983) 1 SCC 305], did not direct the payment of an equal amount of

pension to all pensioners.

Ground -

The Division bench has erred in taking the perception that the pensioners are asking for

payment of equal amount of pension to the employees of the same rank retired at

different points of time. The dispute is for giving equal treatment of 100% DA

neutralization under the new liberalized formula, to all the pensioners governed by same

Pension Regulation 1995 in the line of the judgment by Hon’ble Supreme Court in case of

V.Kasturi vs State Bank of India.

4. The division bench took the plea that Nakara decision [(1983) 1 SCC 305] did not direct

the payment of an equal amount of pension to all pensioners & referred the para 49 of

the judgment that is as under -) as under-

“In our opinion, it would make a marginal difference in the case of past pensioners

because the emoluments are not revised. The last revision of emoluments was as per the

recommendation of the Third Pay Commission (Raghubar Dayal Commission). If the

emoluments remain the same, the computation of average emoluments under amended

Rule 34 may raise the average emoluments, the period of averaging being reduced from

last 36 months to last 10 months. The slab will provide slightly higher pension and if

someone reaches the maximum the old lower ceiling will not deny him what is otherwise

justly due on computation.”

Ground- The Division Bench has erred in taking only a part of the para 49 from the

referred judgment - Nakara decision [(1983) 1 SCC 305]. The full para 49 reads as under

– Quote -

“49. But we make it abundantly clear that arrears are not required to be made because to

that extent the scheme is prospective. All pensioners wherever they retired would be

covered by the liberalised pension scheme, because the scheme is a scheme for payment

of pension to a pensioner governed by 1972 Rules. The date of retirement is irrelevant.

But the revised scheme would be operative from the date mentioned in the scheme and

would bring under its umbrella all existing pensioners and those who retired subsequent

to that date. In case of pensioners, who retired prior to the specified date, their pension

would be computed afresh and would be payable in future commencing from the specified

49


date. No arrears would be payable. And that would take care of the grievance of

retrospectively. In our opinion, it would make a marginal difference in the case of

past pensioners because the emoluments are not revised. The last revision of

emoluments was as per the recommendation of the Third Pay Commission

(Raghubir Dayal Commission). If the emoluments remain the same, the

computation of average emoluments under amended Rule 34 may raise the

average emoluments, the period for averaging being reduced from last 36

months to last 10 months. The slab will provide slightly higher pension and if

someone reaches the maximum the old lower ceiling will not deny him what is

otherwise justly due on computation. The words "who were in service on 31st March,

1979 and retiring from service on or after the date" excluding the date for

commencement of revision are words of limitation introducing the mischief and are

vulnerable as denying equality and introducing an arbitrary fortuitous circumstance can

be severed without impairing the formula. Therefore, there is absolutely no difficulty in

removing the arbitrary and discriminatory portion of the scheme and it can be easily

severed.”

The Hon’ble Supreme Court had in the para 49 (Remaining Portion in RED not taken

by Division Bench) clearly spelt out that the word “who are in service on ……and retiring

from service on or after the date ……“are words of limitation introducing the mischief and

are vulnerable as denying equality and introducing an arbitrary fortuitous circumstance

can be severed without impairing the formula. Therefore, there is absolutely no difficulty

in removing the arbitrary and discriminatory portion of the scheme.

In case of Bank pensioners in 8th Bipartite Settlement, the 100% DA neutralization

formula was made applicable to the employees who are in service on 1.11.2002 and

retiring from service on or after 1.11.2002 and in the light of the above para if read in

full from Nakara Judgment, it clearly held that this limitation is arbitrary and

discriminatory.

5. The benefits arising out of wage revision under 8th BPS w.e.f. 01.11.2002 towards

Dearness Relief at 100% neutralization cannot be granted to employees retired in the

period of earlier BPS i.e. 7th BPS because retirees prior to 01.11.2002 and retirees after

01.11.2002 cannot be said to be ‘similarly placed’.

Ground –

The benefit of upward revision of DA formula that provides for 100% DA neutralization

has been granted in 8th Bipartite Settlement. From amongst many terms of the

settlement, this is the only part of the settlement for which the pensioners retired in the

period of earlier settlements have become eligible for the sole reason that all the

pensioners irrespective of their retirement dates are governed by same Pension

Regulation 1995 and form a homogeneous group for the purpose of pension payments as

per Pension Rule. Thus all the past retired pensioners are very much similarly placed for

this one component of 8th Bipartite Settlement that improved the DA formula, upward

from tapered rates to provide for 100% DA neutralization. Upward revision of DA formula

amounts to liberalized /additional benefit, for which all the pensioners coming under

Pension Regulations 1995 are very much similarly placed in the lines of decisions by

Hon’ble Supreme Court in case of Nakara and V.Kasturi Vs State Bank of India.

6. The division bench also discussed on the financial impact of the formula on the resources

of the Public Sector Bank, where Banks have pleaded that if 100% D.A. Neutralization

demand to pre-November 2002 retirees is considered favourably during 10th BPS

50


Negotiations – there will be considerable financial burden which will have to be carved out

from wage increase package meant for staff in service.

Ground -

The effect of the joint note is that employees who retired before the cut-off date would

get dearness relief at a lower rate than those who retired after that date. The dearness

relief paid is relatable to the cost of living index and varies in direct proportion to the

same. It must be borne in mind that dearness relief is an amount paid to the retirees to

neutralise the astronomical rise in prices. The object of paying dearness relief is the

same, irrespective of the date on which the employee retires. Inflation hits the employees

who retire before the cut-off date as hard as it does those who retire later. Therefore the

dearness relief cannot be different for two sets of retirees.

Pension Regulations 1995 are statutory in nature and provides for payment of pension

with DA, which is the statutory liability of the Banks to pay pension to eligible pensioners.

It is now well-settled that pension is property as understood under Article 300A of the

Constitution of India. Therefore, the right to property cannot be taken away without due

process of law in consonance of Article 300A of the Constitution of India. Thus in the

name of financial burden ,any part of the pension, including upward revised DA, cannot

be taken away by the joint note as joint note cannot constitute “law” as understood in

Article 300A and further the joint note which discriminates between retirees cannot have

the force of law.

7. The Div bench further pointed out that as agreed for the purpose of this settlement, the

additional cost of pension be shared between the parties at the ratio as agreed and

pension coasted accordingly. Thus we find force in the submission made by the learned

counsel for the appellants that, by virtue of the orders allowing the writ petitions, the

appellants have to contribute more to the said Fund and it would definitely cause financial

burden not only on the Banks but the employees who have to share it at the ratio agreed.

Ground –

In terms of Regulation-5 & Regulation -11 of Pension Regulations 1995 Banks are to

constitute Pension Fund and it no where suggest or stipulates that the pension costs as

valued by Actuaries every year at the year ended March will be shared by the employees.

The Regulation -5 & 11 read as under –

Regulation – 5 - Constitution of the Fund.

(1) The Bank shall constitute a Fund to be called the "……………. Bank (Employees') Pension

Fund" under an irrevocable trust within, one hundred twenty days from the notified date.

(2) The Fund shall have for its sole purpose the provision of the payment of pension or

family pension in accordance with these regulations to the employee or his family.

(3) 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.

Regulation – 11 -Actuarial investigation of the Fund.

The Bank shall cause an investigation to be made by an Actuary into the financial

condition of the Fund every financial year on the 31st day of March, and make such

additional annual contributions to the Fund as may be required to secure payment of the

benefits under these regulations:

51


Provided that the Bank shall cause an investigation to be made by an actuary into the

financial condition of the fund, as on the 31st day of March immediately following the

financial year in which the Fund is constituted.

In the light of the above provisions of Pension Regulations 1995, the agreed sharing in

Bipartite Settlement, should not form any basis and legally also cannot take away the due

benefit of the pensioners, who in any way never had been party to such Bipartite

Settlements signed between Banks and Unions of bank Employees.

Any way now the position is that Supreme Court has dismissed the appeals of

pensioners in 100% DA neutralization matter. As I.O.B. Retirees Association was

the intervener in appeals, it is hoped that they may think of filing Review Petition

in Supreme Court in the larger interest of Bank Pensioners Community.

Now what next –

Let us not loose hopes. The ray of light is appearing from the judgment of Calcutta High

Court dated 26-09-2016 amended on 05-12-2016, in case of United Bank of India & Ors

Vs United Bank of India Retirees Welfare Association & Ors in the same matter of 100%

DA neutralization. Till date action of Bank on payment of 100% DA neutralization to

pensioners of United Bank of India is not known. If Bank pays, we have the scope and if

Bank prefers filing appeal in Supreme Court (Not yet reflected on web site of Supreme

Court), the matter can be intervened by Retirees Associations, for which we must convince

our Associations.

Please inform the action taken by United Bank of India after the mentioned judgment of

High Court of Calcutta.

Yours


P.S. – At point No 7 the Banks have pleaded for costs & sharing by employees.

Now I will start working on the value of curtailed benefits of the pensioners in bipartite

settlements from 1993 till 2012 & share contributed by employees for increased pension

costs. You will soon receive the above data.

*****************

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SUBJECTS- Banks Saved Rs. Rs.11666.93 Crores by curtailing benefits of the

employees and delaying dues of pensioners.

1. By Sharing Pension Cost with Employees in Pay Revisions- Rs.3603.71 Crores.

2. By Curtailing Benefits of Bank Pensioners- Rs. 8163.22 Crores.

3. Banks Earned By Denying/Delaying Legitimate Dues of Pensioners –Rs. 5816.18

Background –

The Division Bench of High Court of Madras in W.A.Nos.355 of 2013 and W.A.Nos.688

to 690 of 2013, decided by High Court on 17.06.2013, against the Pensioners, accepted the

plea of the Banks that the improved 100% DA formula given from 1.2.2005, is mainly on

account of Bipartite Settlement applicable to Pensioners retired after 31.10.2002. This

improvement was not considered applicable to pensioner retired before 1.11.2002. The other

plea was on account of cost of pension shared by the employees as agreed under that

Bipartite Settlement. The Hon’ble Judges accepted the said arguments of the Banks, at para

42 of the judgment. It is mentioned as under -

Quote –

42. The appellants also pleaded financial burden on account of upholding of the claim …

……….The said relief granted to the respondents/writ petitioners would definitely result in

huge financial burden to the appellants/Public Sector Banks and as per Regulation 5 of the

Pension Regulations, the Banks shall constitute a Fund and it shall be a contributor to the

said Fund so as to enable the Trustees to make due payments to beneficiaries covered under

the Regulations. From the 8th Bipartite Settlement entered into between the Indian Banks'

Association and the various Banks' Associations, we find that the parties had agreed, after

negotiations, that the total quantum of wage increase arising out of settlement to be

signed in this regard shall be Rs.1288 crores per annum including the cost of

superannuation benefits. It was further agreed that for the purpose of this settlement, the

additional cost of pension be shared between the parties at the ratio as agreed and pension

costed accordingly. Thus we find force in the submission made by the learned counsel for the

appellants that, by virtue of the orders allowing the writ petitions, the appellants have to

contribute more to the said Fund and it would definitely cause financial burden not only

on the Banks but the employees who have to share it at the ratio agreed. The

learned Single Judge has not taken into consideration the factual and legal aspects in proper

perspective and therefore, the impugned common order allowing the writ petitions warrants

interference”

The cost sharing thus became the prime reason for reversing the order of Single Judge,

which otherwise was in favor of pensioners.

The appeals of pensioners were also dismissed by Hon’ble Supreme Court on 1.02.2017.

Here it was comfortably forgotten/not brought on the records by both the parties, that in

subsequent Settlement, the costing of Pension liability was done by the Actuaries as of

March-2008 for retirees of earlier periods from Sept-1995 till March-2008 and also for

employees who were under CPF as on March-2008, with improved DA formula of 100%

Neutralizations @ 0.18% on full basic pension and the employees as well as retirees were

made to contribute for costed gap of Rs.6001.80 crores and Rs.934.50 crores respectively.

For this purpose retires were made to contribute 56% of CPF on returning back the CPF

amounts.

53


Agreements For Sharing The Additional Pension Costs By Employees –

Despite the fact that Pension Regulation 1995, nowhere suggests for sharing of

increased pension costs, the employees were made to contribute for pension costs. The

Regulation- 11 of Pension Regulations 1995 reads – “Regulation- 11 - Actuarial

investigation of the Fund - The Bank shall cause an investigation to be made by an

Actuary into the financial condition of the Fund every financial year on the 31st day of March,

and make such additional annual contributions to the Fund as may be required to

secure payment of the benefits under these regulations.”

Here are the extracts from the MOU/Record Notes in the matter of Pay Revisions. The

matter of pension were also discussed mainly on the point of sharing of increased pensions

costs, and contrary to Regulation No 11 of Pension Regulations 1995, where only the Banks

are to contribute in pension funds, the employees were made to contribute as mentioned

here under-

1. REVISION FOR 1998-02 - MOU 11-03-1999

PENSION FROM 1.4.1998 - 31.10.2002

The parties initially agreed after prolonged negotiations that the total quantum of wage

increase arising out of a Settlement to be signed in this regard shall be 12.25% of the wage

bill of workmen employees for the year ended 31st March, 1997 including the cost of

superannuation benefits and accordingly signed a Memorandum of Understanding on 11th

March, 1999 at Mumbai. It is agreed that for the purpose of this Settlement Pension be

costed at 18.25% of the incremental. Pay arrived at by merger of Dearness Allowance at CPI

1616 points with the Pay as per the Settlement dated 14th February, 1995 and 14th

December, 1996.

Note - Here the Pension of the retirees was agreed to be fixed lower than what

it should have been at revised pay at 1684 CPI. Benefit of retires curtailed to

accommodate the demand of employees in service.

2. REVISION FOR 2002-07- Joint Note on Salary Revision dated 2nd June, 2005

RECORD NOTE OF DISCUSSIONS HELD ON VARIOUS DATES BETWEEN INDIAN

BANKS’ASSOCIATION REPRESENTING MEMBER BANKS AND AUTHORISED

REPRESENTATIVES OF WORKMEN UNIONS AND OFFICERS ASSOCIATIONS IN THE

MATTER OF PENSION

* These retirees between 01.04.1998 and 30.04.2005 will have their pension re-fixed

accordingly w.e.f. 01.05.2005 but no arrears of pension and commuted value of

pension is payable on account of such refixing of pension.

Note - Correction of MOU dated 11.3.1999 at Point No. 1 above done but arrears

curtailed.

* In respect of an employee retiring on or after 01.05. 2005, “average emoluments” as

defined in Pension Regulations for the purpose of pension, be calculated reckoning pay last

drawn during the last ten months of the employees’ service in the Bank.

* Since this is an improvement over the existing provisions, in view of the legal decisions

obtaining in the matter, the pension of retirees of the period 01. 04.1998 to 30.04. 2005 is

to be re-fixed with effect from 01.05.2005 reckoning actual ‘pay’ drawn by them prior to

retirement, i.e. during the last ten months of service in the Bank.

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* The total cost to banks on account of such re-fixation in respect of retirees of the period

01.11.2002 to 30.04.2005 will be costed and taken together with the additional cost of

pension in respect of serving employees who are members of the pension Fund.

* In respect of retirees of the period 01.04.1998 to 31.10.2002, the additional cost on

account of refixation shall be shared equally between the banks and the employees

(officers and workmen),reckoning the annual additional cost which has been determined

at Rs. 62 crores.

Note - Here the at the cost of employees in service, the due & legal benefit of

earlier period retirees was restored.

Costing of Pension

In the last wage revision settlement, the additional cost of pension to banks was reckoned

at 16.5% of the pensionable pay of each member of the Fund and for the purpose of wage

revision, the additional cost to banks on account of increase in pay was shared equally

between banks and the employees at 8.25% of pensionable pay.

During the period since then, influenced by market factors, the cost of pension to banks had

gone up and IBA had placed the additional cost of pension to banks at 20.5% of the

pensionable pay. Following the procedure adopted in the last wage revision, this would have

meant sharing the total cost at 10.25% each by both the parties. While the Unions/

Associations were not agreeable for any increase in the additional costing more than 8.25%

however, after detailed discussions, it was agreed to reckon the total cost over and above

16.5% to be borne by the employees (Officers and Workmen) at Rs. 36 crores p.a This

would translate to the employees sharing the additional cost at 9.25% of pensionable pay

and the banks bearing the cost of the remaining 11.25%.

It is thus clear that employees share of additional pension cost was valued at Rs.36

crores per annum, as on March-2002 for pay revision for the settlement period from

1.11.2002 to 31.10.2007.

It may also be noted that Pension of the retirees on or after 1.5.2005, “average

emoluments” as defined in Pension Regulations for the purpose of pension, be calculated

reckoning pay last drawn during the last ten months, were taken for Pension Fitment, which

for the retirees of the Period from 1.4.1998 to 30.4.2005 was at pre-revised Basic pay with

DA of 1616 CPI, for pension purpose.

It is more interesting to note here that the agreement incorporates following sentence-

“Since this is an improvement over the existing provisions, in view of the legal

decisions obtaining in the matter, the pension of retirees of the period 01. 04.1998 to

30.04. 2005 is to be re-fixed with effect from 01.05.2005 reckoning actual ‘pay’ drawn by

them prior to retirement.”

Here IBA had clearly agreed the fixing of Pension, calculated on “average

emoluments” reckoning pay last drawn during the last ten months In respect of an employee

retiring on or after 01.05. 2005, is an improvement and such improvement has to be

given to all similarly placed retirees in the light of legal decisions obtaining as such

the pension of retirees of the period from 1.4.1998 to 31.04.2005 , who were being paid

pension at 1616 CPI were also given the benefit.

It is surprising that re-fixation formula of Pension is considered as improvement

applicable to all similarly placed retirees in the light of legal decisions obtaining,

but improvement in DA formula making it 100% DA neutralized, and given in the same

55


settlement, is not considered applicable to all similarly placed retirees, as pleaded by

Banks before Division bench of Madras High Court.

It is much more surprising that for bringing the parity by re-fixation of pension, of the

retirees of earlier settlement period from 1.4.1998 to 31.10.2002, the resultant increase in

pension cost on account of retirees was shared by the working employees. It goes

against the plea submitted before the Madras High Court in the case of 100% DA

neutralization to pensioners referred above.

This re-fixation of pension of earlier retirees costed at Rs 62 crores per annum

as on March – 2002. It was agreed to be shared equally and employees were made to

contribute funds, for the pensioners of earlier retired period also amounting to Rs.31 crores.

Thus under the Bipartite Settlement for the period from 1.11.2002 to 31.10.2007, the

working employees shared the increased pension costs at Rs.36 for self + Rs.31 for earlier

retirees = Rs.67 Crores Per Annum valued as on March 2002.

Note - The piece of cake taken away from the due share of Pensioner (1.4.98 to

31.10.2002 fitted at 1616 CPI) was thus returned back to them by taking it away

from the share of working employees. A good brain game played by IBA and made

the employees/retirees feel happy that their pension is re-fixed.

The quantity of offered cake is first mutually decided & fixed. Thereafter if

employees demand for more, cut the share of retirees and if retirees are entitled

for more legally, cut the share of employees. This had been the policy of IBA. In the

process the retiree’s dues have been curtailed every time from 1993 onwards in

every Bipartite Settlement. The figures will be advised in this letter.

HOW THE SHARE OF EMPLOYEES IS CONTRIBUTED

TOWARDS INCRAESED PENSION COST

Now obviously question will arise as to how the employees had been contributing for

increased pension costs as shown in Bipartite Settlements.

The simple way out evolved is, to derive the Revised Pay Scales in such a manner

that, it should reduce the costed pension liability to the extent of employees agreed

contribution. This makes increase in pay lesser than what should be as per calculations made

with merger of DA Slabs and agreed percentage increase. This type of set–off will take care

of the pension cost to be shared by the employees.

Example –

1. In Pay Revision of 2002-07, after merger of DA of 151 Slabs, increase of 13.25% was

agreed and Settlement Signed. Now take officer at 9th stage of officer Scale – I

B.Pay Old Scale

DA of 151 Pay with DA Pay with Increase B.Pay In Revised Scale

Set off for Pension Cost

% Set off

9820 3394.48 13214 14965 13820 -1145 -7.65%

2. In Pay Revision of 2007-12, after merger of DA of 137 Slabs, increase of 17.5% is

agreed and Settlement Signed. Now take officer at 11th stage of officer Scale – I

B.Pay Old Scale

DA of 137 Pay with DA Pay with Increase B.Pay In Revised Scale

Set off for Pension Cost

% Set off

14880 3669.41 18549.41 21796 20900 -896 -4.11%

But it was never thought that it is not only contrary to Reg-11 of Pension Regulations

1995, but the CPF optees were also unnecessary taxed by such set-off.

56


Banks could not draw two types of Pay Scales- one applicable to those who are under

Pension and other for those who are under CPF. The easier way was adopted and Banks

saved a lot of money by such set-off from CPF optees for years together.

The employees of State Bank of India are not getting Industry wide Pension under

Pension Regulations 1995.The Pension Scheme of SBI is different. But by the set off

for Pension costs, the Pay Scales of SBI, employees are also lowered being same to

all Banks. Such allowance was payable to officers and employees of S.B.I/at 6.5%

and 6.4% respectively, of their revised basic pay, from 1.11.2007.

Reference - State Bank of India Officers Association, Hyderabad Circle, Circular

No. 4 of 28.1.2011 may be referred.

The CPF opted employees, who were not entitled for Pension, were also subjected to

sharing the Pension Costs by Public Sector Banks, from Nov-1997 onwards but never were

compensated as in case of State Bank of India mentioned above.

In Ninth Bipartite Settlement the CPF optees (Employees & Retirees) were given

pension option with condition that employees to pay 2.8 Months Pay of Nov-2007 and

retirees, retired till 27.4.2010 to pay 156% of CPF amount, they had received on

retirements.

The Actuarial Valuation reflected that, Pension Fund needed at Rs.17533.80 crores, as

on March-2008 for 272092 CPF employees and gap of Rs.6001.80 crores was there in

comparison to balance of CPF amount of these 272092 employees.

The Actuarial Valuation for 35380 retirees of the period from Sept-1995 to March –

2008, was also done & it was at Rs.4627.33 Crores, and the gap calculated was of Rs.3115

crores.

Total fund need was of Rs. Rs.17533.80 + Rs.4627.33 = Rs 22161.13 Crores for CPF

employee.

By the time the agreement was reached the number of retired employees increased

by 15324 to reduce the CPF employees in service to 256768.Thus total amount collected

from these CPF employees being 2.8 Month’s Pay amounted to Rs 1688.10 crores. The

amount @ 156% of CPF amount got back from 50704 retired employees was Rs. 3712.28.

Total amount so received was Rs. Rs.5400.38 Crores.

The CPF fund which was Rs 11532.00 Crores in March 2008 got reduced by Rs 662

Crores on retirement of 15324 employees from 1.4.2008 to April-2010. It was thus Rs.10910

crores. Adding Rs. 5400.38 crores as above the total comes to Rs.16310.38 crores.

The gap assessed as above and was to be met by Banks was thus Rs. Rs 22161.13

less Rs.16310.38 = Rs.5850.75 Crores actually, as against calculated by IBA at Rs.

6381.76 Crores.

(At Rs 6001.80 less 1800.54 = 4201.26 for employees, plus at Rs.3115 less 934.50

= Rs. 2180.5 for retirees-= Total gap Rs. 6381.76 Crores that was meant to be met by

Banks)

But it cannot be forgotten that the CPF opted employees were also subjected to

sharing the Pension Costs, by set- off in salary from Nov-1997 onwards, in all three Bipartite

Settlements. The sharing of Pension costs by setting off in pay was done at following rates

and accordingly quantum calculated is given in Tables below.

57


Load Shared By Employees - Based On Record Note Dated 22 June -05 (Rs Crores) For Pension Total Amt.

Settlement Full Load Increase Total Employees Amount at 1684 CPI Set Off in

Block of Pay In Pension Amt of Share Set off in Pay Given - Cost Pay of

Period Revision Costs % Pens. Cost % of Cost Of Employees Employees Share

Employees

1997-02 817.81 26.50% 65.49 8.25% 20.39 0.00 20.39

2002-07 1288.00 30.50% 118.70 9.25% 36.00 31.00 67.00

2007-12 2980.00 36.00% 324.16 13.00% 117.06 0.00 117.06

The above figures of load per annum on Pay Revisions are taken from the Bipartite

Settlements as under –

Period Pay Increase Pension Cost Share Load- P.A. As On Signed On Settlement

1997-02 12.25% 26.50% 8.25% 817.81 31-Mar-97 27.03.2000 VII

2002-07 13.25% 30.50% 9.25% 1288.00 31-Mar-02 02.06.2005 VIII

2007-12 17.50% 36.00% 13.00% 2980.00 31-Mar-08 27.04.2010 IX

The subjected CPF employees for sharing cost of pension were as under -

No of CPF Optees Retired No of CPF Optees Retired

No of Serving CPF CPF Employees

CPF Employees As On From To

30-Sep-95 31-Mar-98 1680 307472 31-09-1995

1-Apr-98 31-Oct-02 9150 305972 31-03-1998

1-Nov-02 31-Mar-08 24550 296642 31-10-2002

1-April-08 27-April-2010 15324 272092 31-03-2008

Total CPF Retire 50704 256768 27-04-2010

The calculation of values of money by such set off in Pay of CPF Employees; with DA

thereon as per increasing CPI numbers from 1997 was done. Even small trader knows the

importance of time value of money. He tries to delay the payment of dues and in the interim

period, by time value of money, saves cost and increases profits. The Banks best know the

Time Value of Money.

The money so saved by the Banks, from the said set - off from pay of CPF optees,

who were not party to Pension costs, but were subjected to sharing the Pension Costs from

Nov -1997 onwards. During this period, Banks curtailed their pay for sharing the pension

costs and earned interest at least @10% per annum on the accumulating such set-off

amounts. Banks did not pay to them any allowance as was given by SBI, to its employees

who are not party for Pension Regulations 1995.

The Value of this money as in Jan-2017 is calculated and is given here under-

Value Of Set off in Salary from 1997 to 2012 P.S. Bank Employees for Sharing Pension Costs

For Pay No. of PS Bank Employees Qtly Amt Value

Revisions of Total CPF Set Off (Crs) Jan-17

1997 -02 637000 305792 5.1 697.38

Set Off Amt. 697.38 334.78 Mar-97 Crores

2002-07 538000 296642 16.7500 1297.03


2007-12 528000 272092 29.265 1509.3


Total Set Amt 3503.71 1827.73

3503.71

58


As mentioned above the apparent gap to be met by Banks remained at Rs.5850.75 Crores.

But by various types of curtailments – Lower Gratuity to retirees of 1993-94, Effective Date

of Pay Revision extended to 1.4.98, No arrears on pension at 1616 CPI, delayed benefit of

Reg-29(5) etc, the value of unpaid dues of pensioners is calculated to be at Rs.3981.08

crores. The charts are annexed below. The amount saved on 100% DA neutralization alone is

Rs. 4182.14 crores. Total value of curtailments are shown hereunder-

1. The value of set-off money for sharing pension costs - Rs.3503.71 Crores

2. Various other curtailments, Rs.3981.08 Crores

a. Lower Gratuity to retirees of 1993-94,

b. Effective Date of Pay Revision extended to 1.4.98,

c. No arrears on pension at 1616 CPI,

d. Delayed benefit of Reg-29(5)

3. The value of unpaid 100% DA neutralization- Rs.4182.14 Crores

Total Value of all curtailments Rs.11666.93 Crores

Thus in fact Banks have saved money to the tune of Rs 5816.18 crores (11666.93 less

5850.75) in the process, always made complicated for retirees under pension.

Now in the Pay Revision for the period from 1.11.2012 to 31.10.2017, new concept of

increase in Pay Slip was evolved and by offering such increase of 15%, with no sharing of

Pension Costs, the employees felt very happy.

The main problem in sharing this time would have been the employees appointed after

31.03.2010, who are not under pension and they are young enough to vehemently oppose

the concept of set-off from pay for meeting increased Pension Costs.

The hidden agenda, while fully met by Banks, it was finally disclosed that the increase

in Pensions is only of 3.02% to retirees of the period from 1.11.2012, although Pay increase

was of 15%. Here the Banks have saved 3% of Pension Costs. For increase of 3.2% in Pay

for Pension Purpose, the increased Cost of Pension was only 7%, whereas in all earlier

settlements; share of Banks had been minimum statutory at 10%, and thereafter added by

sharing with employees. It was 16.5%, 20.75% and 26% by Banks in last three settlements.

Thus by offering increase of 15% in Pay Slip & No Pension Cost on employees, the Banks

achieved dual objects- one lowered the Pension of all future retirees as otherwise would had

been by giving 10 to 15% increase in Pay after merger of DA of 401 slabs and second

reduced their load Pension Cost on increase of Pay.

Chart on values of 100% DA neutralization denied to Pensioners by IBA

ESTIMATED AMOUNT OF DA PAYABLE FROM 1-05-2005 TO 31-12-2016 – YEARWISE - Rs. Crores

Annual Amount Payable To Eligible Survived Pensioners For F.Y 2005-06 to 2010-11 - Rs Crores

To Retiree For Period For Period For Period For Period For Period For Period Total Sum

of Period 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2005 to 2011

1986-87 0.49 0.55 0.57 0.59 0.63 0.69 3.52

1987-92 8.07 9.19 9.62 10.15 10.98 12.14 60.15

1992-98 13.41 15.85 17.21 18.89 21.36 24.78 111.5

1998-02 13.89 17.4 19.93 23.02 27.51 33.68 135.43

VRS-2000 49.55 62.37 71.77 83.36 100.16 123.39 490.6

Total for Year 85.41 105.36 119.1 136.01 160.64 194.68 801.2

Intt @10% 4.32 20.25 34.72 52.44 74.56 102.52 288.81

Cumulative 89.73 215.35 369.17 557.62 792.83 1090.02 1090.01

59


ESTIMATED AMOUNT OF DA PAYABLE FROM 1-04-2011 TO 31-12-2016 – YEARWISE - Rs. Crores

Annual Amount Payable To Eligible Survived Pensioners For F.Y.2011-12 to Dec-2016 - Rs Crores

To Retiree For Period For Period For Period For Period For Period Apr-16 Total Sum

of Period 2011-12 2012-13 2013-14 2014-15 2015-16 Dec-16 2005 to 2016 1986-87 0.71 0.74 0.76 0.75 0.71 0.52 7.71

1987-92 12.83 13.55 14.35 14.67 14.56 10.89 141

1992-98 27.16 29.81 32.89 34.93 36.06 28.09 300.44

1998-02 38.2 43.3 49.27 53.6 56.46 45.02 421.28

VRS-2000 140.93 160.97 184.66 202.74 215.76 174 1569.66

Total for Year 219.83 248.37 281.93 306.69 323.55 258.51 2440.08

Intt @10% 135.98 175.88 223.41 278.44 340.93 298.61 1742.06

Cumulative 1445.83 1870.08 2375.42 2960.54 3625.03 4182.14 4182.14

Chart on values of various types of curtailments effected by IBA

On dues of Pensioners in Bipartite Settlement

Revision Head Number Per Head Rs. Amount Crs Value Dec-16

Unpaid

VI BPS Gratuity 2200 23600 5.19 50.34 50.34

Effective Date of Pay Revision extended to 1.4.98 in place of 1.11-1997

Effected Commutation 2600 90880 23.63 162.14 Unpaid

Pensioners Pension 2600 166410 43.27 80.43 242.57

VII BPS At 1616 CPI In Stead of 1684 CPI

Normal Commutation 23810 37200 88.57 399.45 Unpaid

Normal Pension 23810 49515 117.89 367.11 766.56

VII BPS VRS 2000 & At 1616 CPI In Stead of 1684 CPI

No Reg-29 Commutation 41270 42030 173.46 801.81 Unpaid

No Reg-29 Pension 41270 34485 142.32 465.59 1267.40

Eligible Reg-29 Commutation 38090 38140 145.28 671.54

Eligible Reg-29 Pension 38090 32385 123.35 403.55 1075.09

VII BPS VRS 2000 Eligible Reg-29(5) Not Paid by 20 Banks Till Oct-2009

Eligible Reg-29 Commutation 34600 25310 87.57 202.76

Eligible Reg-29 Pension 34600 86927 190.59 300.77

Less Difference Paid In Nov -09 -77015 -266.47 -266.47

Curtailed Value of 34600 Pensioners till Oct -09 237.06 485.12 485.12

VII BPS VRS 2000 Eligible of Two Banks Not Paid Reg-29(5) Till March -2014

Eligible Reg-29 Commutation 1273 25310 3.22 11.63 Unpaid

Eligible Reg-29 Pension 1273 92017 11.71 23.29

Less Difference Paid In Marc-14

By Vijaya Bank 819 -92017 -7.54 -7.54

By Allahabad Bank 454 -219855 -9.98 -9.98

Curtailed Value of 1273 Pensioners till Mar-14 17.41 22.84 22.84

VII BPS VRS 2000 Eligible Reg-29(5) Not Paid by 4 Banks Till Dec-16



IX BPS But VRS 2000 of 4 Banks II Opted Not Paid Reg-29(5)



IX BPS VRS 2000 Eligible Reg-29(5) II Optees Paid in Feb -11 & Mar-14 Unpaid

II Opted Number 1550 Full Paid 0 NIL

Hope UFBU will understand the importance of preparedness while negotiating pay

revisions. 3981.08


60


Dear Friends, BHOPAL 11-03-2017

HOW BANK’S COMPLIED WITH THE STATUTORY

PENSION REGULATIONS 1995

PREAMBLE

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 enacted by

an ordinance No.3 of 1970, provided for the acquisition and transfer of the undertakings of

certain banking companies, in order to control the heights of the economy and to meet

progressively and serve better, the needs of development of the economy in conformity with

national policy and objectives. It aimed at the philosophy of welfare of the public through

State Owned Banks.

Thus Public Sector Banks came into existences that are `State' within the meaning of

Article 12 of the Constitution of India. As the Public Sector Banks are owned by Govt. which

has a goal of setting up of a welfare State, introduced a Pension Scheme as retrial benefit,

that is grounded on 'considerations of State obligation to its citizens’ who having

rendered service during the useful span of life must not be left to penury in their old age.

Thus Pension Regulations 1995 were enacted, under powers conferred by Clause (f) of

Section 19 (2) of the Banking Companies (Acquisitions and Transfer of Undertakings) Act,

1970. Hence, it is a statutory instrument. They were made by the bank in consultation with

the Reserve Bank of India, upon taking prior permission of the Central Government and had

been adopted by the Board of Directors.Thus it is expected from the Public Sectors Banks,

being in the role of “State” within the meaning of Article 12 of the Constitution of India, that

they will fulfill their obligations towards their pensioners, much more sincerely and liberally.

RULINGS OF HON’BLE COURTS RELATING TO PENSION

1. Hon’ble Supreme Court at paragraph 25 in U.P. Raghavendra Acharya & ors Vs State of

Karnataka & ors reported in (2006) 9 SCC 630 held that Pension is not a bounty or a

bonanza for an employee, without cavil. It is a measure of social welfare and is paid to a

retired employee for his meritorious service with the employer. In fact it is a deferred wage

which is paid to the employee. It is the property of an employee in terms of Article

300 A of Constitution of India. An employee cannot be deprived of his rightful

claim to pension except in accordance with law. The joint note cannot be

construed as “law” as it cannot govern the pension payable to retirees who were

not in service when it was issued.

2. Hon’ble High Court of Madras in Writ Appeal No.1209 of 2007 at para No 18 reconfirmed

the statutory status of Pension Regulations, 1995 that are framed in exercise of the

powers conferred by clause (f) of sub section (2) of Section 19 of the Banking Companies

(Acquisition and Transfer of Undertakings) Act and further by referring judgment of the

Hon’ble Supreme Court in Vidya Dhar Pande Vs. Vidyut Grih Sikshasamiti [(1988) 4 SCC

734] held that, they are having statutory force.

3. Hon’ble Supreme Court while deciding the Civil appeal No. 1942 of 2009 {Relating to REg-

29(5) applicable to SVRS 2000 pensioners} against Bank of India, Punjab National Bank,

Punjab & Sind Bank, Union Bank of India and United Bank of India, at para No.33

concluded that the banks in the present batch of appeals are public sector banks and are

‘State' within the meaning of Article 12 of the Constitution and their action even in

contractual matters has to be reasonable, least, it must attract the wrath of

Article 14 of the Constitution.

61


Assessment of Attitude of Public Sector Banks as Employer & also in Role of

‘State’ towards their own pensioners-

Now going with the expectations from Public Sector Banks in role of “State” in

complying with the above rulings by Hon’ble Apex Court relating to Pension, we may relook

the history of IBA/ Bank’s action, in discharging the Statutory Liability towards their

pensioners.

Knowing well that the Pension Regulations 1995 are Statutory in nature and these

Regulations cannot be altered, amended or read down in view of any settlement /contract

or a contractual scheme, in every Bipartite Settlement IBA/Banks violated Statutory

Pension Regulations and curtailed the benefits of the pensioners one way or other.

Resultantly many Writ Petitions were filed by aggrieved pensioners and most of these are

pending for years in Supreme Court. The summary is as under -

1. The employee who retired during 1993-94 falling under the 6th wage settlement were not

paid gratuity amount on the revised pay and allowances as required under the provisions

of gratuity act. Special Leave Petition (Civil) 28332 -28362 of 2012 BY Indian Banks'

Association Vs Y.R.Shenoy & Ors. Connected to Civil Appeal 1975 of 2010.

2. In 7th Bipartite Settlement (1998 to 2002), the pay revision was made with merger of DA

at 1684 CPI. But for retirees/ pensioners the Basic Pay for the pension purpose was

accepted at pre-revised pay scale with merger of DA at 1616 CPI. Appeals of Canara Bank,

Vijay Bank, Syndicate Bank, State Bank of Mysore, Indian Overseas Bank, are now

connected to one case - Civil Appeal No 5525 of 2012 of Bank of Baroda & another Vs

G.Palani & Others and matter is pending in Supreme Court.

3. In 8th Bipartite Settlement 100% DA neutralization was given but all preNov-2002

pensioners were excluded. The Civil Appeal No.8420 of 2013 filed by A.B. Kasturian &

Oths Vs Canara Bank, admitted on 16.09.2013was being heard in Supreme Court. Till On

15.09.2016 it was heard for seven times and on 9th hearing on 11.11.2016.IBA was

allowed as intervener. Suddenly on 1.2.2017 it was concluded by Hon’ble Supreme Court

that appeals have no grounds that may attract interference of the Apex Court in the

natter. Now other Special Leave Petitions (Civil) 7368 -7371of 2017 filed by United Bank

of India against the order of Calcutta High Court in WP No.507 of 2012 decided on 26-09-

2016 are pending in Supreme Court.

4. In 9th Bipartite Settlement the Second Pension Option was agreed to be given to all

retirees who retired with CPF. But IBA while issuing the Circular changed the word from

“Retired“ to “Retired on Superannuation”. With this change the employees/officers

retired after taking VRS under Pension Regulation 29 and those who were Compulsorily

retired by the Bank, were excluded while implementation the Joint Note dated 27-4-2010

and were denied of justified option for pension.

4(a) Despite the SLP No. 8506 of 2016 of Punjab & Sind Bank rejected by Supreme Court

on 13.04.2016 and judgments by High Courts of Punjab and Haryana passed in

W.P.No.2553/12 (O & M) V.K.Vohra Vs. Central Bank of India and others and

Judgment of Andhra Pradesh High Court passed in W.P.No. 9069/11 Sreeram

Ramamurthy Vs. Andhra Bank, rep. By its Chairman and Managing Director The

said judgment of writ court got stamp of approval from the Division Bench in

W.A.No.905/12. The SLP (Civil) No. 35449 of 2013 filed by the Bank is dismissed by the

Supreme Court on 05.09.2014. Still the IBA/Banks have not yet given chance of Second

Option to Compulsorily Retied Officers.

4(b) Similar was the fate of the denial by the IBA & Banks to Compulsorily retied

employees and after Judgment in Special Leave Petition No.17054/2009 by Supreme

62


Court of India Dated 11.12.2013 in Bank of Baroda vs. S K Kool & Anrs the IBA & Bank

had to include these workmen employees also for Pension option under the said Joint Note

dated 27-04-2010.IBA advised the Bank by CIR/HR &IR/KU/M1/1004 Dated the 30th June

-2015, addressed to CEOs of the Banks to initiate suitable amendments in Regulation 22

of the Bank Employees’ Pension Regulations, 1995 as far as workmen employees are

concerned. But so far even after more than 3 years from the dat eof judgment by Apex

Court the second option to workmen employees has not been given by the Banks.

BANK’S PLEA IN HIGH COURTS

In High Courts Banks/IBA had pleaded that all above are in accordance of Settlements

reached between the Unions/Associations of employees/officers of the Bank and IBA

representing the Public Sector Banks and the retirees are bound with the terms of the said

Settlements.

It may not be out of place to mention here that in civil appeal No. 1942 of 2009{Relating

to REg-29(5) applicable to SVRS 2000 pensioners} Bank of India, Punjab National Bank,

Punjab & Sind Bank, Union Bank of India and United Bank of India at para 39 pleaded –

Quote -

“On behalf of the banks, it was contended that Pension Regulations, 1995, are statutory

in nature and these Regulations cannot be altered, amended or read down in view of any

contract or a contractual scheme.”

The above self contradictions by the Banks, very well spell out the motives of the Banks,

which is nothing but to any how delay payment of legitimate dues of the pensioners and in

the interim period earn interest on the funds so held.

In all above matters, the Writ Petitions were decided against the Banks. Banks every time

filed the appeals in Supreme Courts and all the above matters are yet to reach finality by

Supreme Court.

CONCLUSION

It can well be understood that Banks have used the Settlements as tool to deny/delay the

legitimate dues of the pensioners.The IBA supported by Public Sector Banks have created

such circumstances in the name of Settlements that warranted litigations and these

litigation prolonged by mighty Banks/IBA have succeeded in delaying payments of the

dues of the pensioners. In the process Banks have saved thousands of crores of rupees at

the cost of old pensioners. Can it be termed as good behavior of the Public Sector Bank

being in the role of “State” within the meaning of Article 12 of the Constitution of India.?

Role of Unions/Associations in Settlements-

The Associations /Unions are dealt by the IBA in Wage Settlements in a way that delays

the process of Settlement. It had averaged delay of 32 months in last 8 settlements. By

virtue of intentional delay by IBA, the Associations generally keen down to pressure from

the members for early wage revisions.

Hope everybody concerned will understand the game of hide & seek played by Banks with

pensioners and all the retirees will unite as a strong force to fight with the injustices. It

can be done only by strong & regular demonstrations/dharanas to awaken the

Government on the issues confronted by Bank Pensioners.

S.K.MISHRA – BHOPAL- 11.03.2017

*****************

63


Dear Friends Bhopal – 23-03-2017

Subject -Legal Battle On 100% DA Neutralization Matter Has Become Unavoidable

Pre-2002 Retired Pensioners had hopes that SLPs in Supreme Court in subject matter

will be decided in favour of pensioners. But on 1-2-2017 the Hon’ble Supreme Court

dismissed appeals stating that that there were no grounds to interfere in the order of Madras

High Court. Although it was a set-back, but only on the point that the concerned individuals

could not present the legal ground & law points that could have attracted interference of

Supreme Court.

But the fact remains that the aspect of equity as per Article -14 of constitution of

India has been violated by Banks/IBA, in making discrimination amongst a homogeneous

group of pensioners, by not giving 100% DA neutralization formula to pre-2002 pensioners.

Equity has to be achieved, but how?

ATTITUDE OF IBA ON THE ISSUE OF 100% DA NEUTRALISATION

In may-2015 on persuasions by CBPRO & UFBO,IBA agreed to consider the matter after

estimating the load, based on Actuarial Valuations.IBA has not moved an inch ahead in this

direction, despite the fact all the Banks have already reflected actuarial valuations for all

pensioners in Balance Sheets of March-2016. It is based on the data of all pensioners

including pensioners of pre-2002 periods, but IBA could not collect the same from Banks.

CBPRO, through Regional Labour Commissioner at Mumbai tried the conciliation on the issue,

but IBA did not attend the first meeting dated 24-01-2017. CBPRO met IBA On 15-02-2017

to discuss the issue but it was advised that Management Committee of IBA has not

considered the matter as the mandate was not available from the Bank Managements to IBA

to resolve the Retirees’ issues. In another round of conciliation proceedings before Assistant

Labour Commissioner on 28-2-2017, IBA stepped back on the ground that the Hon’ble

Supreme Court had dismissed the Civil Appeals of some of the individual Retirees.

HISTORY OF BANKS & IBA IN DENYING LIGITIMATE DUES OF PENSIONERS

The above attitude of Banks/IBA towards pensioners is not new. It has long history of

denying /curtailing the benefits of the old pensioners in the name of Settlements. The

pensioners have been put to losses in almost all the settlements from 1993 onwards as

under-

Lower Gratuity paid to retirees of 1993-94, Lower pension fitted at 1616 CPI in place

of Pay being at 1684 CPI & no arrears of pension paid on correction of illegality in May-2005,

Benefit of Reg-29(5) denied to pensioners retired under VRS Scheme of 2000, Second Option

for Pension not given to Voluntary Retired and Compulsorily Retired Employees, and benefit

of Regulation-26 denied to specialist officer.

In all the above matters the Writ Petitions filed by individual pensioners/retirees were

decided by different High Courts, in favour of employees mostly on one principle that any

part of the pension, cannot be taken away by the joint note, as joint note cannot constitute

“law” as understood in Article 300A and further the joint note which discriminates between

retirees cannot have the force of law.

But Banks dragged the matters in Supreme Court. The benefit of Reg-29(5) to

pensioners, Second Option, to Voluntary Retired Employees & Compulsorily Retired Officers

and Pension to Terminated Workmen, could come through Supreme Court only, by the

efforts of individual pensioners/retirees. The other matters are still pending in Supreme

Court and individuals are fighting against the money power of Banks/IBA.

64


Thus looking to the factual position as reflected from the history of IBA/Banks, expecting

the justice from IBA/Banks on their own will be nothing but living in fool’s paradise.

Whatever little have been achieved, is only through legal battle by individuals.

Thus it seems that the only way out left is to get the due benefit of 100% DA

neutralization through legal recourse. It is good news that based on the aspect of equity in

line with Nakara Case; Division Bench of High Court of Calcutta has, on 26-09-2016, passed

a judgment in WP No.507 of 2012, in 100% DA neutralization matter in favour of pensioners

against United Bank of India. The order of High Court is as under – Quote-

“We find that the distinction, between the pre-November, 2002 retirees and

post-November, 2002 retirees, is unreasonable, arbitrary and discriminatory. There

is no justification for the same. Though each bank which is a member of the Indian

Banks Association has a separate identity, the mandate of the Pension Regulations

which have a statutory force of law, cannot be altered by a joint note. Therefore,

we direct the bank to comply with Regulation-37 of the Pension Regulations and to

pay dearness relief to the Pre-2002 retirees at the same rate as enjoyed by the

post-2002 retirees.”

After above judgment United Bank of India has filed appeal in Supreme Court. The

appeal is numbered as SLP(Civil)7368-7371 of 2017.Now in these appeals, onus is on the

bank to establish that the classification of pensioners in two groups - one getting tapered DA

and other getting 100% DA neutralization is not unreasonable, arbitrary and discriminatory.

The bank can not establish it and the appeal is certainly going to be in favour of pensioners

who are party in case.

The only fear is that other Banks may not follow the order. It is evident from history as

under-

1. Even after Supreme Court Judgment on 27-03-2009, the benefit of Regulation 29(5)

was not given by Vijaya Bank & Allahabad Bank and it could come through other WP

filed by Pensioners that were finally decided by Supreme Court on 13.02.2014.

2. Supreme Court has on 13-04-2016 decided against Punjab & Sind Bank, the matter of

Second Pension Option to the compulsorily retired officer, but bank has given Second

Pension Option to the only officer who had fought the case. The other similar officers

have been denied of Second Pension Option despite representations.

3. Benefit of Regulation-26 to specialist officers has been given by State Bank of

Hyderabad, Vijaya Bank & Bank of India after Judgments by the High Court, but, Bank

of Baroda & Allahabad Bank have filed appeals in Supreme Court.

From the above three examples it can easily be concluded that individuals may

get benefit after Supreme Court verdict, at the most United Bank of India may

implement the order to their pre-2002 pensioners, but other Banks may not, unless

ordered by court. So it will be prudent if Retirees Associations become the intervener

in the SLP (Civil) 7368-7371 of 2017 at appropriate stage for the benefit of all the

pensioners.

Please e-mail your considered opinion on the proposal of becoming

intervener in case in Supreme Court, for the benefit of approx. 2100 pensioners of

Allahabad Bank included in 85000 surviving pre-2002-pensioners of all Banks, hoping

for 100% DA neutralizations for last 12 years.

Sincerely Yours

S.K.Mishra – Bhopal - e-mail Address – [email protected]

mailto:[email protected]

65


Dear Friends, BHOPAL – 23-03-2017

Subject- Fate of Filing Too Many Writ Petitions in Courts by Individuals

After introduction of Pension Regulations 1995, the Banks/IBA had, in every Bipartite

Settlement, in the name of agreements with working employee/officers associations,

curtailed the pension benefits of the retirees in one way or other. Facts are as under -

Lower Gratuity paid to retirees of 1993-94, Lower pension fitted at 1616 CPI in place

of Pay being at 1684 CPI for retirees of April-98 to March-2005 & no arrears of pension paid

on correction of illegality in May-2005, Benefit of Reg-29(5) denied to pensioners retired

under VRS Scheme of 2000,100% DA neutralization not given to pensioners of pre-nov-2002

periods, Second Option for Pension not given to Voluntary Retired and Compulsorily Retired

Employees, though agreed in Joint Note dated 27-4-2010,and benefit of Regulation-26

denied to specialist officer.

In all the above matters the Writ Petitions, filed by individual pensioners/retirees were

decided by different High Courts, in favour of employees, mostly on one principle that any

part of the pension cannot be taken away by the joint note, because joint note cannot

constitute “law” as understood in Article 300A and further the joint note, which discriminates

between retirees cannot have the force of law.

But Banks dragged the matters in Supreme Court. The benefit of Reg-29(5) to

pensioners, & Second Option, to Voluntary Retired Employees could come through Supreme

Court only. But the decided matter of Second Option to Compulsorily Retired Officers and

Pension to Terminated Workmen had not yet been given to all similarly placed retires by the

Banks.

Whatever little is achieved; it could come through Supreme Court only, by the efforts

of individual pensioners/retirees. The other matters are still pending in Supreme Court and

individuals are fighting against the money power of Banks/IBA.

In the beginning period say- from 1995 to 2009, most of the Bank retirees were not

united under the forum of Associations. During the period from 2009 onwards; almost all the

public sector banks retirees have formed All India Associations of Retirees. The Bank-wise

Associations of retirees are affiliated to AIBRF or AIBPARC or similar other Apex

Confederation.

It may be observed that till date in all the disputed/denied pension benefits the

individuals have approached the courts. But due to extra enthusiasms by some of the groups

of the individuals, in matter of pension at 1616 CPI, they have filed the Writ Petitions in

a large number and that had delayed the process of getting early justice from the

court of law.

The examples of very old matter Lower pension fitted at 1616 CPI in place of Pay being at

1684 CPI for retirees, is there for such abnormal time consuming process. In the matter, a

large number Writ Petitions were filed in High Courts during 2000 to 2002 by the pensioners,

but till date these are pending in Supreme Court. The only reason appeared is, very large

number of Writ Petitioners in individual capacity.

Here are the details of WPs filed in the matter of lower pension at 1616 CPI. The

Matters is still undecided for 16 years and at present SLPs filed by Banks are pending in

Supreme Court.

Single Bench of High Court of Karnataka at Bangalore in Order Dated 21.4.2011

decided petitions of 522 individuals as per List (A). Besides above, the Single Bench of High

Court of Karntaka in orders dated 8/8/2007, 23/3/2011, 6/4/2011, 8/4/2011 & 30/5/2011

66


decided Writ Petitions of approx.250 individuals also. In these writs some of the retirees of

VRS 2000 Scheme prayed for benefit of Reg-29(5) and or for quashing the amendment in

Reg-28 of Pension Regulations 1995. In these WPs. B.O.Baroda, Canara, Central, Indian

Bank, I.O.Bank, State Bank of Mysore, Syndicate, UCO, Union and Vijya Bank – thus 10

Banks were involved.

After judgment of Supreme Court in Bank of India Vs K. Mohandas in 2009, the

benefit of Reg-29(5) was given by the Banks and as such the Appeals filed by the Banks in

the Matter of Pension at 1616 CPI only remained undecided. For this Banks had filed appeals

in Division Bench that were numbering 509. These were decided on 08-03-2012 and Banks

moved to Supreme Courts, where 436 SLPs are pending in the matter of pension at 1616 CPI

as under –

Number of SLPs In Supreme Court filed by Banks No.

Arising From HC Order

In

Main Case-SLP(C)No.24889/2011By Bank of Baroda=5525 of 2012 1 WA No.1209/2007 28.6.2011

1. SLP (C) No. 18139/2012 By Bank of Baroda = 5611 of 2012 1 WA No.590/2012 of 8.6.2012

2. SLP (C) Nos. 20661-20668/2012 By Canara Bank 8 WA No.4256/2012 of 8.3.2012

3. Special Leave Petition (Civil) 29820 -30047 Of 2012 By Vijaya Bank Changed to Appeal Civil 3026-3253 OF 2013 228

WA No.4260/2011 of 8.3.2012

4. Special Leave Petition (Civil) CC 23184 -23352 Of 2012 By State Bank of Mysore Changed to SLP (Civil) 15640-15808 of 2013 169

WA No.4093/2011 of 8.3.2012

5.Special Leave Petition (Civil) 23848,24851,23773,23777-23797 Of 2012 By Syndicate Bank and 24

WA No.4901/2011 of 8.3.2012

6. Special Leave Petition (Civil) 31470 -31474 Of 2012 By Indian Overseas Bank 5 WP No.47033/2001of 21.4.2011

Total Appeals Pending In Supreme Court 436

CAUSES OF DEALY - As per procedure, the notices are issued to all respondents (In above

cases the 436 individual pensioners), service of notice is recorded, their replies are awaited

and received/recorded in cases, where after counter–reply by appellants are received &

recorded. After completing the said process the dates for arguments are fixed and heard

from each side. One can imagine how long should it take for 436 respondents. The result is,

the matter is still not finally decided.

From the facts as above, it should be understood that the matter of common cause of the

Bank Pensioners & Retirees must be taken up by a group formed as Resisted Body or Union

or Association of Pensioners. Here only the registered body will represent, all the similarly

placed pensioners / retirees in the court and benefit will come to all.

Now in present day pensioners & retirees have opportunity of becoming members of All

India Pensioners/Retirees Associations of individual banks (Public Sector Banks). The

pensioners can now impress upon their Associations to be the party in court cases of

common cause.

Hope pensioners /retirees will understand the benefit of unity under Associations.

Yours Sincerely


Main Case - Special Leave to Appeal (Civil) No(s).24889/2011 This Case is converted to Civil

Appeal No.5525 of 2012 Bank Of Baroda & Anr Vs. G.Palani & Ors & All above cases are connected to this.

*****************

67


The Fight for Justice by Old Pensioner -Pre-1986 Retirees

Further Fight for Dues of Approx. Rs. 18.50 Crores of Old Scheme Pensioners

Who Were Paid Gratuity In Nov -2010.

During the periods of negotiations with IBA for pay revisions, in last settlement & for the

ensuing 11th settlement, from every corner of Bank Pensioners, various suggestions for

demands are poured. The representatives of the working employees & officers, in the form of

UFBU, have included these demands in their charter of demands. Pensioners eagerly wait for

the outcome for betterment of their pension & benefits. We the retirees and pensioners of

Allahabad Bank are not exceptions.

But we have almost forgotten the pathetic condition of our seniors who are under Old

Pension Scheme of our Bank. True, now it is close ended pension scheme and will certainly

die its own death on the day when last such pensioner will breathe his last. But they are

some who are still alive. They were our heroes, including one – Shri Dayaldas Khanna –

known by all present pensioners at least in Allahabad Bank.

The attitude of Allahabad Bank toward these old pensioners can well be understood from

the following facts of history - not very old. It was only in the month of Oct-2010 when

payment of monthly pension was stopped to the old pensioners numbering 169 only for

which monthly pension pay-out was just Rs.9.03 lacs on that date. The pension was not paid

to them for the period up to June -2013, unless it could be decided by the judiciary in favor

of these old unsung heroes. The battle was fought by them only.

The history stared from the dispute on Old Pension considered to be in lieu of Gratuity by

the Bank. In year 2010 Supreme directed the Bank to Pay Gratuity as per Gratuity Act of

1972 to the then pensioners who were being paid Old Pension.

Consequent upon the Judgment by Supreme Court –

a. All the pensioners under old scheme were paid (Refunded) gratuity by the Bank on

1.11.2010 in implementation of judgment dated 15-12-2009, of Supreme Court.

Payment of Old Pension was stopped to these Pensioners, from October, 2010 vide

instructions vide HO IC No. 11185 of 30.10.2010.The effect of this circular was varying on

three category of retirees as under-

i. As prudence prevailed upon most of old pensioner retired during 1.1.1986 to 29-09-1995,

they had already opted under first pension option in 1995 for New Pension by paying CPF

with 6% Interest and now they got the gratuity refunded in Oct-2010.They were happy. Still

some had not gone for new pension.

ii. Those who were continuing under Old Pension scheme (Mostly Retirees of period from

29-09-1995 onwards), also felt happy by getting refund of Gratuity and they did not feel the

pinch as they had seen the chance of switch over to New Pension by Second Pension Option,

already agreed by Banks in Joint Note of April 2010 and to this effect Bank’s Circular was

floated, just after the circular of stopping Old Pension. They were to get New Pension w.e.f.

27-11-2009. The new pension was higher than what they were getting under Old Pension,

and benefit of commutation and family pension was to come to them. So this category of

retiree was complacent.

iii. Only all those old pensioners retired prior to 1.1.1986 were worst effected by stopping

monthly pension as they were not eligible for New Pension under Pension Regulations 1995.

The number was very limited. In the year 2010 they were of the age of 84 plus years. Who

was to care for them?

68


The effected Number of these old Pensioners was just 169 and total monthly pension

payment in Sept -2010 to them was just Rs. 902868.56, which gives average monthly

pension of just Rs.5342.41 per pensioner.

The Bank had paid Gratuity amount total to Rs.46.63 lacs to these 169 pensioners –

Average per Pensioner comes to Rs.27594/- equal to a little more than FIVE MONTHS

PENSION. The gratuity amounts were very low in the years from 1975 to 1992 the period of

retirement of these old pensioners.

The ceilings on Gratuity were as under-

Gratuity Act, 1972 Wage limit For Months Amount

Up to 30.6.84 1000 20 20000

w.e.f. 1.7.1984 1600 20 32000

w.e.f. 1.10.1987 2500 20 50000

Ceiling from 1.10.87 2500 Limited to 50000

w.e.f. 1.12.1992 3500 Limited to 50000

One can thus understand easily that by refunding Gratuity in compliance of judgment

of Supreme Court and the decision of stopping the pension of very old pensioner was only

with one angle of savings & profits to the Bank.

b. The timing adopted by bank was such that most of the pensioners could not

understand the game of the bank in avoiding Interest Payment on Gratuity for delay period.

In fact all such pensioners got the Gratuity only on 1.11.2010, and they were entitled for

interest on Gratuity amount as per Section 7(3A) of Gratuity Act-1972, for the period of

delay. This delay period is in years. The delay period was from the Date of retirement to

1.11.2010, when gratuity was actually /finally paid to the retiree by the Bank.

c. The delay Period will be counted for every such pensioner who has received Gratuity

refunded by Bank on 1.11.2010. The period will be different for every pensioner and it will be

for the period “From Date of Retirement to 1.11.2010.”

d. Fortunately, rather I must say being vigilant for rights one of the VRS 2000 Scheme

retiree - Sh. A.C. Aggarwal, who was asked to refund the gratuity for getting Old Pension

refused to refund the Gratuity. He had filed WP No.2261/2012 in the year 2002 itself, in High

Court Delhi, seeking direction to the Bank for payment of Old Pension to him along with

Gratuity as per Act. The W.P. could be decided in his favour on 15-11-2011 (Although Bank

Pleaded that A.C. Aggarwal had already opted for new Pension under Second Option in the

month of Dec-2010 and is being paid new pension from 27-11-2009. (As per Joint Note of

28-04-2010)

Delhi High Court ordered that Sh. A.C. Aggarwal is entitled to old pension in addition

to the gratuity amount received by him. The Bank was accordingly directed to release the

arrears of pension due to the Sh. A.C. Aggarwal, within six weeks together with interest

@6% per annum from the date when the pension for each month would have fallen due and

till the date of payment. Thus he was declared eligible for payment of arrears of old pension

from 1-05-2001. (He was retired on 30.4.2001).

Bank filed appeal In Supreme Court - Civil Appeal No. 9024 of 2012, and it was decided in

favour of Sh.A.C. Aggarwal, by order dated 13-03-2013.The apex court held that –

Quote – “In view of the plain language of the above reproduced provision, (Of Gratuity Act -

1972) which contains a non-obstante clause, every eligible employee is, notwithstanding

anything inconsistent contained in any other enactment or instrument or contract is entitled

to gratuity. Therefore, even if the respondent had opted for pension, he could have

69


legitimately claimed gratuity without being required to refund the amount of pension already

received by him.”“In the result, the appeal is dismissed. The appellant is directed to

implement the order of the High Court within a period of eight weeks from today.”

e. From amongst the senior unsung heroes (Retirees of Pre-86 periods) - Sh Shapoor

M Mehta of Bombay and Sh. Shridhar N. Indurkar of Nagpur, whose pensions were also

stopped, filed WP in 2011 in High Court of Bombay and at Nagpur. These were decided in

favour of these veterans, but as usual Bank filed Appeal No. SLP(C) 7429/2012 & 9665/2012

in Supreme Court and on the basis of judgment in case of A.C. Aggarwal, Supreme Court

dismissed both the appeals of Bank on 18/04/2013.

f. The All India Allahabad Bank Retired Employees Association (Started By Late Sh.

Jaigovind Rai who had started this fight of Gratuity) had also filed WP No. 961 of 2011 in

High Court Lucknow for quashing the banks circular of stopping payment of Old Pension. The

W.P.was allowed on 10.04.2013 on the basis of case law of 13.03.2013, by Supreme Court in

case of A.C. Aggarwal. The order of HC Lucknow was as under -

“The impugned circular dated 30.3.2010 insofar as it relates to discontinuation of pension

under the Old Pension Scheme from October, 2010 onwards and to recover the aggregate

amount already paid under the scheme is hereby quashed. Respondent-Bank is directed to

pay regular monthly pension to the members of the petitioner's association as is being paid

to all other employees of the Allahabad Bank from October, 2010 onwards.”

I am putting up the history of the fight of our seniors, with a view to make

all understand that Bank has not easily given even to the very limited pension to a

limited number of old pensioners.

Still there were advices from legal department that Bank should go in for

appeal in Supreme Court against the order of Lucknow High Court. The law

department of Bank was of the view that the orders of Supreme Court in cases of

A.C. Agrawal, Shapoor M Mehta and Shridhar N. Indurkar, were complied with and

there was no order from Supreme Court to pay pension all other similarly placed

old pensioners. It was only by High Court of Lucknow for all such pensioners &

appeal can be filed in Supreme Court against the order of H.C. Lucknow.

One can easily visualize the darkest side of the officers sitting at the helm of

affairs in Bank.

The matter came up for discussion in the board meeting at Bhubaneshwar on

28.06.2013. By that time Chairperson and Managing Director Mrs. Shubhalaxmi Panse had

taken over. It is said that prior to her becoming Chairperson and Managing Director of the

Bank, there was contempt proceedings in Lucknow Bench of Allahabad High Court against

Mr. Dua - Former CMD of the Bank. Probably the fear of possible contempt of court

particularly when similar three cases had been decided by Apex Court of the country, had

influenced and also good sense prevailed upon the CMD and the move of going again in

Supreme Court was not accepted.

g. Thus Bank had to pay both Gratuity & Pension to the eligible retirees of Old Pension

Scheme. The gratuity was paid on 1.11.2010, old pension was stopped from 1.10.2010 to

30.6.2013 and the arrears were paid on 03.07-2013. Now old pension is being paid from July

2013 onwards regularly, but the survived old Pensioners as on 31.10.2016 were just 104.

The biggest question on attitude of Banks towards the very old pensioners remains

un-replied. The stopping the bare minimum pension for a period of almost three years is

nothing but being inhuman. The bank might have not paid any interest on arrears of these

70


old pensioners as there was no order by High Court of Lucknow. But there was order of

Interest in case of A.C Aggrawal by Delhi High Court and Supreme Court Ordered the Bank to

comply with the order of Delhi High Court. Thus Sh. A.C Aggrawal received arrears of

pension with interest.

Now I am of the view that we should not let the Bank go free on this count.

There are sure chances of getting the interest on Delayed Payment of Gratuity to

these old Pensioners. Pensioners got the Gratuity only on 1.11.2010, and they were

entitled for interest on Gratuity amount as per Section 7(3A) of Gratuity Act-1972,

for the period of delay. This delay period is in years. The delay period was from the

Date of retirement to 1.11.2010, when gratuity was actually /finally paid to the

retiree by the Bank.

The delay Period will be counted for every such pensioner who has received Gratuity

refunded by Bank on 1.11.2010. The period will be different for every pensioner and it will be

for the period “From Date of Retirement to 1.11.2010.”

I have calculated the interest payable to them from their respective date of retirement

till 1.11.2010 when Gratuity was actually paid @ 10% Per Annum. The delay period ranges

from 35 years to 16 years. The amount of Interest so payable to 169 old pensioners is

calculated to be Rs.113.63 lacs till 31.10.2010.

We must not leave the case of Interest on Gratuity to other category of Pensioners

also, whose pension was stopped after paying them gratuity on 1.11.2010. Such number is

approx. 350, mostly those who retired under VRS-2000 Scheme in 2001 and were being paid

old pension. This number is approx. 275 and approx.75 pensioners are those who retired on

superannuation with Old Pension. Total interest due from Bank to these 350 Pensioners is

Rs.1684.25 lacs as under -

The gratuity ceiling was Rs.3.5 lacs for these retirees. For VRS 2000 Scheme Retirees

it has been taken at average of Rs.2.75 lacs on account of lower length of service rendered

by them.

Amount in Lacs of Rs.

Category Number Intt Up to 31.10.10 Further Intt Total Intt

VRS 2000 275 712.14 498.49 1210.63

Normal 75 278.60 195.02 473.62

Total 350 990.74 693.51 1684.25

For Pre 86 169 113.63 79.54 193.17

All 519 1104.37 773.05 1877.42

Thus 519 old scheme pensioners, who were paid gratuity on 1.11.2010, are eligible to get

interest of Rs.18.77 Crores as per Gratuity Act-1972. It will come to them only by finally

concluding the battle started by Late Sh. Jaigovind Rai- Our most respected leader of

Allahabad Bank.


*****************

71


Dear Friends, Bhopal – 12-07-2017

I am inviting your attention to the following matter and request you to please study &

convince the leaders of our association to think on the taking suitable action.

Yours

S.K.MISHRA

BANK HAD TO PAY BOTH – PENSION & GRATUITY WITH INTEREST

TO PENSIONERS OF OLD SCHEME

BACKGROUND –

a. Bank used to get back the gratuity from retires for payment of Pension under old

pension Scheme.

b. Even after enactment of Gratuity Act 1972, which imposed the Statutory Obligation

upon the Bank to pay Gratuity as per Act, the bank continued the same system of

getting back the gratuity for payment of Old Pension.

c. In the year 1986 All India Allahabad Bank Retired Employees Association, filed Writ

Petition in High Court of Lucknow, seeking order from High Court to the bank for

payment of Gratuity also as per Gratuity Act-1972 to all those who were being paid

old pension. The case was decided in favour of pensioners. Bank filed SLP in Supreme

Court, against the order of High Court of Lucknow. On 29-01-2010, Supreme Court

held that as the Bank has not got exemption for payment of Gratuity from the

Competent Authority, hence Bank must pay the gratuity. The summary order is

reproduced for the knowledge of all those who were declared eligible for such payment

of Gratuity.

Quote -

“Judgment is, however, applicable to all the members of the Petitioner's

Association/Pensioners in the respondent-Bank governed by the Pension

Regulations (old) 1890 of the Bank as well as those pensioners who retired

during the period 1.1.1986 to 31.10.1993.

It is made clear that such of those officers of the Bank working prior to

1.7.1979 and have retired after coming into force of the said Act on 31st

October, 1993, shall alone be entitled for the benefits.”

d. After the said order Bank paid the Gratuity to Pensioners under old scheme, but

stopped payment of Old Pension. One of Pensioner Sh. A.C. Aggarwal had already filed

the WP in High Court Delhi, which was finally decided by Supreme Court (Civil Appeal

No. 9024 of 2012 - Allahabad Bank vs. A.C. Aggarwal) on 13-03-2013, and it was held

that Gratuity and Old Pension, both the benefits are payable to eligible retired

employees/officers of the Bank retired during periods as above in RED.

Thus Bank had to pay both - Gratuity & Pension to pensioners of Old Scheme.

QUESTION OF INTEREST ON DEALYED PAYMENT OF GRATUITY-

A. Now some of these Pensioners, who were paid gratuity in compliance of Supreme

Court Judgment dated 2-01-2010 , by the Bank probably on 01-11-2010, have put

their claim for payment of interest on delayed payment of Gratuity.

72


What Delay - Example - One who retired on 30-04-2001, and was getting old

pension (Although had in 2001 refunded the gratuity as per bank’s requirement) was

paid the Gratuity in compliance of Supreme Court Judgment, on 01-11-2010. Now he

has claimed interest on delayed payment (Delay from date of Retirement to payment

on 01-11-2010) almost 10 years. The Interest Amount to this one is Rs.3.5 lacs.

Obviously Bank has rejected their claim. These pensioners have adopted the

Statutory Route of presenting their case before the Competent Authority

under the Gratuity Act -1972.

B. What is your reaction on possible success of such claim of interest on

Gratuity paid on 01.11.2010 to old pensioners?

The old pensioners, who were paid the Gratuity as above on 01.11.2010, are

the workman cadre retirees of the period from 1.1.1986, and officers in

service prior to 1.7.1979 and were paid old pension after retirement. The

number may approx.500, including those who switched over from Old

Pension to New Pension under Second Option in the year 2010.

C. The Statutory Route has been adopted by some 16 such retirees of our bank and

payment of interest for delay on payment of gratuity has been ordered by following

authorities -

1. Controlling Authority under Payment of Gratuity Act 1972 & Asstt. Labour

Commissioner (Central), Dehradun – By Order No.D-36(13)/2015-ALC dated 4-

12-2015.

2. Appellate Authority Under Payment of Gratuity Act 1972 & Dy. Chief Labour

Commissioner (Central) Derhadun -By Order No.D-36(25)/2016/Dy.CLC dated

23-01-2016

D. Now keeping in view that for compliance of above order of the Appellate Authority

under Payment of Gratuity Act 1972, Bank is required to pay approx. Rs.50 lacs as

interest to those 16 only. What could be the interest amount involved for all such

approx. 500 pensioners can easily be visualized. Therefore and obviously Bank has

filed appeals in High Court.

We are now to decide the action that may be taken by our Association to get the justified

dues of these pensioners, most of them may be in the age group above 80 + years. I am

of the strong view that Association should become intervener in the case to represent all

such deprived pensioners and get justice to them.

With best wishes to all those, who are fighting the case,

Yours

S.K.MISHRA – BHOPAL 12-07-2017

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73


HISTORY OF LABOUR MOVEMENT & MINIMUM WAGE/PENSION CONCEPT

ROOTS OF LABOUR STRUGGLE

The struggle of workers whose livelihood is solely depending upon the wages paid by

employers, find its roots in the French Revolution. The French Revolution was a period of far-

reaching social and political upheaval in France that lasted from 1789 until 1799. The modern

era has unfolded in the shadow of the French Revolution. Almost all future revolutionary

movements looked back to the Revolution as their predecessor. Globally, the Revolution

accelerated the rise of republics and democracies. It became the focal point for the

development of all modern political ideologies, leading to the spread of liberalism, radicalism,

nationalism, socialism, feminism, and secularism, among many others.

Many historians were saying that the field of the French Revolution was in intellectual

disarray. The old model or paradigm focusing on class conflict has been discredited, and no

new explanatory model had gained widespread support.

Some historians argue that the French people underwent a fundamental transformation in

self-identity, evidenced by the elimination of privileges and their replacement by rights as

well as the growing decline in social deference that highlighted the principle of equality

throughout the Revolution.

Throughout the 19th Century, the revolution was heavily analysed by economists and

political scientists, who saw the class nature of the revolution as a fundamental aspect in

understanding human social evolution itself. This, combined with the egalitarian values

introduced by the revolution, gave rise to a classless and co-operative model for society

called "socialism" which profoundly influenced future revolutions in France and around the

world.

HISTORY OF UNITED LABOUR MOVEMENTS

“Labour has been central to the modern globalization process. From issues of

the embodied movement of workers to the emergence of a global division of labour,

and organized responses to capitalist relations of production, the relevance of

labour to globalization is not new, and it is far more significant in shaping the world

than is usually recognized.”

In Europe, the labour movement began during the industrial revolution, when

agricultural jobs declined and employment moved to more industrial areas. The idea met

with great resistance. In the early 19th century, groups such as the Tolpuddle Martyrs of

Dorset were punished and transported for forming unions, which was against the laws of the

time.

Labourism was active during the early to mid 19th century and various labour parties

and trade unions were formed throughout the industrialised parts of the world. The

International Workingmen's Association, the first attempt at international coordination, was

founded in London in 1864. The major issues included the right of the workers to organize

them-selves, and the right to an 8-hour working day. In 1871 workers in France rebelled and

the Paris Commune was formed. From the mid-nineteenth century onward the labour

movement became increasingly globalized.

The movement gained major impetus during the late 19th and early 20th centuries

from the Catholic Social Teaching tradition which began in 1891 with the publication of Pope

Leo XIII's foundational document, Rerum novarum, also known as "On the Condition of the

Working Classes," in which he advocated a series of reforms including limits on the length of

74


the work day, a living wage, the elimination of child labour, the rights of labour to organize,

and the duty of the state to regulate labour conditions.

Throughout the world, action by labourists has resulted in reforms and workers' rights,

such as the two-day weekend, minimum wage, paid holidays, and the achievement of the

eight-hour day for many workers. There have been many important labour activists in

modern history who have caused changes that were revolutionary at the time and are now

regarded as basic. For example, Mary Harris Jones, better known as "Mother Jones", and the

National Catholic Welfare Council were important in the campaign to end child labour in the

United States during the early 20th century.

HISTORY OF LABOUR/TRADE UNION MOVEMENT IN INDIA

The setting up of textile and clothing mills around the port cities of Bombay, Calcutta,

Madras and Surat in the second half of the 19th century led to the beginnings of the

industrial workforce in India. Several incidents of strikes and protests by workers have been

recorded during this time. The credit for the first association of Indian workers is generally

given to the Bombay Mill-Hands Association founded by N.M. Lokhande in 1884.

This was in the period just after the passing of the 'First' Factories Act in 1881 by the

British Government of the time. The following years saw the formation of several labour

associations and unions. The first clearly registered trade-union is considered to be the

Madras Labour Union founded by B.P. Wadia in 1918, while the first trade union federation to

be set up was the All India Trade Union Congress in 1920.

Following the rapid growth of unions around the time of the First World War, the

Russian Revolution and the setting up of the ILO - industrial conflict began to increase and

over 1,000 strikes were recorded between 1920 and 1924. The waves of strikes boiled over

with the arrest of prominent leaders and trade-unionists in the infamous 'Cawnpore

Conspiracy case' in 1924 with the union leaders being arrested and accused of attempting a

Communist revolution to try and overthrow the ruling British Government. Subsequently, the

Trade Union Act (1926) was passed which created the rules for the regulation and closer

monitoring of Trade Unions. In the first year of the law's operation, 28 unions registered and

submitted returns with a total membership 100,619. The number of unions grew rapidly after

that and by the time of Independence of India in 1947, there were 2,766 unions registered

which had a combined membership of over 1.66 million. This resulted in a wide influence of

unions and workers' organisations and led to significantly favourable social legislation being

enacted in the first decade of Independence. Several important labour laws were passed

during this time.

AFTER INDEPENDENCE TO LIBERALISATION

Following its Independence in 1947 and the formation of the Republic in 1950, India largely

followed a Socialist economic approach encouraging public sector employment and pro-

worker legislations. The trade-union movement reflected the main political divisions of the

time and was divided mainly along Socialist and Communist lines. The subsequent decades

saw significant expansion in trade union membership with the number of active unions

reaching its peak in the mid-1970s and mid-1980s. While the 1970s in India was a period

characterized by political instability, the 1980s was characterized by the beginnings of a

distinct turn towards more market-friendly policies, support for industrialists and an implicit

opposition to workers. Two key events during this period were the 1974 railway strike in

India and the Great Bombay textile strike of 1982, the latter of which subsequently led to a

long and complicated stalemate. The period following the Economic liberalisation in 1991 was

75


characterized by declining government intervention in the economy, a decline in the creation

of public sector employment and encouragement for the private sector. Efforts for

unionization in the private sectors were often met with opposition and the wider general

withdrawal of State support for workers further undermined their bargaining power. These

policies led to stagnation in the number of unionized formal sector workers.

Source - Wikipedia

CONCEPT OF MINIMUM WAGES FOR WORKERS

The above history of process of labour unification and simultaneous development of

civilized society brought many reforms for workers' rights, such as eight-hour day, weekend

holiday, paid holidays, minimum wage, etc. In our country also the process of reforms for

workers' rights continued to be focus of Trade Unions and Government brought in the same.

At the 15th Session of the Indian Labour Conference held at New Delhi in July 1957, an

important resolution was passed, which laid down that the minimum wage should be

need-based and should ensure the minimum human needs of the industrial

worker. The following norms were accepted as a guide for all wage- fixing authorities

including Minimum Wage Committees, Wage Boards, Adjudicators, etc.

The Union Labour & Employment Minister Shri Mallikarjun Kharge has informed the

Rajya Sabha that the norms recommended by the Indian Labour Conference (ILC), held in

1957 are taken into account while fixing the minimum wages. These are as follows:

(i) In calculating the minimum wage, the standard working class family should be taken

to comprise three consumption units for one earner, the earnings of women, children

and adolescents being disregarded.

(ii) Minimum food requirements should be calculated on the basis of a net in take of 2700

calories, as recommended by Dr. Akroyd for an average Indian adult of moderate

activity.

(iii) Clothing requirements should be estimated on the basis of a per capita consumption of

18 yards per annum, which would give for the average workers family of four a total of

72 yards.

(iv) In respect of housing, the norm should be the minimum rent charged by Government in

any area for houses provided under the Subsidised Industrial Housing Scheme for

low income groups ; and

(v) Fuel, lighting and other miscellaneous items of expenditure should constitute 20 per

cent of the total minimum wage. The Resolution further laid down that wherever the

minimum wage fixed was below the norms recommended above, it would be incumbent

on the authorities concerned to justify the circumstances which prevented them from

adherence to the aforesaid norms. The Resolution, thus, tried to give concreteness to

the whole concept of minimum wage.

**In 1991, the Supreme Court in its judgment expressed the view

that children’s education, medical requirement, minimum recreation, including

festivals ceremonies, provision for old age and marriage should further constitute

25 per cent and be used as a guide for fixing the minimum wage.

MINIMUM WAGES FOR INDUSTRIAL WORKERS CALCULATED AS PER NORMS The

minimum wage norms as per (ILC), of 1957 have been taken care of by the Central

Government in Pay Revisions of Central Govt. employees. In the recent 7th Pay Commission

report the concept has been applied. For the purpose of calculation of Minimum Wage at CPI

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level of June -2017, the prices as on 01.01.206, taken in 7th Pay Revision have formed the

base for the following calculations.

CALCULATED MINIMUM WAGE FOR INDUSTRIAL WORKER -

Based On Prices Taken In 7th Pay Commission as on 01.01.2016

Pay Calculated On The Norms For Minimum Wages Fixed Based On ILC Norms (1957)

Item In Units of Gms,Kgs, ml, Number Per Day PCU

P.M.3 CU(in Kg)

Price per Unit

Costs Total cost PM Rice/Wheat = Gms 475 42.75 25.93 1108.51 1108.51

Dal- Toor/Urad/Moong = Gms 80 7.2 97.84 704.45 704.45

Raw Veg = Gms 100 9 58.48 526.32 526.32

Green Leaf Veg = Gms 125 11.25 38.12 428.85 428.85

Other Veg - Onion,Potato,Tomato = Gms 75 6.75 32.80 221.40 221.40

Fruits = Gms 120 10.8 64.16 692.93 692.93

Milk = ml. 200 18 37.74 679.32 679.32

Sugar/Jaggery = Gms 56 5 37.40 187.00 187.00

Edible Oil = ml 40 3.6 114.02 410.47 410.47

Fish for 3 Members = Kgs 2.5 268.38 670.95 670.95

Meat for 3 Members = Kgs 5 400.90 2004.50 2004.50

Egg = Number 1 90 4.27 384.30 384.30

Detergents/Soaps- Bath & washing , etc Per Month 291.31 291.31 291.31

Clothing for 3 Members PM = Meters $ 5.5 164.88 906.84 906.84

Sub Total - A 9217.15

Add Misc. @ 20% * * 20% of Sub Total - A 1843.43

Sub Total - B 11060.57

Add Exp @ 25% ** As per S.Court-1991 ** 25% of Sub Total - B 2765.14

Sub Total - C 13825.72

Housing *** - 10% of monthly expenses *** Grand Total Less Sub Total - C 1536.19

Grand Total $$ $$ Sub Total- C, Divided By 0.9 15361.91

Step Up 125 % On Present Level $$ $$ At Level of CPI Compared to 19202.39

that of 1.1.2016 – 7th Pay Commission Rs.19200

PCU = Per Day Consumption Unit

3 CU = Three Consumption Unit

The normative family is taken to consist of a spouse and two children below the age of 14.

With the husband assigned 1 unit, wife, 0.8 unit and two children, 0.6 units each, the

minimum wage needs to address 3 consumption units.

$ = Clothing as prescribed is 70 yards per year. This will work out to 5 mtrs per month

and the costs include the ancillary charges like stitching etc.

* = 20% miscellaneous charges towards fuels, electricity, water, etc

** = Additional Expenses @ 25% includes expenditure towards education, medical,

treatment, recreation, festivals, etc, as per Supreme Court decision in 1991

*** = Housing is Grand Total Less Sub Total - C, As per ILC Norms

$ $ =Total Cost = Sub Total Divided By 0.9 as per 15th ILC Norms

Hence the minimum wage is calculated to be Rs.19200/ that is Basic Pay applicable

to the rank of sub staff employee as on 1.1.2016 for three members of his family,

including him.

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After considering all relevant factors in 7th Pay Commission minimum pay of employee in

Central Government is at Rs.18000/- per month plus Grade Pay of Rs.1800/- Total

Rs.19800/-, w.e.f. 01.01.2016, is fair and reasonable. Our calculation at Rs.19200/- is thus

very much reasonable keeping in view the minimum pay taken in 7th Pay Commission.

COMPARISION OF PAY OF SUB-STAFF OF BANK IN JAN-16 WITH

MINIMUM PAY IN 7TH PAY COMMISSION AS PER NORMS OF ILC

The bank employee of the level of sub-staff at the very start of Basic Pay should be

Rs.19200/- on 1.1.2016. But as per10th Bipartite Settlement the Basic Pay of Sub- Staff at

start of Basic Pay is Rs.9560/.In Jan-2016 the DA payable was 39.8% that gives total Pay

of Rs.13364.88. This is calculated to be just 67.5% of that of minimum in Central Govt. in

Jan-2016.

CONCLUSION-

The Pay Scales for Bank employees are while not in line with 15th ILC Norms,

resultantly the Pension to bank pensioners is also far below the minimum subsistence

required to ensure a normal standard of living for the lowest ranked employee in the Central

Government. The limits fixed for family pension does not permit even normal livelihood to

Bank Pensioner’s families. The minimum & maximum limits fixed on family pension of Bank

Pensioners are as under –

Family Pension of Retirees of Min. Basic Pension Max. Basic Pension

1.1.1986 to 31.10.1992 Rs.600 Rs.1250

1.11.1992 to 31.3.1998 Rs.1150 Rs.2400

1.4.1998 to 31.10.2002 Rs.1687 Rs.3521

1.11.2002 to 31.10.2007 Rs.2292 Rs.4784

1.11.2007 to 31.10.2012 Rs.2841 Rs.5930

1.11.2012 to 31.10.2017 Rs.4448 Rs.9284

Thus as on 1.1.2016 the minimum & maximum family pension to Bank employee

retired after 31.10.2017 were as under-

Family Pension In Jan-2016 Basic Pension DA 39.8% Total Pension

At Minimum- Basic Pension Rs.4448 Rs.1770.30 Rs. 6218.30

At Maximum Limit of Basic Pension Rs.9284 Rs.3695.03 Rs.12979.03

The family pension of earlier retirees from 1.1.1986 is lower than shown above. The

Family Pension to the top executive– General Manager is Rs. 12979. 03, but the minimum

family pension of the lowest paid retiree of Central Govt. is Rs.9000/ in Jan-2016 as per 7th

Pay Commission. Thus while pension to Bank Pensioners is much low even below the

minimum subsistence required for very normal livelihood, other irony of the fate is that the

pension for top executive– General Manager of Bank if retired before 1.1.1986 was Rs. 3455/

and family pension was just Rs.1728/- in Jan-2016. At present for the month of July-2017 it

is Rs.3701 and Rs.1850/- respectively. as IBA CIR/HR & IR/D/G2/2016-17/1998 dated

01.02.2017.

The Bank pensioners are demanding pension updating but on plea of resultant

increased load on Banks, these are not even discussed either at Govt. level or at IBA level.

The Associations of Bank Pensioners have not lost hopes and trying to get the demand

accepted by Govt. & IBA.


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HISTORY OF DELAYING DUES OF THE PENSIONERS BY BANKS

The Supreme Court had on 20-7-2017, decided the issues of benefit of Reg-26 to specialist

retired officers of bank. A good number of representations have reached Head Office and the

eligible officers are anxious to know the development. As you are aware the Case was linked

with case of Bank of Baroda. Both the Banks filed Review Petition and were dismissed. The

decision for payment of benefit to pensioners is not yet taken by Bank.

But we should not forget that it is not the first time that Banks are delaying the due

payments to retirees/pensioners. During past settlements from 5th to 10th every time

retiree/pensioners have been subjected to such acts by way of joint notes that created

circumstances warranting legal recourse by retirees and Banks got the opportunity to drag

the matters in courts for years together.

The question arises why so?

The banks are doing business of interest earnings. This basic and foremost objective is to be

achieved by them. The acts are of indication that Banks are religiously working on their main

objective of earning interest may be by the above modous that hurts their own retired

employees. This may be for the reason that these retirees are of no more use to Banks.

Here are all the EIGHT Such examples. Please study and do not forget the history that the

legitimate dues could be earned by the retirees only through Courts.

1. In 5th Bipartite the Pay Scales were made effective from 01-07-1993, the Gratuity

Calculations based on revised Pay was made applicable only for the employees who retired

on or after 1-11-1994. Thus those who had retired between 1-7-1993 to 31-10-1194, the

calculation of gratuity was done on old pay scales and thus they were not paid difference of

gratuity amount. The matter was decided by Supreme Court on 29-3-2017 in favour of

retirees.

2. The 6th Bipartite was to expire on 31-10-1997 but it was made effective from 1.4.1998. Thus

pensioners retired during 1-11-97 to 31-3-1998 were at loss, in respect of Basic Pension.

None of the retirees or pensioner fought against above injustice and Banks were benefitted by

paying lower pension to the approx. 5000 retirees of the period from 1-11-1997 to 31-4-

1998.

3. In 7th Bipartite the Basic Pay for the pensioners was accepted at 1616 CPI where as the Pay

revision was at 1684 CPI. Thus employees retired during the period were given lower Basic

Pension at around 41% instead of 50% of Basic Pay. Matter is pending in Supreme Court.

4. During the block period of this settlement the SVRS -2000 Scheme was offered by Banks and

approx 80000 employees retired under VRS 2000 scheme during the year 2001. Banks

subsequently amended Pension Regulation-28 and denied benefit of Reg.29 (5) to VRS

Pensioner. Supreme Court on 27-03-2009 decided the issue of Reg.29 (5) in favour of

pensioners.IBA filed Review Petition No. 1112/2009 on 28-4-2009 which was dismissed on

12-8-2009.IBA in the Month of August 2009, issued circular to all banks to follow the apex

court order. But Vijay Bank & Allahabad Bank filed SLPS in Supreme Court. These had also

gone against Banks and it was only after order of Supreme Court, Allahabad Bank and Vijaya

Bank passed on the benefit of Reg.29 (5) to VRS pensioners in March-April 2014. Pensioners

of State Bank of Mysore and State Bank of Travancore has not yet got the benefit of Reg29(5)

as both the banks are delaying by dragging the appeals in Supreme Court.

5. 8th Bipartite – Here 100% DA neutralization was given to employees and retirees retired after

1-11-2002, but all existing pensioner prior to that date continued to at tapered DA rates. The

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matter is pending in Supreme Court, though judgment is reserved on 01-08-2017, but wait is

continuing.

6. In 9th Bipartite – Second Pension Option was given to CPF opted retirees also. In actuarial

valuation of pension liability, the calculations were for CPF optees in reference to data &

number of such retirees as on 31-03-2008. The estimated required funds as on 31-3-2008,

was 156% of CPF amount of these retirees. Retirees were made to contribute 156% for the

required fund. But they were paid pension from 27-11-2009, instead from 1.4-2008. Thus all

these were put to Loss of Pension of 20 months & decreased commutation amount to the

retirees of this period (1-4-2008 to 26-11-2009).

7. Further in this settlement as per Joint Note the second option was for all retirees, but IBA by

inserting the word “Retired On Superannuation” in its circular to Banks created the scope to

Banks for denying to other types of retirees. The Voluntarily Retirees had to go to courts and

they could get the chance by orders of the courts only. But the second option to compulsorily

retired officers had not yet been given as a matter of rule.There are judgments by Supreme

Court

8. In 10th Bipartite- The salary revision was made with a new concept of increase in pay packet

by 15%. All felt that it is good. But the increase in Basic Pay was just 3.23% (Merger of DA &

Increase of 2% on it), for the purpose of Pension. The special allowance was not counted for

Pension. Thus in this settlement employees were also subjected to curtailment in pension

benefits.

I had gone in a bit details of Bank’s actions on the above, to point out that despite Apex

Courts Orders, all Banks dragged the matter for years just to earn profits from the unpaid

dues of old pensioners. With this attitude IBA/ Banks have ditched the retirees in every

settlement and due benefits could be earned through courts only but with much delay, and in

the meantime Banks earned profits from the unpaid dues of pension of these retirees.

Now about the Review Petition by BOB & Allahabad Bank in Reg-26 Matter-

As a legal right & remedy available to banks the Review Petition in Supreme is last recourse.

The review petition is first submitted to Registrar of the Supreme Court. The registrar

registers it and allots a number. It may take 1-2 months. Thereafter the registrar prepares

the office report & submits before the court judges to get the date. Generally the chamber

hearing is done in such Review Petitions and in case there is any conflicting law point in the

earlier judgment it is fixed for further notice to the parties, otherwise it is dismissed in

chamber hearing itself.

In the matter of Benefit of Regulation 29(5) to SVRS retired pensioners the Supreme Court

had decided the issue on 27-03-2017. IBA had filed Review Petition on 28-04-2009; it was

Registered On 14-07-2009 and was Dismissed On 12-08-2009.

So please wait for the usual time. But banks are succeeding in detaining the due amounts of

crores of rupees of pensioners and earning out of it in line with the objective of Bank

business.

Yours

S.K.MISHRA –BHOPAL – 16-09-2017

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Need of United Legal Efforts for Getting Justice to Bank Pensioners

Several dues were curtailed /denied to the Pensioners, by IBA/ Banks during last

Bipartite Settlements. Individuals adopted the legal routes. The justice could be achieved

only through the apex court - the Supreme Court. But despite the judgments by Supreme

Court the Banks had not followed the judgment as applicable to all similarly pensioners/

retirees. The examples are –

1. In the matter of benefits of Reg-29(5) to Special VRS – 2000, pensioners were denied.

After the favorable judgment dated 27-03-2009, by Supreme Court t in Civil Appeals No

1942 -1957 of 2009, filed by five Banks, the IBA filed Review Petition. This Review Petition

was dismissed and IBA issued circular to all banks to pass on the benefit to pensioners.

But Allahabad Bank and Vijaya Bank continued the Appeals. The pensioners of Allahabad

bank & Vijaya Bank were given the benefit only in 2014 when another order was passed

by Supreme Court. It is to bring to knowledge that State Bank of Mysore has not given the

said benefit as yet and the appeals by this bank are still pending in Supreme Court for the

reason that a large number of individual pensioners had adopted the legal route and this is

taking time.

2. The eligibility for Second Option to Compulsorily Retired Officers of Banks has been

decided by Hon’ble Supreme Court in cases against Andhra bank (SLP No. 35449/2013

decided on 5-9-2015) and Punjab & Sind Bank (SLP No. 8506/2016 decided on 13-04-

2016). But these two banks have given chance of Second Option only to the individuals

who were in Supreme Court. All similarly placed retired officers are denied the chance by

all the Banks. As much as six high courts have also adjudged the matter in favor of such

officers, but no bank has yet given chance of Second Pension Option to Compulsorily

Retired Officers.

3. In 7th Bipartite Settlement it was decided that the Basic Pay for pension purpose would be

at the pre-revised pay and the dearness allowance thereon calculated at 1616 CPI. Thus

pension fitted was lower than should have been as the Pay Revised at 1684 CPI.

Resultantly the employees retired during that period were given lower Basic Pension at

around 41%, instead of 50% of Basic Pay. Total adversely effected pensioners were

around 1.05 lac, including approximately 0.80 lac SVRS 2000 Scheme, retirees.

In this matter, a large number of Writ Petitions were filed in High Courts in Southern

India, during 2000 to 2002 by pensioners individually. Most of these were decided in

favour of pensioners, Banks filed appeals in Supreme Court. The Matters is still undecided

for 16 years. The only reason appeared is, very large number of Writ Petitioners in

individual capacity.

CAUSES OF DEALY - As per court procedure, the notices are issued to all respondents (In

above cases the 713 individual pensioners), service of notice is recorded, their replies are

awaited and received/recorded in cases, where after, counter–reply by appellants are

received & recorded. After completing the said process, the dates for arguments are fixed

and heard from each side. One can imagine how long should it take for 713

respondents. The result is that the matter is still not finally decided.

From the facts as above, it should be understood that the matter of common cause of the

Bank Pensioners & Retirees must be taken up by a group formed as Registered Body

or Union or Association of Pensioners. Here only the registered body will represent for

all the similarly placed pensioners / retirees in the court and benefit will come to all.

81


It is also a fact that till date in all the disputed/denied pension benefits, the individuals

have approached the courts. But in the extra enthusiasms by some of the groups as

individuals, they have filed the Writ Petitions in a large number and that had

delayed the process of getting early justice from the court of law.

4. Now take the example of case of 100% DA neutralization to pre-Nov -2002 retired

pensioners. Some individuals filed the Writ Petitions in High Court of Madras. The single

judge bench decided in favour of pensioners, but Division Bench reversed the order. The

individuals filed SLPs in Supreme Court, which were dismissed in Feb-2017. But

fortunately the formal united group in the name of United Bank of India Retirees Welfare

Association had also filed the WP in Calcutta High Court. This case came up at Supreme

Court level where Retired Bank Officers National Confederation, Association of Retired

IOBs’ Employees and All India Bank Retirees Federation have become the impleaders. This

has helped all the retirees with availability of very experienced advocates and the now the

judgment is reserved. The judgment will be applicable to all pensioners by virtue of the

Fact that Associations of Retirees and Pensioners are now party in the case.

In present days pensioners & retirees have opportunity of becoming members of All India

Pensioners/Retirees Associations of individual banks (Public Sector Banks). The pensioners

can now impress upon their Associations to be the party in court cases of common cause.

Hope pensioners /retirees will understand the benefit of unity under Associations.

List of mentioned 713 Appeals pending in Supreme Court is also given.

Yours

S.K.MISHRA – BHOPAL - 30-09-2017

LIST OF APPEALS PENDING IN SUPREME COURT

IN THE MATTER OF LOWER PENSION AT 1616 CPI APPEAL NUMBERS

By BANKS No of Appeals

C.A. No. 005525 / 2012 BANK OF BARODA 1

C.A. No. 005611 / 2012 BANK OF BARODA 1

SLP(C) No. 020661 - 020668 / 2012 CANARA BANK 8

SLP(C) No. 012038 / 2013 CANARA BANK 1

SLP(C) No. 031470 - 031474 / 2012 INDIAN OVERSEAS BANK 5

C.A. No. 003257 - 003262 / 2013 STATE BANK OF MYSORE 6




C.A. No. 008357 / 2014 STATE BANK OF MYSORE 1


SLP(C) No. 023777 - 023797 / 2012 SYNDICATE BANK 21

SLP(C) No. 023773 / 2012 SYNDICATE BANK 1




C.A. No. 003026 - 003253 / 2013 VIJAYA BANK 228

TOTAL NUMBER OF APPEALS = 713 TOTAL BANKS INVOLVED - 6 713

S.K.MISHRA – BHOPAL - 30-09-2017

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82


Whether We Will Ever Care For Paying Capacity Of the People?

‘Government of the people, for the people and by the people’

The Indian Constitution provides a comprehensive framework to guide and govern the

country. The Constitution contains a chapter on the directive principles of state policy that

are in the nature of directives to the Government to implement them for establishing

social and economic democracy in the country. These principles are considered

fundamental in the governance of the country.

The opening and last sentences of the preamble in Constitution: “We, the

people... adopt, enact and give to ourselves this Constitution” signifies the power is

ultimately vested in the hands of the common people.

As spelt out above in constitution, “The Common People” are the “Masters” of

Government & Govt. Employees. The Govt. Employees are public servants, and are paid Pay

& Allowances from the exchequer created mainly by the taxes collected from the “Common

People”. But whether the so called “Master” – “The Common People” have any role in

deciding the payments to these servants, it is a big question. It is said that there is indirect

involvement of the “Common People” in deciding the Pay & Allowances of the Public Servants

through Pay Commissions.

What is a Pay Commission? It is an administrative system/mechanism that is set up

by government of India to determine the salaries of government employees. Every Pay

Commission does its research and then produces its recommendations to the government of

India, which GOI accepts or rejects. Mostly members of Pay Commission are some very

senior government servants, economists, Supreme Court judges and people from different

fields. It does its research on market, inflation, and whole lot of financial things to suggest

salary changes for a particular time-frame.

The First Pay Commission chaired by Shri Srinivasa Varadacharia was constituted in

1946, and since then, every decade commission is setup by GOI to decide the wages of

government employees.

But often the “Paying Capacity” of the “Master” – “The Common People” is ignored,

while suggesting the “Salary Revision”. The Salary Revision has always been aimed at

increase in Pay & Allowances.

Paying Capacity of Master Vs Pay & Allowance of Public Servants

The first pay commission was based on the idea of “living wages” to the employees.

The minimum basic pay for Class IV staff was raised from Rs 10/- to Rs.30/- and for Class III

from Rs 35/- to Rs.60/- per month. The Commission had fixed Rs.55/- as minimum wage

(Rs.30 plus Rs.25 as Dearness Allowance). The recommendations were accepted and

implemented in 1946.

The minimum wages to Govt. Employees in 1946, 1957 and 1986 were Rs. 55/-

Rs.80/- and Rs.750/- respectively, as per Central Pay Commissions recommendations

accepted by Govt.

During the corresponding years the ,Per capita Net National Income at factor cost at

constant prices, was Rs.7513 in 1950-51, Rs.8644 in 1957-58 and Rs.13751 in 1986-87

taking the base year of 2004-05,as reflected in Economic Survey of India report for year

2014-15, released by Ministry of Statistics and Programme Implementation dated 19-06-

2015.

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In Jan-2016, minimum wage is at Rs.19800/ (Rs.18000/ Basic Pay & Rs.1800/ Grade

Pay) as recommended by seventh pay commission & accepted by Govt. The per capita

income for the year 2015-16 was Rs 93393 at prices of 2016.

The minimum pay and per capita income for the earlier corresponding years- 1947,

1957 & 1986 converted at Purchasing Power Parity (PPP) in 2016 and increase so calculated

from 1947 to 2016, from 1957 to 2016 & from 1986 to 2016, clearly speak that the

minimum pay of Govt. employees have been increased disproportionally higher than increase

in Per Capita Income of Indians, during these periods. The following table may be studied

carefully.

INCREASE IN MINIMUM PAY Vs INCREASE IN PER CPITA INCOME IN PURCHASING POWER PARITY TERMS

During Minimum Monthly Pay

Increase Per Capita Income

Increase % Increase in

Period In Year By CPC At PPP in 2016 In PPP Base 2004-05 At PPP in 2016 In PPP Pay to Income

1947-2016 1946 55 5178 382.4% 7114 39434 236.6% 161.63%

1957-2016 1957 80 5760 343.8% 8644 41804 223.2% 154.03%

1986-2016 1986 750 7297 271.3% 13751 51665 180.6% 150.27%

7th CPC 2016 19800 19800 NA NA 93293 93293 NA

Interpretation of Above Comparisons

1. The increase in Minimum Pay was 382.4% and increase in Per Capita Income was 236.6%

during the period from 1947 to 2016.Increase in Minimum Pay was 61.63% extra.

2. The increase in Minimum Pay was 343.8% and increase in Per Capita Income was 223.2%

during the period from 1957 to 2016.Increase in Minimum Pay was 54.03% extra.

3. Similarly during the period from 1986 to 2016 the increase in Pay was 50.27% extra as

explained hereunder -

The minimum pay being Rs.750/- in 1986, is equal to Rs.7297 in PPP terms in Jan-

2016. This is revised to Rs.19800/ for Jan-2016, thus increase in minimum pay in PPP terms

is (19800 divided by 7297) 271.3%, during the period from 1986 to 2016.

The per Capita Income being Rs.13751/- in 1986, is equal to Rs.51665/ in PPP terms

in 2016, thus increase in per capita income in PPP terms is 180.6% (93293 divided by

51665), for the period from 1986 to 2016.

Thus by above Pay Revisions, the increase of minimum pay was 150.27% (271.3%

Divided by 180.6%) of increase in per capita income during the corresponding period.

Thus approx.50% extra increase has been made, in the Salaries of Govt. employees,

in relation to increase in the per Capita Income of India. The paying capacity of the

“Common People” the “Masters” had not been carefully taken into consideration while

increasing the salaries of the “Public Servants”.

It is not the case that the above facts did not come to the notice of the Pay

Commissions. The Seventh Pay Commission, in its report at Para No. 6.2.25 have compared

the GDP per capita in comparable purchasing power parity (PPP) terms, for the year

2014.This comparison was based on the data of the World Bank for the three countries in the

table below.

The pay commission mentioned that the Juxtaposed are the salaries of defence personnel on

an annual basis for the three countries compared. These are based on what has been

reported by IDSA.

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Comparison Based on Per Capita Income COUNTRIES

HEAD USA UK India

1.Per capita income Per Annum 54,630 39,137 5,833

2. Pay General/Equivalent 1, 81,500 2, 69,868 1, 40,520

3. Sepoy/ Equivalent 16,992 20,700 16,332

Ratio of Salary to per capita Income

(Row 2/ Row 1) 3.32 6.9 24.09

(Row 3/ Row 1) 0.31 0.53 2.8

Comparison Based on Purchasing Power Parity (PPP) COUNTRIES

Rank USA UK India

General/ Equivalent1 15,125 22,489 11,710

Sepoy/ Equivalent5 1,416 1,725 1,361

The conclusion by the Seventh Pay Commission on above comparisons was as under -

At Para - 6.2.26 - The tables above point to the fact that defence service officers and

JCO/ORs in India, based on VI CPC pay scales, are placed quite well in terms of pay, even in

relation to defence personnel in countries like US and UK, where the GDP per capita in PPP

terms for the country as a whole is significantly higher than that of India - 9.4 times in the

case of US and 6.7 times in the case of UK.

At Para - 6.2.27- These conclusions are equally applicable to Civilian employees who are

similarly placed.

At Para - 6.2.28 - The above analysis does not take into account the augmentation

of pay being recommended by this Pay Commission.

The Seventh Pay Commission has not considered the comparison as per Para 6.2.26

above , which might have lead to a situation where a serious thought warranted for

decreasing the Pay & Allowances of Public Servants in India.

It is worth noting from the above comparison, that in India, the ratio of Pay to Per

Capita Income in case of General or Equivalent is 7.256 times higher & in case of Sepoy or

Equivalent is 9.032 times higher than this ratio in USA. Thus by average, we have been

paying 8.14 times higher Salaries than that in USA to Govt. Employees in relation to

compared Per Capita Income Per Annum in 2014. It must also be noted that GDP of USA was

9.4 times of GDP of India in 2014.

The Pay and allowances to Public Servants being much higher are being tolerated by

the Common Man, in the circumstances where Planning Commission defines the income of

Rs.32/ per day per person as sufficient enough for exclusion from the poverty line. As per

reports of planning commission in the year 2015, based on the said income criteria 26.98

Crores Indians – 21.92% of population of our country were below poverty line.

Analysis of Payment on Pay & Allowances and Pension -

Another data from Seventh Pay Commission Para 2.1.18 gives the expenditure on

pay, on pension and total in percentage terms of GDP of our country for the years 2009 to

2015 as under-

Head Statement (In percentage)Ratio

Year 2009 2010 2011 2012 2013 2014 2015

PAY/GDP 2.05 2.47 2.03 1.94 1.92 1.87 1.88

Pension/GDP 0.84 1.20 1.00 0.94 0.95 0.92 0.92

Total PAP/GDP 2.89 3.67 3.04 2.87 2.86 2.79 2.81

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The figures of GDP in Rs Crores are also available on the web-site of Planning

Commission for the years 2009 to 2015. I have derived the amounts of expenses on Pay,

Pension & Total (Pay & Pension), on the basis of above percentages. The derived data is as

under-

Head Data Of Pay & Pension Paid, Derived On the Basis of percentage ratio on GDP & GDP in Rs.Cr. Crores Year 2009 2010 2011 2012 2013 2014 2015

GDP Rs Crores 5,630,063 6,477,827 7,795,313 8,974,947 10,159,884 11,355,073 12,876,653

Pay & Allowances

115416 160002 158245 174114 195070 212340 242081

Pension. 47293 77734 77953 84365 96519 104467 118465

Total PAP 162709 237736 236198 258478 291589 316807 360546

At Para 10.1.14 of VII CPC details of Payment on Pension is given for years 2008 to

2014. For the year it is Rs. 104101 Crores , which is 99.65% of derived figure , thus the

derived figures are taken for arriving at the other relevant data of Average Pay & Pension

Per Person Per Year as under-

Average Pay & Allowance Per Employee Per Annum in 2010, 2014 & 2015

Heads Employees In Jan In March

For Year 2010 2014 2015

Number of employees - Lacs 32.31 33.02 32.67

Pay & Allowance Paid Rs Crores 160002 212340 242081

Average Pay & Allowance Per Employee Paid Rs. 495210 643064 741102

Average Pension Per Pensioners Per Annum in 2007 & 2014

Pensioners - As Per VI CPC – In 2007 As Per VII CPC at Para 10.1.18 in 2014

In Year 2007 2014

Total Number of Pensioners -Lacs 38.41 51.96

Pension Paid In Next Year Rs Crores 33823 118,465

Average Pension Paid Per Pensioner Rs. 88,058 227,993

Analysis of Planed Expenditure of Central Government

The emphasis of our Govt. for decades had been for eradication of the poverty and improvement in living standard of the Common Man. The planned expenditure of the Govt. thus must aim to spend more as capital expenditure, which will develop the infrastructures &

consequently will develop economy in a way that facilitates more earning opportunities to Common Man.

The data on planed expenditure obtained from the site of Planning Commission for years

2000, 2005, 2010 & 2015 are as under-

Detail of Central Plan Expenditure as % of GDP at Current Market Prices (12 July, 2014) Rs. Crores

Year GDP of Plan Revenue Plan Capital Total Plan Expenditure As %age of GDP

% of

India (A) Expenditure(B) Outlay(C) Exp.(B+C)= D B to A C to A D to A C to D

2000 2,012,198 38,308 32,012 70,321 1.90% 1.59% 3.49% 45.52%

2005 3,242,209 87,494 44,798 132,292 2.70% 1.38% 4.08% 33.86%

2010 6,477,827 253,884 49,507 303,391 3.92% 0.76% 4.68% 16.32%

2015 12,876,653 453,503 121,497 575,000 3.52% 0.94% 4.47% 21.13%

It is evident that the planned capital outlay which was 45.52% in 2000 has gone down to

21.13% in 2015.The Plan Revenue Expenditure that includes the expenditure on Pay & Allowance have increased from 54.48% in 2000 to 78.87% in 2015.

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REVENUE DEFICIT

Year 2009 2010 2011 2012 2013 2014 2015

GDP at Cu. MP (Rs Cr) 5,630,063 6,477,827 7,795,313 8,974,947 10,028,118 11,355,073 12,876,653

Revenue receipts 540,259 572,811 788,471 751,437 879,232 1,029,252 1,189,763

Revenue expenditure 793,798 911,809 958,724 1,145,785 1243514 1399540 1563611

Revenue deficit 253,539 338,998 276,512 394,348 364,282 370,288 373,848

Plan expenditure 275,235 303,391 373,092 412,375 413,625 475,532 575,000

Non-plan expenditure 608,721 721,096 735,657 891,990 996,747 1,114,902 1,219,892

TOTAL EXPs 883,956 1,024,487 1,108,749 1,304,365 1,410,372 1,590,434 1,794,892

Source – Economic Survey 2013-14 Data Book to PC – Union Budget 2014-15 Page No.25

From The Foreword of Seventh Central Pay Commission Report

At Para 1.6 of the report the Seventh Pay Commission started with following foreword-

“What should be the norms for governance? This has been a moot point through ages and

the norms of the governance have changed from time to time. If we go to the past history of

ancient India, we have many scriptures which have dealt with issues of governance and

those norms are also relevant in the present time.”

“Bhagwat Gita tackles many management issues at the grass root level and offers feasible

solutions on the principles of value-based ethics, enlightened leadership and human quality

development. It says: (Ch. III Karmayoga Shloka 21)”

“Whatever action a great man performs, common men follow and whatever standards he

sets by exemplary acts, all the world pursues”. It is further stated in the Gita that “where

there is Dharma there is victory” or, in other words, success goes hand in hand with

righteousness.

At Para 1.7 of the report the Seventh Pay Commission quoted-

“Chanakya also, in his celebrated discourse “Arthashashtra,” emphasized that the Dharma

Sukti is applicable to both, a ruler and the common man. It is necessary to follow Dharma in

all walks of human life.”

CONCLUSIONS

If derived from the literature of ancient India the norms of the governance

based on the Dharma of the ruler – in present context – Duty of Elected

Government is to ensure that Education, Health Care, Security and Justice is

provided to the Common Man without cost.

Every elected Government lead by any political party had been committing in their

manifesto for betterment of the Common Man, the ground realities are altogether different.

The quality of Education & Health Care provided by Government with very limited resource

provisions has deteriorated to the level that hardly any Govt. Employee prefers Govt. School

for education and Govt. Hospital for health care. It has lead to a situation that education &

health care has become a business in the hands of private players, who are concerned for

the profits and it has gone beyond reach of Common Man. The position of security is now

matter of concern in every State. The justice is getting delayed by decades for the sole

reason that Judiciary is much short of number of judges and required infrastructure.

All it needs more investments & more expenditure in the field of Education, Health

Care, Security and Justice, by Govt. But the expenditure on Pay & Pension does not leave

scope for such investments & Expenditure in terms of Dharma of the ruler.

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The fiscal deficit at average 5% of GDP had always been the main concern of the

Govt. and it can be brought down only by curtailing the revenue expenditure particularly on

Pay & Pension, and making funds available for capital expenditures.

When average annual pay of Rs.741102/- per Servant and on retirement of

the Servant the average annual pension per pensioner is Rs 227993/-how the so

called “Masters” – “The Common Man” now given new name- “The Mango Man” can

get the attention of the Govt. that is expected to be the Dharma of the ruler.

The only way out appears to me is to control the increases in Pay & Pension,

so as to reduce the revenue deficit and have sufficient funds available for the main

four areas Viz. Education, Health Care, Security and Justice in line with directive

principles given in Constitution to the Government & to implement them for

establishing social and economic democracy in the country.

S.K.MISHRA – BHOPAL -15-08-2017- Happy Independence Day

How the Pay & even Pension have reached to Rs in lacs P.M.? Read Next Article

****************

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HOW PAY OF CENTRAL GOVT. EMPLOYEES INCREASED EXTRA BY 161%

AS COMPARED TO INCREASE IN PER CAPITA INCOME OF

INDIANS DURING 1947 TO 2016.

The Pay of Central Govt. Employees is revised every decade based on the

recommendations of Central Pay Commissions. A noble thinking and ideology always found

place in prefaces and forewords of the Central Pay Commissions, before going for

recommendation of increase in Pay & Allowances of Govt. Employees. Viz-

a. Sixth Pay Commission - The efforts of the Commission have been to devise a suitable

pay package which will not only provide enough incentive to retain the brightest officers

but also attract the best to join it in future.

b. The sixth CPC had at Para 1.2.4, written that a fair comparison based on principles

of equity and social justice, also makes it imperative to take into account the

economic conditions of large sections of the community that are less privileged

than Government employees and several of whom live below the poverty line.

c. Seventh Pay Commission - For fixing salary, the Commission has mainly been guided

by various factors like ensuring fair wages keeping in view the capacity of the

Government to pay, the inflationary impact of such increase on the economy in general.

But the spirit of prefaces and forewords as above, appeared to be lost sight of, if

analyzed from the angle of Paying Capacity of Common Man. During the period from 1947 to

2016, the Per Capita Income increased by 236.6 % whereas the Pay of Central Govt.

Employees increased by 382.4% in Purchasing Power Parity Terms. As a result comparative

increase in Pay during 1947 to 2016 had been approx 161.63% of the increase in Per Capita

Income of Indians.

The comparison of Per Capita Annual Income of Indians with what had been paid as

Average Pension and Average Pay & Allowances per employee; more clearly reflect the bitter

fact that Paying Capacity of Common Man had not been considered at all.

Table – 1. Average Amount Spent On Pay, Allowances & Pension Per Person Per Annum - Rs.

During Pay & Allowances Paid Pension & Commutation Paid

Year Rs Crs No. Employees Rs PA/Per Rs Crs No. Pensioners Rs PA/Per

2014-15 242081 4712000 513754 118465 5196000 227993

2015-16 258760 4673000 553734 125842 5310000 236991

2016-17* 290900 4680000 621581 142600 5390000 264564

2016-17# 359300 4680000 767735 176300 5390000 327087

Table – 2. AVERAGE PAY & AVERAGE PENSION PER HEAD OF EMPLOYEES Vs PER CPITA INCOME OF INDIANS

During Pay P.A./Empl/Head As %age of Pension As %age of Per Capita Average As %age of

Year Per Empl. Fmly Of 3 Per Capita Per Head Per Capita Income Pay Out Per Capita

2014-15 513754 171251 195.16% 130282 148.47% 87748 150767 171.82%

2015-16 553734 184578 197.85% 135423 145.16% 93293 160001 171.50%

2016-17* 621581 207194 201.15% 151179 146.77% 103007 179186 173.96%

2016-17# 767735 255912 248.44% 186907 181.45% 103007 221409 214.95%

2016-17*- The Estimates before Implementation of Seventh Pay Commission Pay Revisions. 2016-17#- The Estimates after Implementation of Seventh Pay Commission Pay Revisions.

Sources - Indian Public Finance Statistics, Ministry of Finance, CPC Reports,

Economic Survey 2013-14, 2014-15 Data Book to PC – Union Budget 2014-15- 2015-16, www.indiabudget.nic.in

https://dbie.rbi.org.in/DBIE/dbie.rbi?site=home,http://planningcommissionarchive.nic.in/

https://dbie.rbi.org.in/DBIE/dbie.rbi?site=home

http://planningcommissionarchive.nic.in/

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THE PREFACE AND FOREWORD OF CPC –

“Fair comparison based on principles of equity and social justice, also makes it imperative to

take into account the economic conditions of large sections of the community that are less

privileged than Government employees and several of whom live below the poverty line”

The Table – 2, Above Glaringly Tells the Truth of Principles of Equity and Social

Justice

Where the Spirit of prefaces & forewords lost sight of by Pay Commissions-

1. Exorbitant High Increase In Fifth Pay Revision

Starting from Fifth Pay Commission on the plea of vast change of global economy, a

notion was developed that the avenues for talented young persons have opened up; and

several of them are being hired by the private sector for emoluments much higher than in

the government sector.

Mere comparison of the pay without taking cognizance of the total package of

allowances and benefits available within the Government can never be appropriate especially

as the value of pension granted by the Government and the value of job security provided

cannot be undermined since they form major components of the total package. Moreover,

job related stress is significantly lower in the Government and work schedules provide a

more favourable work-life balance.

The fact was that keeping aside the CEOs of Corporate, the common working

employees of Private Sector were not being paid higher than the Govt. employees.

Still an impression was created that to retain the talented persons in Govt Services;

pay has to be competitive with pay in private sector. There was no data of talented

employees leaving the Govt. Service, particularly related to persons /top officers at policy

making level of the Government.

Through the findings of the previous pay commission it is found that “Group A”

employees form, less than 5 per cent of the total Central government workforce; Group C

and D are about 90 per cent. Second, it noted that a government job offers many other

benefits not available in the private sector and the fear of flight away from public service

towards the private sector is overblown.”

Despite the above facts being in the knowledge of the Pay Commissions, the special

chapter/ paragraph were written by CPCs to justify the edge to given to IAS officers in

terms of pay. The pay commission termed them as “Core” of the Government, and the

number of such top officers in Central Govt, had been around 26000 to 28000.

To justify much higher payment to this limited number of Officers, the whole paradigm of

payment comparable with private sector was built–up, & the fear of flight away from public

service towards the private sector was created right from Fifth Pay Commissions Reports. An

exorbitant Increase of 40% was given in this pay revision, which was all time high.

The implementation of The Fifth Pay Revision disturbed the financial situation of both the

Central and the State Governments and led to a hue and cry after its implementation. The

Central government's wage bill before the implementation of the commission’s

recommendations was 218.85 billion in 1996-1997 which also included pension dues and by

1999 it shot up by about 99% and the burden on the exchequer was about to Rs. 43,568

crore in 1999-2000

The World Bank criticized the Fifth Pay Revision, stating that the Fifth Pay Revision is the

'single largest adverse shock' to the public finance of the nation. It also said that the number

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of employees of the government was 'not unduly' large, but there was a 'pronounced

imbalance' in the skills. It noted that about 93% of the employees were of 3rd or 4th grade.

From Fifth Pay Commission onwards the focus of the Commissions got shifted mainly to

increase the emoluments of Govt. Employees, particularly of top officers in Central Govt.

2. Running Pay Scale & Grade Pay with 3% PA compounded increment In Sixth

CPC

The pay scales revised by Fifth CPC had a sufficiently long span to ensure that the

employees did not stagnate after getting the benefit of prescribed financial upgradations

recommended under ACPS. However, during implementation the Government increased the

fitment benefit to 40% as against 20% recommended by the Fifth CPC. Many of the pay

scales got `burst’ at the time of initial fixation where revised pay of some of the

employees became higher than the maximum of the revised pay scale and,

therefore, had to be fixed at the maximum of the revised pay scale at the initial

stage itself. These employees, therefore, had started to stagnate right from the time of

implementation of the Fifth CPC pay scales.

The sixth pay commission instead of suggesting correction recommended 31%

increase in Pay Revision and suggested Running Pay Scale & Grade Pay with 3% PA

compounded increment. This resulted in further higher increase in Pay & Allowance of

Govt. Employees.

The compulsion of visible acceptable Ratio of Maximum pay to Minimum pay to rest

around 12:1 benefited the all other cadres of Govt. Employees; and the paying

capacity of country got lost sight of.

It is evident from the Para 4.2.12 of Seventh CPC Report as under -

Quote – “To obtain a comparative picture of the salaries paid in the government with

that in the private sector enterprises the Commission engaged the Indian Institute of

Management, Ahmedabad to conduct a study. According to the study the total

emoluments of a General Helper, who is the lowest ranked employee in the

government is Rs 22,579, more than two times the emoluments of a General Helper

in the private sector organizations surveyed at Rs 8,000 - Rs 9,500.”

All the above facts were in the knowledge of the Pay Commissions, but the trend of

giving additional amounts by one or other way started. Most of such increases given were

not pressed by the Govt employees. These decisions increased the Pay, Allowances and

Pension and exorbitant load on exchequer of Govt. based on the CPC recommendations.

Other Factors That Increased the Pay, Allowances and Pension

Payments to Govt. Employees 161% Extra Compared to Increase

In Per Capita Income of Indians During 1947 To 2016

3. By Higher Dearness Allowance - More than 100% Neutralizations

Pay Commissions increased dearness allowance of the Central Government employees and

gave higher and higher benefits under the improved formula -

a. The III Central Pay Commission recommended payment of DA whenever the CPI rises by

8 points over the index of 200 (with base 1960 = 100). The extent of neutralization

ranged from100% to 35%.

b. The IV Central Pay Commission recommended the grant of DA on a 'percentage system'

of the basic pay (1986). The extent of neutralization now ranged from 100% to 65%.

http://cgstaffnews.com/?page_id=5046

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c. The V Central Pay Commission looked into the issue of differential neutralization and

found it to be injustice to senior officers and recommended uniform neutralization of

100% to employees at all levels.

It is established facts that increase in CPI, which is based on items of consumptions

needs, effects 100% to the employees getting minimum subsistence wages derived in

accordance with norms of Indian Labour Conference of 1957. Higher is the Basic Pay lesser is

impact of Increase in CPI. This was the logic behind tapered DA rates that were neutralized

from 100% to 35% till 1986 and from 100% to 65% during 1986 to 1996.With 100%

neutralizations across at all scales from 1996 onwards, the employees with Basic Pay above

the minimum of scale are being paid, on head of DA, amounts higher than the actual impact

of increase in CPI, on them.

d. The V CPC also suggested that dearness allowance should be converted into dearness pay

every time the cost of living rises by 50% over the base level. As per recommendation of

V CPC the Government merged 50% of the DA with basic pay w.e.f. 1.4.04 and the

dearness allowance continued to be calculated with reference to the AICPI (IW) average

as on 1st January 1996 of 306.33 without changing the base consequent to the merger.

As a consequence, salaries of Government employees are being neutralized more than

hundred per cent. It was continued in Sixth Pay Revision, although commented by Sixth

CPC, but no corrective step either suggested or taken as yet. More than 100%

neutralization is still continuing since 1.4.2004.

Resultantly the very logic that there is always lesser impact of CPI increase over and

above minimum subsistence basic pay, was kept aside in 1996 to Govt Employees and all

those who are drawing higher Basic Pay are getting extra amount over & above the real

impact on their consumptions needs that measures the CPI.

4. Many Allowances were linked to increase in DA-

Besides Dearness Allowance various allowances like House Rent Allowance. CCA,

Traveling Allowance & T.A. on Transfer, Transport Allowance, Non-practicing Allowance, Risk

Allowance, Uniform related Allowances, Deputation Allowance, and Education Allowance etc

are paid to Govt. Employees. These were revised upward in every Pay Revisions, but by a

decision in Sixth CPC, most of these allowances were linked to Dearness Allowance-

Viz-The rates of all the above allowances shall automatically increase by 25% whenever the

Dearness Allowance payable on the revised pay bands goes up by 50%.

It to be noted that in the year 2008 when most of the State Governments

were paying Rs.2500/-& 3500/-Per Month to Primary & Middle School Teachers

(Samvida Shikshak), the amount of education allowance to Govt Employee was

Rs.1000/ per Child for TWO children and Hostel Subsidy was Rs.3000/- Per Child.

By Seventh Pay Commission this amount is increased to Rs.1500/ &

Rs.4500/ per month per child. Children Education Allowance being the absolute

amount is the same across all ranks.

It also may not be out of place to mention here that during the period 2007-

08, the Teachers (Samvida Shikshak ) appointed in primary schools of U.P. were

being paid Rs.2200/ Per Month on contractual basis for a term of 3 years and in

2010-11 they were appointed as Shiksha- Mitra. After a judgment by Court all such

approx. 1.35 lacs teachers have been dismissed and are now path of agitation.

Today only they had planned demonstrations in capital - Lucknow, but were

detained, by police in nearby cities of Lucknow.

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5. By merger of higher DA amounts & increase over it in Pay Revisions

As has been reflected that the conversion of dearness allowance into dearness pay every

time the cost of living rises by 50% over the base level, was compensating more than 100%

of increase in CPI since 1.4.2004, but the whole of that was merged for arriving at Revised

Basic Pay and additional percentage increase were given in Sixth & Seventh Pay Revisions of

2006 & 2016.

6. By Improvement in Pension Terms & Increase In Rate of Pension

a. Third CPC - Increased the pension of civilians, who retired at 58, by 20 percent, from

30 to 50 percent. There was no demand.

b. The Fifth CPC- Increased the percentage of commutable pension from 33% to 40%

of pension along with its restoration after 12 years.

c. The Fifth CPC - The rates of family pension increased from 12% to 30% of the last

pay drawn for all.

d. Sixth CPC -Payment of full pension on completing 20 years of qualifying service,

instead of 33 years as was being paid. It too was without any pressure from

Pensioners.

e. Sixth CPC - Additional quantum of 20%,30%,40%,50% and 100% of pension was

given to Pensioners and Family Pensioners on attaining the age of 80, 85, 90, 95 and

100 years . No logic for such increase in pension in a country whose approx 25%

population is below poverty line.

f. Sixth CPC- Enhanced rate of Family Pension Period increased from 7 years to 10

Years.

g. Sixth CPC – Updating the Pension of all past Pensioners was done by fitment benefit

equal to minimum of 40% of corresponding Basic Pay in revised scale. This was aimed

at being consistent with the fitment benefit being allowed in case of the existing

employees. Consequently all old pensioners got pension increased by 186%

7. By Improvement in other retirement benefits

a. Increase of Encashment of leave – Fourth CPC increased the encashment of

earned leave from 180 days to 240 days and the Fifth CPC to 300 days, making Half

Pay Leave also, en-cashable at the rate equal to half the amount of leave salary

payable during Earned Leave without any reduction being made on account of pension

payable.

b. In Fifth CPC – The encashment of leave was allowed while availing Family Pension.

c. Gratuity - Sixth CPC - The maximum limit of Rs.3.5 lacs on payment of gratuity

increased to Rs.10 lacs and now to Rs.20 lacs – Tax Free.

CONCLUSIONS

A. Big Question On The Very Idea Of Paying Higher Pay To Retain The Talant?

The whole paradigm of payment comparable with private sector was built–up, & the fear

of flight away from public service towards the private sector was created right from Fifth Pay

Commissions Reports and exorbitant high increase in pay was given in Fifth Pay Commission

& Sixth Pay Commissions, as an effort to retain the talent officers in Govt. Service. But it is

surprising that Sixth Pay Commission Recommended a VRS Scheme, as under –

Sixth CPC at Para 11.36 A liberal severance package for employees leaving service

between 15 to 20 years of service.

At Para 6.2.10 The Commission, accordingly, recommends that all Central Government

employees seeking voluntary retirement on completion of qualifying service equal to or

more than 15 years but less than 20 years should be paid one time, lump-sum,

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retirement benefit equal to 80 months’ salary last drawn or average salary, whichever is

more beneficial to the retiring employee inclusive of benefits like service gratuity and

death cum- retirement gratuity that shall stand subsumed.

Analysis of the recommendation –

1. Permitting the employees who are in the age group of 40-45 with experience of 15-19

years to leave the service, is totally against the very purpose of retaining by higher

pay.

2. In this CPC eligibility for full pension was reduced to 20 years of service.

3. As per Pension Rules on voluntary retirement notional addition of 5 years is made for

Pension Fitment, thus employee on voluntary retirement after 15 years will be eligible

for Full Pension @ 50% of last basic and will earn 6 months of pay in a year.

4. By lump-sum, payment of such retirement benefit equal to 80 months’ salary, he will

be earning interest @8% and the amount will be equal to 6.4 months pay per year.

5. Thus employee getting voluntary retirement after 15 years service will be earning

12.4 months pay, having corpus of 80 month’s salary and opportunity to earn from

other sources being free at the age of 40 years with 15 years experience.

Can any employer think of motivating his experienced employee to leave service at above

cost? But Sixth CPC recommended for it.

B. Clean Hands of CPC By Saying (“provided growth is secured as planned”)

The seventh CPC while giving 23.5% increase in pay has given the ideology of paying

capacity as under -–

Para No.2.1.10. … no fiscal space available to increase the share of the total spending on PAP

other than that afforded by GDP growth. The share of PAP in total revenue expenditure

will, at best, stay constant over the medium term.

Para No. 2.1.11 - It therefore follows that any increase in PAP that can be financed

without jeopardizing the government’s macro fiscal parameters can, in the medium term, at

most be equal to the growth rate of GDP. Of course, due to the peripatetic, decennial,

occurrence of the Pay Commission recommendations this condition cannot be met in the

initial year of award, as the award has to adjust for many cumulative factors that have

negatively impacted the purchasing power of the PAP over the historical medium term. Even

so it is important to ensure that the increase in the PAP-GDP ratio in the initial year of the

award is moderate, so that it stabilizes over the medium term (provided growth is

secured as planned).

The Seventh Pay Revision is to cost the government Rs.102100 Crore in 2016-2017, the

Commission has estimated.

In 2013-2014, the government spent nearly 69.4% of its receipts on paying salaries,

pensions and interest on its accumulated debt, and repaying the debt that fell due. In 2015-

2016, this had gone up to nearly 75.3%.Where will it be in 2017-18 after seventh pay

revision?

To sum up it can be said that the Govt. of the People need to be awaken and the

directive principles of state policy that are in the nature of directives by Constitution, to the

Government to implement them for establishing social and economic democracy in the

country are to be remembered and enforced by such awakening.

With best wishes


94


THEORY OF RELATIVITY OF INJUSTICE IN OUR COUNTRY

Dear Friends,

Do not get surprised by reading the subject head. It is true in our country. The concluded

injustice to one class of employees should not always be taken as injustice to all other

employees, even if they are on same footings.

This is what our bureaucrats have proved by their actions. Please study the attached file and

think.

Thank God we have not redefined the applicability of values and ethics on the theory of

relativity.

The Rule Found As Injustice to Central Govt. Employees,

Continued to RBI Employees for 17 Years and

Still Continuing to Employees of Banks & LIC for More Than 21 Years

DA rates were tapered from 100% to 35% during the period from 1976 to 1986 and

were improved a little by reducing the tapering up to 65% for years 1986 to 1996 for Central

Govt. Employees. The Fifth Commission looked into the issue of differential neutralization

and found it to be injustice to senior officers and recommended uniform neutralization of

100% to employees at all levels. This was given effective from 1-1-1996. (Refer Chapter

105, para 105.9 of V CPC)

But for the employees of all the Public Sector Undertaking the tapering that was as

low as up to 25%, was not considered as injustice. For employees, may be of R.B.I., Public

Sector Banks, LIC, General Insurance etc the said injustice continued. It is still continuing

with a large number of Pensioners of the P.S.Us.

Why So?

The Regulatory Acts applicable to these different PSUs does not permit their Boards to

decide the terms of Pay & Pension. It has to be first got approved by the Government of

India, through the Ministry of Finance. Here the role of bureaucrats, in Ministry of

Finance comes into picture. They are entrusted with the responsibility of putting the

proposals of Pension/Pay Revisions moved by the Boards of PSUs for approval of G.O.I. The

bureaucrats, who considered tapered DA rates as unjustified for themselves & got their

100% DA neutralization way back in 1996,did not acted upon the proposals by Boards of

RBI & LIC, rather put the hurdle in the name of Regulatory Acts applied to the PSUs.

Here are the examples –

1. Reserve Bank of India –

The Reserve Bank by circular dated September 1, 2003, revised and updated the pension

of pre-2002 retired pensioners from the year 2002.This stared giving 100% DA

Neutralisation to RBI Pensioners. But under directions of G.O.I. Ministry of Finance, it was

withdrawn by another circular of RBI dated October 10, 2008.

Writ Petition No W.P. No. 710/2009 was filed by Arvind Ganesh Karnik and ors.in

Mumbai High Court against RBI and Union of India on issue of withdrawal of said updating.

The High Court issued order to the effect that GOI should clarify the position. The Ministry of

Finance by letter F.No.I.6/1/58/2008-IR Dated 23.10.2009, took the stand that Board of RBI

is to obtain prior sanction of GOI under Section 58 of RBI Act, 1934 for any such decision,

95


which Board has not obtained. The Board is not entitled to assume, usurp and exercise such

powers, which are not vested with it.

It is interesting to note that the unauthorized updated pension was paid by RBI to pre-2002

retired pensioners for “FIVE Years” form Sept-2003 to Sept-2008 & it was not recovered as

per letter by Ministry of Finance. The said updating was withdrawn only. For such

“Unauthorized Payment of Crores of Rupees, No Accountability” was fixed either on

RBI or on bureaucrats, who were responsible to exercise timely supervision on

such decisions by the Board ob RBI.

2. Life Insurance Corporation of India-

Board of Life Insurance Corporation of India on 24th November, 2001, passed a

resolution as is extracted below:-

“Amendment to LIC of India (Employees) Pension Rules, 1955 – UPGRADING OF Basic

Pension to AICPI 1740 Points and 100% DA neutralization thereon in respect of Retirees prior

to 01.08.1997”

Corporation wrote to the Joint Secretary (Insurance & Banking) on 31st December, 2001,

seeking amendment to the 1995 Rules. Nothing happened thereafter, thus it was not

implemented by LIC.

Aggrieved by the non-execution of the resolution passed by the Corporation preferred

Krishna Murari Lal Asthana & Ors, filed S.B. Civil Writ Petition No.654 of 2007 before the

High Court of Rajasthan at Jaipur. It was decided in favour of pensioners, but the matter

reached up to Supreme Court Level. There were two more WPs decided By High Court of

Delhi and by High Court of Punjab & Haryana, before the Supreme Court. The counsel for LIC

pleaded that for conferment of benefit, either pension or anything ancillary thereto has to be

first got approved by the GOI as prescribed under Section 48 and 49 of the LIC Act.

The Supreme Court decided on 31-3-2015 to transfer all three cases to High Court of

Delhi with direction to decide the constitutional validity of Para 3A of the Appendix to

the Rules. This “Para 3 A” differentiated the pensioners for benefit of 100% DA

neutralization, on the basis of Cut-Off date.

As directed by Supreme Court the Delhi High Court decided the matter by judgment

dated 27-4-2017. Delhi Court did not decide constitutional validity of Para 3A of the

Appendix to the Rules, rather commented at Para 8 as under -

“------------ the issue which survives for consideration and has to be answered relates to

the validity of Rule 3(A) which is restricted to employees, who have retired or died on or

after 1st day of August, 1997. “This, as noticed below, is not the primary issue.”

“The core issue is the prayer of the retired employees/ associations that all retirees prior

to 1st August, 1997 should be given full neutralization and upgradation of basic pension with

effect from 1st August, 1997, ensuring uniform pension for all retired employees, irrespective

of the date of retirement and emoluments drawn at the time of retirement. . In other words,

the retired employees seek enforcement of the precept of ―One Rank One Pension‖, by

judicial verdict contrary to the Rule position.”

The Delhi High Court rigidly sticking and confining to the prayer of the retired

employees/associations did not tested the Rule 3(A) on its constitutional validity. Going

96


further Delhi High Court came out with new term “equalization” and decided that the tapered

DA rates should not be lower than 0.23% for the purpose of equalization. It created new

aspect to be adjudged further. The LIC pensioners are now again in Supreme Court.

Thus shunting of legitimate claim by LIC Pensioners for 100% DA neutralization is

continuing.

Nowhere any of the courts had the questioned the bureaucrats for not acting

timely or not replying to Proposal of Board of LIC forwarded to Joint Secretary

(Insurance & Banking) on 31st December, 2001.

Pension Regulations in-acted for RBI were based on Central Civil Services (commutation

of Pension) Rules, 1981 applicable for Central Government employees, and if the tapered DA

rates that were considered as injustice & the injustice was removed in year 1996 itself for

Central Govt. employees, why it could took more than 17 years to accept the same for RBI

and is not considered as injustice meted to LIC and or Bank Pensioners for around 21 years

by now.

No one can ask them this question. It can also not be questioned that when the Pension

Regulations in-acted for LIC and Banks are also in the lines of Pension Rule to RBI, why the

100% DA neutralization is not being given to LIC & Banks in line which was adopted for RBI

way back in 2013.

It is established and commonly accepted fact that no one questions the bureaucrats for

their not responding or not replying even to the Boards of R.B.I. of LIC, what to talk

of Common Man.

The common man cannot ask any “Babu” even of municipal to reply to the

legitimate application/request submitted. It is up to the wishes and convenience of

“Babu” whether to reply or not.

It was only by way of kindness of bureaucrats that they forwarded to G.O.I. the

proposal of RBI for 100% DA neutralization and improvement in family pension

granted to RBI pensioners from Jan-2013.

Please study and think.

Yours


***************

97


Dear Friends, BHOPAL - 23-12-2017

PENSION FUND OF ALLAHABAD BANK

Much is talked about the pension cost & pension fund of the Banks. Some of the

pensioners’ & retirees’ organizations have commented that banks have not contributed

properly in the pension funds. Some commented that the pension fund has grown by interest

income and the value of pension fund is sufficient to cover the pension updating also.

While I have with me, the consolidated data of pension liabilities of all Nationalised

Banks for the period from 2008 to 2017, I think it proper, not to offer my opinion on the

comments as above by of some retirees’/pensioners’ organization. Rather, I leave it to you

all to form a correct opinion of your own on the subject matter. In this respect I am

appending the figures of our Bank - Allahabad Bank for last 7 years, as of each year ended

March, on Pension Liability arrived at by approved actuaries, the value of Pension Fund, the

interest income from pension fund, the amount of pension payouts and the amounts

contributed by Allahabad Bank for meeting the pension liability as per accounting standards.

Please study it and form a correct view on the subject matter of Pension Liability of

Bank Vs Pension Fund maintained, by our Bank. The similar had been the position/pattern of

other public sector banks, on Pension Liability, Pension Fund and contribution by banks. The

Pension Liability of all nationalized banks was assessed at Rs. 31012.41 crores as on March

2007 and it was assessed to the level of Rs.164488.72 crores as on March-2017.The banks

have paid the pension amounting to Rs. 62104.35 crores & earned interest of Rs. 67392.00

crores on Pension Funds during the period from 1-4-2007 to 31-3-2017. To meet the pension

liability as assessed by actuaries, these banks have contributed Rs 128188.86 crores in

pension funds during last 10 years.

PENSION FUND OF ALLAHABAD BANK

Value of Pension Liability of Allahabad Bank Vs Value of Investments by Pension Fund Trust (Rs Crores)

In Year Ended March 2011 2012 2013 2014 2015 2016 2017

Pension Liability at beginning of year 1870.71 2578.78 3174.75 3697.49 4143.65 4561.30 5214.71

Interest income from pension fund 149.66 206.30 206.81 312.89 319.60 329.81 349.85

Pension paid during year 141.27 167.50 192.89 243.27 297.29 368.99 419.49

Pension Liability at the year end 2578.77 3174.75 3697.49 4143.65 4582.02 5186.91 5777.90

Amt. added by Bank to meet liab. 699.67 557.17 508.82 376.54 416.06 664.79 632.83

Pension liab. to be covered by fund 2578.77 3174.75 3697.49 4143.65 4582.02 5207.63 5770.81

Fair Value of Pension Fund 1781.59 2571.85 3289.10 4093.13 4561.30 5214.71 5770.06

Unfunded Amount Of Pension Liability 797.18 602.90 408.39 50.52 20.72 -7.08 0.75

Unfunded Permitted By RBI Circular 797.18 602.90 408.39 50.52 N/A N/A N/A

Pensioners in Pension Reg -1995 8499 9290 10157 11164 12293 13255 14277

Employees in Pension Reg -1995 20157 19261 18281 17213 15832 14352 12792

Total Empls & Pensrs in Pen Reg-1995 28656 28551 28438 28377 28125 27607 27069

Value of Investments by Pension Fund Trust of Allahabad Bank (Rs Crores)


Central Govt. Securities 380.37 572.49 502.9 495.27 480.76 566.84 687.21

State Govt. Securities 665.78 814.76 1309.06 1765.37 2023.85 2462.91 3026.4

High Quality Corporate Bonds 705.15 1033.63 1291.63 1619.24 1813.57 2156.8 2040.87

Special Deposit Scheme 15.14 10.29 10.53 10.23 10.03 12.52 15.58

Other Investment 15.14 140.68 174.98 207.11 233.08 156.44 0

Total Value of Pension Fund Assets 1781.59 2571.85 3289.1 4097.22 4561.3 5355.51 5770.06

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Investment Percentage by Pension Fund Trust of Allahabad Bank


Central Govt. Securities 21.35% 22.26% 15.29% 12.10% 10.54% 10.87% 11.91%

State Govt. Securities 37.37% 31.68% 39.80% 43.13% 44.37% 47.23% 52.45%

High Quality Corporate Bonds 39.58% 40.19% 39.27% 39.56% 39.76% 41.36% 35.37%

Special Deposit Scheme 0.85% 0.40% 0.32% 0.25% 0.22% 0.24% 0.27%

Other Investment 0.85% 5.47% 5.32% 5.06% 5.11% 3.00% 0.00%

Total 100.00% 100.00% 100.00% 100.10% 100.00% 102.70% 100.00%

Important Notes by Auditors on Pension Fund as appeared in annual reports of

Allahabad Bank for some important relevant years are appended-

Year 2011-

a. By judgment & order of Hon’ble Supreme Court of India in the matter of pension (old)

makes gratuity payment obligatory on the part of the Bank to the old scheme pensioners.

Bank discontinued the old pension scheme w.e.f. October 2010 simultaneously paying

gratuity to these pensioners. Hence, further provisioning is neither made nor required in

respect of Pension (Old) as on 31.03.2011 and in future.

Out of the accumulated provision for Pension (Old) amounting to Rs 168.77 Crore as at

the time of discontinuation of the Scheme, Rs.150.00 Crore has been utilised towards

provisioning against Bank’s liabilities in respect of Additional Load on account of 2nd

Option for Pension (ABEPR-1995) by a section of employees.

The remaining Rs.18.77 Crore has been transferred to ‘Outstanding Liabilities A/C’

to club with an earlier provision of Rs.33.00 Crore made in F.Y. 2009- 10, towards

payment of gratuity in compliance of Hon’ble Supreme Court’s Order, making total

provision on this score to the tune of Rs.51.77 Crore. Out of this, payment to the tune of

Rs.32.61 Crore has already been made to those whose names appeared in the Pension

Scroll under the Scheme in October 2010 and some of the legal heirs of eligible deceased

ex-employees whose claims were received. The balance Rs.19.16 Crore is considered to

be sufficient to meet the payment liability to the remaining judgement beneficiaries.

b. During the year, the Bank reopened the pension for such of its employees who did not opt

for the pension scheme under Allahabad Bank (Employees’) Pension Regulations 1995

earlier. As a result of exercise of pension option by 11557 employees, Bank had incurred

huge liability towards additional load amounting to Rs. 708.07 Crore for Pension which

were to be amortised in terms of Reserve Bank of India circular DBOD

No.BP.BC.80/21.04.018/2010-11 dated 9th February, 2011 in five years at 1/5th of load

each year.

For Second Option the payments were made in Feb-2011- The Pension & Commutation

Paid was Rs. 1928.69 Crores and Contribution received from employees/ retirees was Rs

1220.62 Crores. The Gap of Rs. 708.07 Cores was permitted by RBI to be amortized in

five years i.e. years 2012, 2013, 2014 & 2015.

c. The Bank has since completed the process of implementing wage revision on account of

9th Bipartite Settlement/ Joint Note dated 27.04.2010. The exercise, including payment of

Bank’s contribution to PF on arrear salary, has been completed within the aggregate

99


provision of Rs.275.00 Crore held by the Bank as on 31.03.2010 (Rs.122 Crore and

Rs.153 Crore provided in F.Y. 2008-09 and 2009-10, respectively). The ad-hoc provision

from earlier F.Y. amounting to 47.00 Crore has been applied towards Bank’s liability in

respect of Additional Load on account of 2nd Pension Option

Year 2015 – Unamortized Pension and Gratuity Liabilities:

On re-opening of Pension option to employees under Allahabad Bank (Employees’) Pension

Regulations 1995 and enhancement in Gratuity limits under the Payment of Gratuity Act

1972 during the financial year 2010-2011, the Bank had incurred huge liability towards

additional load amounting to Rs.708.07 Crore for Pension and Rs.39.63 Crore for Gratuity,

which were amortised in terms of Reserve Bank of India circular DBOD

No.BP.BC.80/21.04.018/2010-11 dated 9th February, 2011. As per the provisions of the

said circular, 1/5th of the amortised expenses is to be absorbed each year and

accordingly, Rs.747.70 Crore (i.e.Rs.708.07 Crore for Pension and Rs.39.63 Crore for

Gratuity) has been charged to the Profit and Loss Account in F.Y. 2010-11, 2011-12,

2012-13 & 2013-14, and 2014-15. Following the said directive of the Reserve Bank of

India, during the current financial year the Bank has charged a sum of Rs.149.36 Crore

(i.e. Rs.141.66 Crore for Pension and Rs.7.70 Crore for Gratuity) to the Profit and Loss

Account. The unamortized amount carried forward is Nil.

Sincerely yours

S.K.MISHRA

State President- All India Allahabad Bank Pensioners & Retirees Association – M.P. State, and

Secretary- Allahabad Bank Retirees’ Welfare Society, Bhopal

BHOPAL - 23-12-2017

*************

100



ELIGIBILITY OF BENEFIT OF REG-26 TO SVRS 2000 SCHEME PENSIONERS

There are some pensioners who had retired under Special VRS 2000 in the year 2001. They

are eligible or not for benefit of the Reg- 26 is questioned, because the Reg-26 provides

benefit only for “superannuation pension” (Not for any other class of pension).

Here is the explanation as to how SVRS 2000 Scheme pensioners are also eligible for

benefit of Reg-26 -

i. After introduction of SVRS 2000 Scheme in the year 2000, Bank at the direction by the

Government through I.B.A. amended the Regulation-28 of Pension Regulation 1995. It was

mainly aimed to include the retires who have served for more than 15 years but

less than 20 years as they were not falling under any category for pension

eligibility.

ii. By amending Regulation -28, Banks included all the retirees of Special Voluntary

Retirement Scheme 2000 under the definition of superannuation pension.

The copies of letters in this matter are as under -

The copy of letter of Govt. Of India, Ministry of Finance to

I.B.A. for amendment is as under-

"F.No.4/8/4/2000-IR New Delhi, the 5th Sept 2000

Government of India , Ministry of Finance

Department of Economic Affairs, (Banking Division)

To

The Personnel Advisor, Indian Bank's Association,

Mumbai.

Sub: Amendment to Regulation 29 of the Pension Regulations.

Sir,

I am directed to refer to this Division's letter No.11/1/99 IR dated 29th August 2000

conveying Government's no objection for circulation of Voluntary Retirement Scheme in

Public Sector Banks. The scheme, inter-alia, provides that employees with 15 years of

service or 40 years of age shall be eligible to take voluntary retirement under the scheme. As

per provisions contained in Regulation 29 of Pension Regulations an employee can take

voluntary retirement after 20 years of qualifying service and thereafter becomes eligible for

pension. Thus employees having rendered 15 years of service or completing 40

years of age but not having completed 20 years of service shall not be eligible for

pensionary benefits on taking voluntary retirement under the scheme.

In order to ensure that such employees do not lose the benefit of pension, IBA

may work out modalities and suggest amendments, if any, required to be made in the

pension regulations to ensure that these employees also get the benefit of pension.

Yours faithfully,

Sd/-

(U.P. Singh)

Director (IR)"

******************

101


Letter by IBA to Banks for amending Pension Regulation 1995 for the purpose of

implementation of SVRS 2000 Scheme

PD/CIR/76/G2/G4/ December 11, 2000

Designated officers of all Public Sector Banks.

Dear Sirs,

Voluntary Retirement Scheme in Public Sector Banks

Amendments to Bank, (Employees') Pension Regulations, 1995.

Please refer to our circular letter No. PD/CIR/76/G4/933 dated 31st August 2000

convening the 'No Objection' of the Government in banks adopting and implementing a

voluntary retirement scheme for employees on the lines of what was contained in the

Annexure to the circular. As per the scheme, an employee who is eligible and applies for

voluntary retirement is entitled for the benefit of CPF, Pension, Gratuity and encashment

of accumulated privilege leave, as per rules. Bank (Employees') Pension Regulations, 1955

do not have provisions enabling payment of pension to an employee who retires before

attaining the age of superannuation except under circumstances as in Regulations 29, 30,

32 and 33.

We had, therefore, taken up with the Government the need to incorporate

necessary provisions in the Pension Regulations by way of amendments to Regulation 28

so that employees who retire as above under special/ad hoc schemes formulated by the

banks, after serving for a prescribed minimum period would be eligible for pro rata

pension. Government of India has after examining the proposal conveyed its approval and

desired that IBA advise banks to make necessary amendments to their Pension

Regulations as in the Annexure. We request banks to take note accordingly. Please note

that with the above amendments, employees who apply for voluntary retirement after

having rendered a minimum of 15 years of service under a special/adhoc scheme

formulated with the specific approval of the Government and the Board of Directors will be

eligible for pro rata pension for the period of service rendered as they are to retire

on attaining the age of superannuation on that date.

Yours faithfully,

sd/-

(Allen C A Pereira)

PERSONNEL ADVISER

Thus IBA and GOI letters as above clearly spell that SVRS 2000 Scheme Pensioners are

getting Superannuation Pension under amended Reg-28 and not under Reg-29 .If it is not

so then those who had put in less than 20 years of service cannot be given pension under

Reg-29 as per Pension Regulations 1995, then what category of pension they are being paid

by Banks? What is the answer?

They are being paid pension under amended Reg-26 hence all SVRS Scheme Pensioners

forming uniform group are under amended Reg-26and are getting Superannuation Pension.

*****************

102


Further important notes to support view that SVRS 2000 Scheme Pensioners are

getting Superannuation pension are submitted here under-

a. The definition of Superannuation pension in Pension Regulation 1995

Prior to Amendment it was under Regulation 28

28. Superannuation Pension. - Superannuation pension shall be granted to an employee

who has retired on his attaining the age of Superannuation specified in the Service

Regulations or Settlements.

But for operation of VRS 2000 Special Scheme, at the instance of IBA and with

the approval of the Central Government, Regulation 28 was amended. The

amendment was carried out in the year 2002 with retrospective effect from September 1,

2000. By way of amendment, a proviso has been inserted to Regulation 28, which reads as

follows:

28. Superannuation Pension under amended Regulation 28

"Provided that pension shall also be granted to an employee who opts to retire before

attaining the age of superannuation, but after having served for a minimum period of

15 years in terms of any scheme that may be framed for the purpose by the

Bank's Board with the concurrence of the Government."

Note - The circulars were issued in March 2001, by the Banks relating to amendment of

Regulation 28 after the closer of date of applications submitted by employees for VRS. These

applications could not be withdrawn as per terms of VRS 2000 Scheme.

b. Further it may be pleased that SVRS 2000 Scheme pensioners have been given benefit of

Regulation 29(5) as per Supreme Court orders dated 27-3-2009 in cases of Bank of India

vs. K.Mohan Das and also Supreme Court orders on 14-2-2014 against Allahabad Bank &

Vijay Bank. The cases against Allahabad Bank & Vijaya Bank were decided based on case

of Bank of India Vs. K.Mohandas.

In this connection we are to study the important notes from Supreme Court judgment

the judgment dated 27-03-2009 of the Supreme Court in Civil Appeal No 1942 of 2009

K. Mohandas and others

i) In judgment dated 27-03-2009 the Supreme Court at para 27 termed the VRS 2000

Scheme as a contract.

Quote –

“27 .In view of the admitted position that VRS 2000 was a contractual scheme;

that it was an invitation to offer containing a term that optee will also be eligible for pension

as per Pension Regulations; that an application by an employee for voluntary retirement was

a proposal or offer and that upon acceptance of the application for voluntary retirement

made by the employee and a communication of acceptance to him, the concluded contract

came into existence and the offeree was relieved from the employment, for consideration of

the question posed herein, the court need to examine the contract and the circumstances in

which it was made in order to see whether or not from the nature of it, the parties must have

made their bargain on the footing that a particular thing or state of things would continue to

exist.”

103


ii) Going further the Supreme Court at para 32 commented as under –

Quote -

“32. The fundamental position is that it is the banks who were responsible for

formulation of the terms in the contractual Scheme that the optees of voluntary

retirement under that Scheme will be eligible to pension under Pension Regulations,

1995, and, therefore, they bear the risk of lack of clarity, if any. It is a well-known

principle of construction of contract that if the terms applied by one party are

unclear, an interpretation against that party is preferred”

iii) In judgment dated 27-03-2009 the Supreme Court while ordering for benefit of Reg29

(5) to VRS 2000 Scheme Pensioners had not declared Regulation 28 as ultra vires.

At Para 40 Supreme Court observed and concluded as under -

Quote -

“40. It was submitted on behalf of the banks that amendment to Regulation

28 has neither been challenged nor the said Regulation has been declared ultra vires

and, therefore, that provision cannot be rendered otiose by taking recourse to

Regulations 29. It is true that validity and legality of Regulation 28 has not been put in

issue. It was apparently not done because, according to the employees, amended

Regulation 28 although made retrospective could not have affected the concluded

contract. We have already indicated above as to how the amendment in Regulation 28

in the year 2002 with effect from September 1, 2000 could not have applied to the

optees under the Scheme who had completed service of 20 years. Lack of challenge to

the Regulation 28 by the employees is, therefore, not very material. It is not correct to

say that by taking recourse to Regulation 29, the amendment to Regulation 28

is rendered otiose.”

iv) Finally the Supreme Court at para 53 decided the issue as under-

Quote -

“53.We hold, as it must be, that the employees who had completed 20 years of

service and were pension optees and offered voluntary retirement under VRS 2000

and whose offers were accepted by the banks are entitled to addition of five years

of notional service in calculating the length of service for the purposes of that

Scheme as per Regulation 29(5) of the Pension Regulations, 1995. The contrary view

expressed by some of the High Courts, do not lay down the correct legal position.

CONCLUSION – SUPREME COURT RULED THAT “ employees who had completed 20

years of service and were pension optees and offered voluntary retirement under VRS

2000 and whose offers were accepted by the banks are entitled to addition of five

years of notional service in calculating the length of service for the purposes of that

Scheme”.

So the addition of notional maximum 5 years was given to those VRS

pensioners who had completed service of more than 20 years as a term of

concluded contract that Supreme Court had decided.

104


v) Moreover in the year 2010, Bank opened the Second Option for Pension to retired bank

employees who remained under CPF. This option was given to “Retired Employees retired

on “superannuation”. But the SVRS 2000 retired employees were treated at par with

those retired on “superannuation” and were given second pension option. This was in line

with amendment done in Reg-28 for the purpose of eligibility of pension to SVRS 2000

retirees.

The details are as under -

Allahabad Bank by Instruction Circular No.11143/PA/2010-11/27 dated 15.09.2010 for

Extension of another option to join the Pension Scheme under Allahabad Bank

(Employees’) Pension Regulations, 1995 in terms of Settlement/ Joint Note dated 27th

April, 2010 offered as under-

At Para 3 of Circular - Salient Terms for offer of Another Option were

The terms and conditions for offer of the option are set out below for information of all

concerned:-

3.1 Option will be accepted only from those existing employees, employees retired on

superannuation, employees voluntarily retired under the special voluntary retirement

scheme (ABEVRS-2000) and families of deceased employees/retirees who fulfill the

eligibility criteria set out under Paragraph 1 above, received by the Bank between

20.09.2010 and 18.11.2010 (both days inclusive), in prescribed format at designated

places….

3.3 Employees who ceased to be in service in any other manner than those mentioned

in paragraph 3.1 above (namely, by way of resignation, voluntary retirement other

than those under ABEVRS-2000, on account of punishment imposed on them, etc.) or

their family members, are not eligible to exercise option for pension in terms of the

Settlement/Joint Note dated 27.04.2010.

In view of the facts as above the Pensioners retired under Special Voluntary

Retirement Scheme 2000 are at par with retirees on superannuation, hence they are

also eligible for benefit of Reg-26.

S.K.MISHRA –BHOPAL – 31-12-2017

******************

105


UNITED WE CAN

SO POWERFUL IS THE LIGHT OF UNITY THAT IT CAN ILLUMINATE THE WHOLE EARTH

ALLAHABAD BANK RETIREES’ WELFARE

SOCIETY,BHOPAL(M.P.)

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