1.
While notifying the Pension
Regulations, a rigorous clause was placed in regulation 22.4 (b) vesting with
the banks powers to forfeit the entire past service of the employee for participation
in strike which was detrimental as it would entail loss of pension to the
employee opting for pension after surrendering his CPF to the Pension Fund of
the bank. The clause was discriminatory one opting for pension lose the
erstwhile benefit of CPF as also the new benefit of Pension, while one remaining
in CPF would not lose their terminal benefit of CPF.
2.
The rigorous clause
was later deleted by amending regulation 22.4 (b) on pressure from
unions/associations for the sole purpose of giving a fresh option to those who
could not opt for pension earlier. The communication in this behalf was issued
by Ministry of Finance (“MoF” for short)) vide F.No.4/8/4/95-IR dated
24.12.1997 to Indian Banks’ Association (“IBA” for short) with specific
instruction to give effect to the amendment.
3.
IBA disregarded
the direction of the MoF and though Public Sector Banks (“PSBs” for short)
amended the regulation 22.4 (b), did not give effect to the amendment by
extending fresh option in the wake of the amendment. Thus the very purpose of
the amendment got defeated. The subjects of the subordinate legislation did not
get the benefit the Houses of the Parliament bestowed on them.
4.
Subsequently, on
further pressure from unions/associations, IBA signed a Joint Note dated
27.04.2010 for giving option for pension to those who missed it earlier. But the Joint Note was on extremely unlawful and
irrational terms. The option extended through it was the one that was to be
given while amending regulation 22.4 (b). MoF accorded sanction for
implementation of the Joint Note vide letter DO No.14/1/1/2007-IR dated 10.08.2010 without amending the Pension
Regulations. The action was ultra vires. MoF was usurping the territories of the Legislature.
5.
The Joint Note,
per se conclusion 10 of it was to be
forwarded to the government along with the Scheme of Pension for its approval
and further action in terms of section 19 of the Act, viz. laying it in the
Houses of the Parliament for a period of thirty days for their nod. The due procedure of amending the Pension
Regulations is not done in spite of the passage of seven years. The Pension
Regulations are remaining the same for non-compliance with the due procedure in
law of amending them. The Joint Note
thus has no force of law. Its implementation
sans the nod of the Houses, thwarting the Pension Regulations was as affront to
the Legislature.
DUE PROCEDURE FOR
MAKING /AMENDING REGULATIONS
(a)
Sub-section
19.1 of the Act mandates that a regulation can be modified / amended in
consultation with RBI and with the previous sanction of the government through and
through notification in the gazette.
(b)
Sub-sections
19.1 and 19.4 prohibit making /amending a regulation that prejudices what is
done earlier under it.
(c)
Sub-section
19.4 further mandates that every regulation, as soon as may be after it is made
under the Act or any scheme thereunder shall be laid in both the Houses of the
Parliament for a period of 30 days for their approval and shall have effect
only if it is approved by the Houses or will be of no effect.
STATUS OF THE JOINT
NOTE
The Joint Note signed on 27.04.2010,
in spite of section 19.1 requiring to be notified in the gazette is not
notified so far, its conclusions prejudice what was done under the relative regulations,
making it unfit to be laid in the Houses in terms of sub-sections 19.1 and 19.4.
It has no force of law. The Pension
Regulations are thus remaining the same.
EXTENT OF VIOLATIONS
OF THE PENSION REGULAIONS THROUGH THE JOINT NOTE
I.
Regulation 52.1
of Pension Regulations mandates that a pension shall become payable from the
date following the date on which an employee retires. Conclusion No.8 of the Joint Note envisages payment
of pension from 29.11.2009 to employees retired prior to its date, which
prejudice regulation 52.1.
Bad Effects:
Employees retired on various dates got
pension from a common date. Similar manner of people lost pension for varying
periods from their date of retirement to 27.11.2009 fixed in the Joint Note. This was discriminatory, derogative of
regulation 52.1 and opposed to the Constitution of the Nation.
II.
Regulations 5.3
and 11 of Pension Regulations make the banks the sole contributor to Pension
Funds. But the Joint Note prescribed a
contribution of 2.8 times pay from
November,2007 in case of employees on rolls and 56 percent of CPF
from employees retired prior to its date
in addition to refund of the CPF paid on retirement to the Pension Fund of
banks, which was in derogation of these
regulations.
Bad
Effects:
Employees,
whether working or retired, constitute a similar manner of people. One category
was subjected to a small contribution of 2.8 times pay for a month and the
other category was subjected to 56 percent of CPF paid on retirement which was
a large sum.
Among
the retired employees, one who retired one month before the date of the Joint
Note and another who retired 10 years were subjected to a uniform levy of 56
percent of CPF to the Pension Fund. For the former it was a tiny for the latter, it
was a huge sum. One who received one month before the date of the Joint Note as
also another who retired ten years back had to pay the same percentage. This was irrational and detrimental to the
former.
Pension
was a benefit in lieu of CPF. When the CPF and 56 percent of it paid back, pension
the benefit in lieu of it shall flow from the date of retirement. Paying it
from an arbitrary date of 29.11.2009 was illogic and irrational besides being
derogative of regulation 52.1. The Joint Note was transgressing the
regulation.
Retired employees, were eligible to an
option when regulation 22.4 (b) was amended vide government direction dated
24.12.1997. This would have entitled
them to commutation of one-third pension, a sum matching with the CPF paid on retirement.
The contribution of 56 percent of CPF, even hypothetically assuming as the
interest for the period the CPF was with them, was irrational.
III.
Regulation 7
delineates the various components of the Pension Fund created under regulation
5 of Pension Regulations. The components
exclude a contribution from the employee other than the initial transfer of his
CPF to the Pension Fund. Thus, both the contributions envisaged in the Joint
Note prejudice regulation 7 also, in addition to regulations 5 .3 and 11.
Effects of the contribution:
Though the bank is the contributor to
Pension Fund, the amounts of contribution are the amounts which were previously
payable by banks as contribution to CPF of the employees pursuant to EPF Act. The Pension Fund is thus the statutorily
deferred wages of employees and not the money of banks.
IV.
In terms of
regulation 3, the last date for option for pension was 26.01.1996, i.e. within
120 days of the notification of the Pension Regulations on 29.09.1995. Since this regulation is not amended, no one
can be given an option through the Joint Note. Any pension paid out of the
Pension Fund has to be in accordance of the Regulations and has to be from the
date of retirement and not from 27.11.2009.
Effects:
All pension paid by PSBs on the basis
of the Joint Note from 29.11.2009 out of the Pension Funds created pursuant to
Pension Regulations are unauthorized as such payment is not in accordance with
the Regulations. The amounts are
mounting month after month, creating a contingent liability in the books of the
banks. It is essential that the options
had to be given with retrospective effect from 26.1.1996 for rectifying the
anomaly and for removing the irregularity.
V.
In terms of
regulation 5.2 of Pension Regulations, the Pension Fund created pursuant to the
regulations can pay pension/family pension in accordance with the regulations
only. Any pension paid out of the Pension Fund shall be with effect from the
date of retirement as mandated by regulation 52.1. No employee can be paid
pension on the basis of the Joint Note which has no force of law and without an
option exercised on or before 26.01.1996.
Effects: same as that given under
clause (iv) above
BREACH OF PENSION
REGULATIONS OTHER THAN THAT THROUGH THE JOINT NOTE
Regulations 56 of Pension Regulations
clearly states that the Pension Scheme in Banks is exactly on the premises of
the Central Civil Service Rules 1972 and permits departure only with the
specific sanction of the government. The
government has not so far sanctioned any deviation to any PSB from this and
hence the pension in banks is to be improved from time to time with each
Bipartite Settlement just in the same way Central Civil Pension gets revised
with each Pay Commission. Non-revision
of pension in banks ever since the inception of the Pension Scheme is an apparent
derogation of regulation 56 and has resulted in extremely low pension to the
retired. A General Manager retired
fifteen years ago from a bank is drawing a pension which is less than that of
his Clerk retiring now and is deprived of a life with dignity, thus defeating
the very purpose of pension in their case.
This is a gross anomaly in the wake of OROP Scheme extended to defense
sector recently.
COST OF IMPLEMENTING
THE PENSION REGULATIONS AS SANCTIONED BY THE STATUTE
Pension is paid in PSBs out of Pension
Funds created exclusively and available for the purpose. The payment brings in zero expenditure to
banks. The government also does not have
to make any budgetary allocation for its payment as the Pension Funds are
abounding in the case of all banks and can meet two to three times the present
pension to all their pensioners.
Employees recruited after 31.03.2010 are covered by PFRDA Scheme of
Pension and hence need not be services by the Pension Funds. This apart,
mortality of pensioners is reducing the pension liability of banks
considerably. The Pension Fund has the sole purpose of paying pension/family
pension in terms of regulation 5 .2. A
growing pension fund without paying statutorily defined pension is
meaningless. The Pension Funds are
abounding in resources in all banks and can refund the unlawful contributions
raised from the employees / retired employees together with compound interest
without incurring any costs to banks as the detained amounts had been earning
similar interest on Pension Fund investments.
The details of Pension Fund of two banks viz. Bank of India and Union
Bank of India for the period from 2010-11 to 2014-15 are attached as Annexure –
A and B by way of illustration to unfold the truth.
RECENT UNTOWARD
HAPPENING
In response to unstarred question No.
2444 by Prof. M V Rajeev Gowda, Member of Parliament to be answered in the
Rajya Sabha on 8th August, 2017, Hon’ble Minster of State Shri.
Santhosh kumar Gangwar reportedly appraised the House that improvement in pension
in banks will directly affect the profitability of banks and cannot be
considered, based on the distorted information provided by the Indian Banks’
Association, without knowing that the payment of pension in banks, being out of
the Pension Funds, has zero impact on the profits of banks. This apart, there was slight error in stating
that pension is paid on the basis of agreement between IBA and unions of
employees / associations of officers to
the extent pension is paid on the basis of the Bank (Employees’) Pension
Regulations, a subordinate legislation put in place by the Parliament.
STORY OF
EXPLOITATION.
Bank employees are direct employees of
the government on account of nationalization of banks and government ownership.
They are the people who translate all the financial policies of the government
into a reality they are carrying out the government work. As such, their
compensation is payable out of the exchequer in any parlance. However, since their wages are set off against
the income they generate in banks, they themselves foot their salaries, pension
etc.
Bank employees had a better pay pack
during the seventies of last century when the Pillai Committee Recommendation
were implemented in banks on 01.07.1979 to stagger pay and to bring it on par
with the government. Though parity of
reasoning requires protection of bank pay at least at the level of government
pay, the plight is that the bank employees who worked for six days a week in a
hectic mode cracking their bones from dawn to dusk now get a pay which is
lesser by Rs.40,000 to Rs.50,000 a month than the government employees. If Pillai Committee could be implemented to
stagger pay in banks while pay revision used to be done through Bipartite
Settlements, it is high time for the government to emerge into the scene and to
establish parity and righteousness.
It is also pertinent to say that
section 10 (7) of the Act gives a prior charge to retirement benefits like
pension as it permits the Board of Directors of a Bank to declare a dividend
and to retain surplus profits as reserves in its books only after making due
provision/payment of superannuation benefits.
Given that PSBs had been regularly declaring dividends and accumulating
reserves without paying due salary increase and improvement in pension, they
were infringing the Act as also the Pension Regulations, insulting the statute.
When such higher dividends were applied to pay higher salaries in government
and other sectors, the process was totally.
The need for a Pay Commission for banks to determine compensation for
labour in an unbiased manner is imperative.
CORRIGENDUM MEASURES
TO BR TAKEN FOR REGULARISING ISSUES
The derogations of the subordinate
legislation by IBA through the Joint Note curtailing and abridging the
sanctions of the statute is an affront to the Legislature, the Apex law making
body of the Nation. There was apparent maladministration of Pension Regulations
by not extending an option while amending the regulation 22.4 (b). This was supplemented by the implementation
of the Joint Note resulting in a competing regime challenging the Pension
Regulations, Parliament, and the Constitution of India. Proper compliance with the statutory pension
regulations is hence essential and this can be done with no costs either to
banks or to the government for preserving the sanctity of the Pension
Regulations through the following:-
I.
Rolling back
the Joint Note dated 27.04.2010 which has no force of law and was implemented by
MoF ultra vires, without amending the
Pension Regulations causing an affront to the subordinate legislation viz.
Pension Regulations.
II.
Payment of
pension from the date of retirement to all the retired bank employees from the
date of retirement as mandated by regulation
52.1 which remains in full force and effect
III.
Refund the
amount of unlawful contributions of 2.8 times pay for November, 2007 raised
from employees and at 56 percent of CPF paid on retirement from the retired, together
with compound interest out of the Pension Funds to be compliant with
regulations 5 (3), 7 and 11 of Pension Regulations in force.
IV.
Pay commutation
of pension on the basis of age on the date of retirement and setting off that
paid at the time of giving option on the basis of the Joint Note.
V.
Update the
pension on the basis of the revision in pay scales on the basis of Bipartite Settlements
as mandated by regulation 56.
Since the righteous resolution of the
above issues are inevitable and essential for preserving the sanctity of the
Pension Regulations and the authority of the Legislature and it can be done
with no costs either to the banks or to the government, I request that they may
be examined and the needful done at the earliest to eliminate the continuous
injustice inflicted upon a vast community of bank employees / retired bankers.
Thanking You,
Yours faithfully,
C
N VENUGOPALAN