By S. Ramachandran
( Source: allbankingsolutions.com)
We give below the speech delivered by S Ramachandran at a meetingorganized by Resigned Bank Employees Welfare Association on 13-6-2015 at 5.00pm at the Indian Medical Association Hall on the Record note signed between IBA AND UFBU on Retirees issues. In the speech Mr Ramachandran has one by one torn into all the arguments and important statements which formed part of the so called historic Record Note. We have added few links so that retirees can refer to original case law and should be sure that what is written here is absolutely correct.
GOOD EVENING ALL OF YOU,
1.Record note of discussion between IBA and UFBU on the issues and demands relating to retirees of the bank held on 25-5-2015.
a. As per this note the demands of retirees as mentioned in charter of demands were discussed on various occasions during the course of negotiations.
b.IBA maintained that any demand of retirees can be examined only as a welfare measure as
contractual relationship does not exist between the banks and the retirees
c. The periodic wage revision exercise based on mandate from member banks cover only wages and service conditions of serving employees
d. Retirement benefits are based on service conditions prevailing at the time of retirement of employee and these do not change with subsequent settlements.
e. At the time of retirement of an employee the bank is expected to ensure that adequate funding is made for payment of pension/family pension with provision for periodic updation of dearness relief as such
there is no provision for updation of pension in bank.
f. Financial implications will need to be fully examined before any change in benefits payable to pensioners can be considered.
MY VIEWS ON THE ABOVE STATEMENTS ARE:-
1.The record note of discussion is totally unconstitutional ,illegal and arbitrary and speaks of negative attitude of IBA towards the retirees genuine constitutional rights .Details are given in my letter dated 28-5-2015 written to Secretary, department of financial services ,ministry of finance with a copy to FM.,PM,IBA CHAIRMAN,RBI GOVERNOR ,a copy of which is already given to you all
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2.First let me make it clear that Pension updation is EXISTING STATUTORY RIGHT AND IT IS NOT PRE-EXISTING RIGHT OR CREATION OF NEW RIGHT. WHAT WE ARE DEMANDING IS EXISTING STATUTORY RIGHT WHICH IS DENIED BY THE BANKS/AND IBA BY NOT IMPLEMENTING THE PENSION SETTLEMENT DATED 29-10-1993 FULLY AND THE STATUTE VIZ BANKING COMPANY (ACQUISITION AND TRANSFER OF UNDERTAKING ACT 1970 UNDER WHICH THE BANK EVOLVED AND OPERATES.
The pension settlement dated 29-10-1993 has not been fully implemented that is to say ,the introduction of pension scheme is not in full ,the implementation of pension settlement by way of Pension Regulations 1995 is only a part of pension settlement dated 29-10-1993 .Pension updation is not expressively, specifically, categorically, firmly definitely banned/excluded in the pension settlement dated 29-10-1993.
IBA has unilaterally, framed pension regulations ,the draft which has been sent to the Board of banks for adoption and thereafter for notification in the Gazette of the central government. It may be noted that, framing pension regulations without the provision of updation of pension in 1995 thereafter taking a stand that the pension regulations 1995 ,do not have the provision to pay updated pension to the earlier retirees,who are discriminated now, is not at all fair. Pension and updation of pension are not different, they are the same, updation of pension is part and parcel of pension scheme.
Among various aspects ,updation of pension is a part of pension. which has to be introduced in the pension regulations .Hence there is a right available, to the pensioners, which cannot be brushed away by mere simple denial by the BANKS, IBA AND THE GOVT WHICH IS BASELESS AND WILL NOT SURVIVE THE TEST OF LAW.
2.The voluntary retirees maintain relationship for the purpose of grant of retrial benefits, in view of past service according to Apex court order in M.R.Prabhakar and others Vs Canara bank (you can read full case by clicking on the link) and others (para 9) have relationship with the bank.
HENCE THE STAND OF IBA THAT CONTRACTUAL RELATIONSHIP DOES NOT EXIST BETWEEN BANKS AND RETIREES DOES NOT HOLD GOOD AND IS ILLEGAL
IF THERE IS NO CONTRACTUAL RELATIONSHIP WITH THE RETIREES ,WHY IS IT THAT, THE GOVERNMENT IS CONSIDERING “ONE RANK ,ONE PENSION “ISSUE OF THOUSANDS OF ARMED FORCES PERSONNEL?
In fact pension and the pension trust is the umbilical cord that sustains the contractual relationship of employee post retirement
After grant of retrial benefit, particularly pension, the contractual relationship between the Bank and the pensioner is continuous one and not a one-time situation /affair, as the pension is paid regularly / monthly by the employer to the employee. Employees contribution per annual actuarial investigation is paid into the pension corpus fund by the employer , so there is no need to elaborate further on this subject of contractual relationship between the bank and the pensioner (employee) .Further , after the death of the pensioner the spouse (nominee) gets family pension ; that is to say, that contractual relationship between the bank and the pensioner automatically and immediately passes to the family pensioner by operation of law .
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3.Payment of pension is not a welfare measure, it is for the past work done to the organization/country. In Nakara Case (You can read the full case by clicking on the link. Specially read para 11 of the page 31) , it has been held that PENSION IS THEIR STATUTORY, INALIENABLE, EQUALLY ENFORCEABLE RIGHT AND IT HAS BEEN EARNED BY THE SWEAT OF THEIR BROW. AS SUCH, IT SHOULD BE FIXED,REVISED AND MODIFIED AND CHANGED IN WAYS NOT TO ENTIRELY DISSIMILAR TO THE SALARIES GRANTED TO SERVING EMPLOYEES (1983 LLI O1O1SC)
Therefore to term the pension and pension related issues as “welfare measure” is not out of ignorance of IBA but a deliberate attempt to mislead the retiree which has been accepted by our great neta’s willingly.
4.Now as regards financial implications/additional cost of burden if the updation of pension is considered I would like to state that there will not be any additional burden on the banks.
The following is the actual and factual position prevailing in the BANK OF BARODA as submitted by the bank in the affidavit dated 11-8-2014 submitted by the bank to the HIGH COURT OF GUJRATH AHMEDABAD IN RESPONSE TO THE SPECIAL CIVIL APPLICATION NO 1208 OF 2013 BY THE RETIREES OF THE BANK
Facts and figures of Pension Fund:
|
Amount in crores of RUPEES.‘
|
Opening Balance as on 1-4-1993
|
7502.04
|
Add Annual Contribution
|
1080.10
|
Add Interest Income
|
616.31
|
TOTAL
|
9198.45
|
Less Benefits Paid
|
502.76
|
Less Gain/Loss
|
436.21
|
TOTAL
|
938.97
|
Closing Balance as on 31-3-2014
|
8259.48
|
INCREASE OF RS 8259.48-7502.04=757.44 CRORES OF RUPEES in Pension fund of BANK in F.Y. YEAR 2013-14 AFTER MEETING ITS ANNUAL OBLIGATIONS OF PENSION PAYMENT.
According to Bank of Baroda the total number of pensioners and family pensioners ,pension paid to the pensioners of the BANK OF BARODA :-
(Amount in crores of rupees)
No. of pensioners/retired as officers
(1)
|
No. of Family pensioners/Families of retired officers
(2)
|
Approximate pension paid per month for both pensioners and family pensioners
(3)
|
Additional burden payable, if the claim of petitioners is granted
(4)
|
Total of column 4, i.e. additional burden if pension is updated.
(5)
|
8585
|
1260
|
21.00 +1.50
|
6.57 +1.35
|
7.92
|
If the claim of the PENSIONERS are granted ,Bank of Baroda has to incur additional burden of Rs.8.00 crores per month and Rs.96.00 cores annually. The additional burden on account of non officer staff and their family pension for 12500 persons would be Rs.100.00 crores approximately. In all, for workmen and officers additional burden on account of updation of pension, would be Rs.196.00 crores per annum. AND
As admitted by the bank in its Affidavit in Reply, the additional cost of pension on account of Pension Updation would be Rs. 200 crores in current rates and the increase in pension fund in the previous financial year is Rs. 757. 44 crores. There are sufficient funds in the pension fund to meet this additional burden of granting claim of PENSIONER in respect of upgrading of pension. That is to say, that the increase in pension fund in the current year amounting to Rs. 757.44 crores is enough to meet additional burden due to upgrading of pension and still the increase in pension fund will be Rs. 557.44 crores. .
If the pensioners claim is granted retrospectively, for the entire period of 20 years, at an average additional burden of Rs. 150.00 Crores per annum come to Rs. 3000.00 crores. But still there will be 5259.48 crores pension fund available after meeting the additional burden on account pension updation. That is Rs. 8259.48 – 3000.00 = 5259.48 crores. However it may be noted that Bank has suppressed the current position of the Pension Fund and has mislead the Hon’ble court by giving the figures of additional burden only. There is no transparency on the part of the Bank, when it comes to the actual and factual funds position. It MAY BE NOTED THAT the additional cost/burden on account of pension updation can be incurred by the self financing scheme of pension and it would not break the backbone of the pension fund.
Further with respect to the financial implications on granting the claim of the pensioners, it has been respectfully submitted above, that the Pension Fund has got enough funds in its Pension Fund, to incur additional burden on account of updation of pension to the pensioners. But at the same time, it may be noted that apart from delivering financial dividends to the Union Government by virtue of majority share holder, invisible dividends are being delivered to the majority share holder of the banks by way of
a. cheap credit to the exporters and agriculture, poor people,
b. spreading banking to the rural at the cost of profits,
c. social banking, and so on,
1. The banks, IBA and Govt has to understand that, the staff existing and retired, have made the bank to post good profits, those who have build the bank to post the profits have to be taken care by way acceding to the demand of updation of pension and keep the retirees, who are senior citizens of the country, happy and comfortable in their evening of lives.
The Government of India, while appointing the Pay commission incorporates in the terms of reference, advises that the Commission is required to examine the principles that should govern the structure of pension, death-cum-retirement gratuity, family pension and other terminal or recurring benefits having financial implications for the Central Government employees. This is to ensure that the revision of pay does not result in upsetting the Basic principles of Pension scheme.
IT MAY BE NOTED the successive Pay commissions had recommended updation of pension paid to pensioners along with salary revision of serving employees. By this, they had extended the benefit of salary revision to the pensioners as well. The last drawn salary, reckoned for the purpose of arriving at the Basic pension of the pensioner is fitted in the new scale of pay, using the same formula and procedure used for fitment of the Basic pay of serving employees, and the corresponding Basic pay in the new scale is arrived at. The Basic Pension of the pensioner is recalculated and fixed at 50% of the Basic pay in the revised scale of pay arrived at as above. Dearness relief is calculated at the revised Basic Pension.
The pension of all the retirees is updated by notional fixation of their pay by adopting the same formula as for the serving employees. Thereafter, all the past pensioners who have been brought on to the new pay scales by notional fixation of their pay and those who have retired after the cutoff date for wage revision are treated alike regarding consolidation of their pension by allowing the same fitment weightage as may be allowed to the serving employees. However, it is ensured that the consolidated pension will not be less than 50% of the minimum revised pay of the post held by the pensioner at the time of his retirement.
It MAY BE NOTED that Reserve Bank of India, the pioneer of pension in banking industry, also extended pension updation to their retirees their Administration Circular No2 dated September, 2003 the pension was updated by way of revising the components of “Pay” drawn on the preceding ten months of service prior to retirement, which were considered for the purpose of calculating pension, to those obtaining in the revised scales of pay brought into effect from 1st November 1997, notionally and recalculate the pension.
The revised pension was paid from 1st November 2002.
This principle has been accepted by the Government of India as paramount to the welfare of its retired employees as it is intended to take care of the erosion in value of rupee. The same has been accepted in State Bank of India, as admitted by IBA, and also in Reserve Bank of India, about which IBA is silent. It is stated that it is not applicable for Public sector Banks, does the IBA suggest that Erosion in the value of the rupee does not take place in the case of employees of Public sector Banks or that they need not be taken care of against this?
The statement that there is no provision in the Pension Regulation governing payment of pension to retirees from Public sector banks (except State Bank of India) for updation of pension of past retirees is contradicted by their subsequent admission that Updation was done in the case of employees of Public Sector Banks in respect of the period 01-01-1986 to 31-10-1987 to update the pay drawn during the last ten months before retirement from a reference level of CPI 332 points to CPI 600 points.
If the banks, IBA and the Government found this principle relevant in 1995, how can it become irrelevant subsequently? Thus this argument of IBA sounds hollow and unconvincing.
Then comes their argument about the nature of Pension scheme in PSBs being funded scheme. The Pension scheme in SBI as well as RBI is similar to that in PSBs. Still they apply the principle of updation for their retirees. Thus the IBA’s argument is not sustainable. I would like to analyse the Pension fund of Banks and the Govt for the sake of clarity of understanding. In the case of the Government employees the Government incurs three expenditures in respect of superannuation benefits of their employees. They are, Gratuity, Provident fund and Pension. In the case of Bank employees, the banks incur only two expenditures in respect of superannuation benefits of their employees; they are, Gratuity and PF/Pension. So the fact that the Government treats the threat of erosion in the value of rupee to be very serious for their retirees and to protect them from its impact, applies the principle of updation of pension, is evident from the fact that despite paying for gratuity, PF, and Pension, the Govt. willingly goes in for updation of Pension of its retirees. Therefore the Public sector banks which give only two benefits to its employees, i.e. Gratuity and pension cannot deny updation to its employees.
The Pension fund of the Government has no Corpus, as we could get from a reading of IBA’s letter. It has an outflow in the nature of Pension payments matched by an inflow from the Government revenues. In the case of Pension fund of Public sector banks, the outflow is only in respect of payment of pension to the retirees and the inflow is twofold, interest income from investments made out of the Corpus funds and banks contribution, amounting to a fixed percentage of the wages of its employees in lieu of its statutory liability of payment of PF to its employees. In this case, the inflow is always significantly more than the outflow and the excess of inflow over outflow goes to swell the Corpus.
It may be noted that there are two aspects of this issue;
1. the principle ,
2.the funding.
The principle of updation is to ensure that no erosion takes place in the value of rupee and it is applicable to one and all, whether retired or in service .IBA seems to say that upholding this laudable principle is the exclusive prerogative of the Government and not IBA.
The principle is recommended by Pay Commission after Pay Commission and readily accepted by the Government, which is not concerned with the availability of source of funding this additional expenditure. Government is more concerned about upholding the principle rather than the availability or source of funding. There is no justification for banks’ total lack of concern for this principle in respect of their pensioners. This difference makes the pension scheme of PSBs more suitable to implement updation without any threat to its viability or otherwise Hence pension updation be implemented for bank retirees immediately and with every successive wage revision for serving employees.
ONE RANK ONE PENSION WAS SEEN WITH EFFECT FROM 1-4-2014 after 58 years of first CPC
Supreme Court in WP(C) NO.521 of 2002 between P Ramakrishnan Raju V/s Union Of India and Ors, upheld the principle of OROP.
On the issue of UPGRADATION OF PENSION FOR ALL EXISTING AND FAMILY PENSIONERS,IBA IS TALKING OF HUGR ADDITIONAL COST INVOLVED IN FUNDING THE PENSION FUND AS PER REQUIRMENTS OF AS-15-R , it would be impossible to consider this demand ,. However it seems IBA are not aware that SECTION 10(7)
Banking companies (Acquisition and Transfer of Undertakings )ACT,1970 AND SETTLLEMENT DATED 29-10-1993 para 10, prevails over the ACCOUNTING STANDARD -15 (REVISED 2005) .Hence there is no meaning in the stand of IBA AND UFBU . What is the huge additional cost is not quantified ,without such quantification the argument /stand of the signatories will not serve the test of law.
I ALSO DO NOT UNDERSTAND AS TO WHY THEY KEPT MUM FOR 30 MONTHS DURING WHICH PERIOD IBA COULD HAVE EASILY COLLECTED THIS INFORMATION FROM THE BANKS. ACCORDING THE MY INFORMATION IBA HAS NOT SOUGHT ANY INFORMATION FROM THE BANKS DURING THE LAST 30 MONTHS ON PENSIONERS ISSUE AND ITS FINANCIAL ADDITIONAL BURDEN ON THE BANKS .
Whereas we have seen above that pension funds are having sufficient funds to meet the pension updation,from the FIGURES GIVEN BY BANK OF BARODA UNDER ITS AFFIDAVIT TO THE HON’BLE HIGH COURT OF GUJRATH, AHMEDABAD.SAME IS CASE WITH ALL THE BANKS CONSIDERING THE TOTAL AVAILABLE FUNDS IN THE PENSION FUNDS OF PUBLIC SECTOR BANKS AS ON 31-3-2014 OF RS 101919.60 CRORES AND TOTAL OF FUNDS EXCLUDING SBI BUT INCLUDING THE SBI ASSOCIATE BANKS WAS RS 113545.62 CRORES
In view of the above the demands of pension updation to retirees, increase in family pension on the lines of RBI AND 100%DA neutralisation to pre nov,2002 retirees with effect from Feb,2005 can be easily met by the banks from the pension funds and hence these demands should be considered immediately .
The term pension includes :
a. Different types of pension
b. Commutation of pension
c. Restoration of commuted pension,
d. Updation of pension,
e. Suspension of pension,
f. Withdrawal of pension,
g. Forfeiture of pension,
h. Dearness relief on pension,
i. And so on and on.
5. As regards the statement by IBA IN THE NOTE REFERRED TO ABOVE has stated that the periodic wage revision exercise is based on the mandate from the member banks cover only wages and service conditions of serving employees. Here I WOULD LIKE TO STATE THAT THIS STATEMENT IS NOT CORRECT. In support of the above I give below the mandate given by the BANK OF BARODA during the last wage settlement to IBA vide banks letter no BCC/HRM/HRA:I-1/5719 DATED 23RD JUNE,2008 WHICH READS AS UNDER
“Resolved that our bank being a member of the Indian Bank’s Association, may authorize the IBA to discuss ob behalf of the bank with the officers association the scales of pay and allowances and other service conditions of officers employees of our bank.
It was further resolved that the conclusions /decisions reached between the Indian Banks Association AND Officers Associations would be acceptable to the bank and would be implemented as advised by the IBA.
Similar resolution was passed by the board to discuss/negotiate and settle on\ behalf of the bank with the workmen unions the scale of pay and allowances and other service conditions of workman staff of the bank.
If the resolutions authorized to discuss the scale of pay and allowances of the workman staff and officer employees of the bank then how the 9th BPS DISCUSSED AND APPROVED THE RENEWED THE PENSION OFFER TO RETIRED EMPLOYEES (AFTER 1995-96 PENSION REGULATIONS) ?
In the 10th BPS retired bankers have been rudely told that CONTRACTUAL RELATIONSHIP DOES NOT EXIST BETWEEN BANKS AND RETIREES. Therefore we need to go back to the time when the 9th BPS was signed in March 2010. An article in the economic times in 2010 appeared under the heading ‘IBA SIGNS REVISED PENSION AGREEMENT WITH BANK UNIONS”
The above article included the following comments by IBA Chairman, by MR .M.V..NAIR ,
“There are two aspects of our pension offer. There is renewed pension offer to retired employees (after 1995-96 pension regulations) who earlier had not opted for the scheme earlier. All employees who are on the banks roll as on March30,2010 will be covered under the existed defined benefit scheme. While those who join from April 1, 2010 will be covered under the government ‘s new pension scheme and the government guidelines will be applicable”.
Thus,till 2010, IBA was of the firm view that there is a contractual relationship between the banks and the retirees and thus ,the above offer was part of the 9thBPS. Therefore retired bankers rightly trusted UFBU AND IBA ,when demands of the retired bankers formed part of the charter of demands submitted to IBA and during the 30 months IBA never publicly objected to these demands.IBA never allowed the retired bankers associations to negotiate with IBA as UFBU have always included the demands of the retired bankers in their Charter of Demands and claimed that UFBU is only entitled to negotiate even on behalf of retired bankers.
As regards the revision of FAMILY PENSION on the same lines of central government ,IBA HAS NOT COME OUT WITH FACTS AND FIGURES .FUTURE DATE SHOULD BE CERTAIN AND IT CANNOT BE VAGUE.
Improvement in the family pension is implemented in the RBI .Our Schemes is based on the lines of schemes available in RBI AND GOVERNMENT, so this need not be discussed as it is already settled issue and it should be implemented from the effective date as the date of implementation in RBI.
With regards to 100% Dearness relief neutralisation to pre November,2002 ,I HAVE TO SAY THAT the issue is implemented in RBI and since our scheme is on the lines of RBI ,so this need not be discussed as it is settled issue. and it should be implemented from the effective date from FEB2005 as the date of implementation in RBI..
They have to refer to clause 12 of pension settlement dated 29-10-1993 which says provisions will be made by the scheme to be negotiated and settled between the parties to this settlement by 31st December,1993 for applicability ,qualifying service, amounts of pension, payment of pension, commutation of pension, family pension ,updating and other general conditions, etc on the lines as in force in RBI.
Another ridiculous stand how can they mention ‘SUBJUDICE’ when in the past ‘Revision in Pension” and ‘Five Year notional service” and “2”nd option for pension “ were implemented when the relative matters were ‘SUBJUDICE’?
In respect of upgrading the basic pension at the common and uniform index of 4400 points, IBA SHOULD refer to section 10(7) Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 says after making provision for bad and doubtful debts ,depreciation in assets ,contributions to the staff and superannuation funds and all other matters for which provision is necessary under any law, or which are usually provided by banking companies, a corresponding new bank may out of its net profit deal are a dividend and retain the surplus if any,That is to say our issues of superannuation funds has prior charge over the net profit. Provisions for advances ,depreciation on the assets and other provisions are made automatically
Without any noise in the banking industry by banks and sustainability of individual banks is thought of at this juncture ,when the question of retiral issues of superannuation funds comes IBA and UFBU MAKE A BIG NOISE AND TALK WITHOUT THE BASE OF LEGAL PLATFORM.
With regards to uniform percentage of allocation from welfare fund towards schemes pertaining to retirees ,government guidelines provides benefit to retirees out of welfare fund. Moreover I reliably understand that KHANDELWAL COMMITTEE appointed by the government have also recommended to provide 25% of welfare funds for the retirees scheme which is not yet implemented.
From the above you will agree with me that as stated by me in the beginning the entire issue of not considering any demands of retirees is the creation of IBA AND UFBU ON ACCOUNT OF THEIR NEGATIVE ATTITUDE AND WHICH IS ALSO UNCONSTUTIONAL AND ILLEGAL AND HENCE IBA SHOULD BE FIRST FORCED TO WITHDRAW THE RECORD NOTE DATED 25-5-2015ON DISCUSSION OF RETIREES ISSUE BETWEEN IBA AND UFBU,
Lastly I shall be failing in my duties if I do not convey sincere thanks to SHRI R.K.PATHAK PRESIDENT OF RESIGNED WELFARE GROUP OF ASSOCIATION ,for arranging and conducting this meeting for the benefit of retirees .
THANKS
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* S. Ramachandran
Former General Manager Bank of Baroda.
Former Chairman & CEO - The Sangli Bank Ltd.
(Now merged with ICICI Bank Ltd.)
Former Administrator Madhavpura Mercantile
Co-op Bank Ltd (Ahmedabad)
Former Director General Maratha Chamber of Commerce
Industries & Agriculture, Pune.
Kunal Icon, Building no. A8,
Flat no. 104, Pimple Saudagar,
Aundh Camp, Pune 411027
Tel: 020 27201012.
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